Central Trust Co. of New York v. Third Ave. R. Co.
Decision Date | 13 March 1911 |
Docket Number | 172. |
Citation | 186 F. 291 |
Parties | CENTRAL TRUST CO. OF NEW YORK v. THIRD AVE. R. CO. et al. |
Court | U.S. Court of Appeals — Second Circuit |
Thomas Carmody, Atty. Gen. (W. A. McQuaid, Deputy Atty. Gen., of counsel), for the People of New York.
Evarts Choate & Sherman (H. J. Bickford and M. S. Borland, of counsel, for appellees.
Before COXE, WARD, and NOYES, Circuit Judges.
In 1907 the Third Avenue Railroad was being operated by the New York City Railway Company as lessee and was subject under section 185, c. 908, Laws 1896, re-enacted in section 185 of the tax law (chapter 62, Laws 1909 (chapter 60, Consol. Laws 1909)) to a tax of 3 per cent. upon its dividends in excess of 4 per cent. for the privilege of exercising its corporate franchise or carrying on its business. It was also required under section 192 to make a return on or before August 1, 1907, of the amount of these dividends during the year ending June 30th, and section 197 made the tax due and payable August 1st, and further provided that it should be a lien upon the company's real and personal property 'from the time when it is payable until the same is paid in full. ' This particular provision in the tax laws appeared for the first time in section 194 of the old tax law (chapter 908, Laws 1896). September 24, 1907, after this tax had become due and payable, receivers were appointed of the New York City Railway Company, who operated the property until January 12 1908, when they turned it over to a receiver appointed for it January 6, 1908. The Third Avenue Railroad Company was subject to a mortgage executed by it to the Central Trust Company, as trustee, May 15, 1900, and in an action foreclosing the mortgage a decree was entered May 17, 1909, against the railroad company for $40,381,173.33. March 1, 1910, the railroad was sold for $26,000,000. The state of New York now claims a priority over the mortgage for the taxes for 1907 under section 185 of the tax law, amounting to $2,543.33.
We regard it as settled law in this state that the state does not succeed as sovereign to all the prerogatives of the British crown, among others the right to a preference for debts due it over all other creditors. It has been expressly held that taxes due the state have no priority of payment out of a fund in court for distribution, unless the priority was expressly given by statute, or unless the fund has come into court impressed with a priority for the tax. Wise v. Wise Co., 153 N.Y. 507, 47 N.E. 788. O'Brien, J., said:
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