Conklin v. United States Shipbuilding Co.

• Decision Date: 27 August 1906
• Citation: 148 F. 129
• Parties: CONKLIN et al. v. UNITED STATES SHIPBUILDING CO.
• Court: U.S. District Court — District of New Jersey

148 F. 129

CONKLIN et al. v. UNITED STATES SHIPBUILDING CO.

United States Circuit Court, D. New Jersey.

August 27, 1906

Lindabury Depue & Faulks, for receiver of defendant company.

Robert H. McCarter and Edward D. Duffield, for the state of New Jersey.

LANNING District Judge.

The receiver of the United States Shipbuilding Company seeks instruction as to whether it is his duty to pay to the state of New Jersey, as a preferred debt, the franchise tax assessed by the state against that company for the year 1905. I think he must do so. The case is controlled by Duryea v. American Woodworking Mach. Co. (C.C.) 133 F. 329 notwithstanding the fact that this court (C.C.) 140 F. 219 and the Court of Chancery of New Jersey have each decided that it has no power to dissolve the shipbuilding company and thereby put an end to its corporate existence and to the receiver's liability for franchise taxes. The trust-fund doctrine, which the counsel for the receiver invokes is supposed aid of the general creditors will not help them. The act authorizing the imposition of the tax in question declares that it 'shall be a preferred debt in case of insolvency' (Gen. St. p, 3335, Sec. 6.) And in the opinion of Chief Justice Gummere in the United States Car Company's Case, 60 N.J.Eq. 514, 43 A. 673, it was held that such an imposition is not, properly speaking, a tax but a debt, and that it is a preferred debt as to each and every franchise tax imposed upon an insolvent corporation during the period of its corporate existence, even after its assets have passed into the hands of a duly appointed receiver. Such a debt may not be allowed as a preferred one in a bankruptcy case, because of the provisions of the bankruptcy act (see In re Cosmopolitan Power Co. (C.C.A.) 137 F. 858), or by any state or federal court outside of Neu Jersey administering a Neu Jersey insolvent corporation's assets which never had a situs in New Jersey, because of the general rule that a court will not enforce a principle opposed to the law or policy established within its territorial jurisdiction concerning matters of local administration. Rogers v. Riley (C.C.) 80 F. 759; Fletcher v. Harney Peak Tin Min. co. (C.C.) 84 Fed 555; Sands v. E. S. Greeley & Co., 88 F. 130, 31 C.C.A. 424; Kirker v. Owings, 98 F. 499, 39 C.C.A. 132; Ballou v. Flour Milling Co., 67 N.J.Eq. 188, 59 A. 331. The trust-fund doctrine, however, accords to all preferred...