Davis v. Pringle Borland v. United States
| Citation | 45 S.Ct. 549,268 U.S. 315,69 L.Ed. 974 |
| Decision Date | 25 May 1925 |
| Docket Number | 787,1085,Nos. 786,s. 786 |
| Parties | DAVIS, Federal Agent, v. PRINGLE (two cases). BORLAND v. UNITED STATES |
| Court | United States Supreme Court |
Messrs. Jerome Michael and A. A. McLaughlin, both of Washington, D. C., for petitioner Davis.
Mr. Godfrey Goldmark, of New York City, for petitioner Borland.
Messrs. N. B. Barnwell, of Charleston, S. C., and Godfrey Goldmark, of New York City, for respondent Pringle.
Messrs. James M. Beck, Sol. Gen., of Washington, D. C., Ira Lloyd Letts, Asst. Atty. Gen., and Harvey B. Cox, of St. Louis, Mo., for the United States.
The first and second of these cases are claims for freight, storage and demurrage proved in bankruptcy proceedings by the federal agent, for which the agent asserts priority on the ground that such claims arising during federal control of the railroads in 1918 are debts due to the United States and are preferred by Rev. Stats. § 3466 (Comp. St. § 6372), and by the Bankruptcy Act of July 1, 1898, c. 541, § 64, amended by Acts of February 5, 1903, c. 487, § 14, 32 Stat. 800, and June 15, 1906, c. 3333, 34 Stat. 267 (Comp. St. § 9648). The third is a claim by the United States for amounts paid by the Postmaster General to the bankrupts for bills of exchange and checks drawn by the bankrupts and unpaid, together with protest fees, etc., as to which priority is asserted on the same grounds. The priorty was denied in the first two cases by the Circuit Court of Appeals for the Fourth Circuit. 1 F. (2d) 860; Id. 864, but it was allowed in the Second Circuit without any reported opinion, following an earlier case in that Circuit, In re Tidewater Coal Exchange (C. C. A.) 280 F. 648.
All the three cases depend upon the question whether the Government has a right to the priority it claims. If that is denied the additional inquiries that would be necessary before the federal agent could prevail in the railroad cases need not be gone into. Therefore we take up that first. It may be assumed that the priority must be found if at all in the Bankruptcy Act and in its supposed incorporation of Rev. Stats. § 3466. That Act, as was said in Guaranty Title & Trust Co. v. Title Guaranty & Surety Co., 224 U. S. 152, 160, 32 S. Ct. 457, 460, 56 L. Ed. 706, 'takes into consideration * * * the whole range of indebtedness of the bankrupt, national, state and individual, and assigns the order of payment.' It was passed with the United States in the mind of Congress as is shown by the exception of debts due as taxes levied by the United States from the discharge in section 17, pt. 1 (Comp. St. § 9601), the limitation on debts owing to the United States as a penalty in section 57j (section 9641), and the provisions as to priority in section 64 with which we are principally concerned. By a of that section—
'The court shall order the trustee to pay all taxes legally due and owing by the bankrupt to the United States * * * in advance of the payment of dividends to creditors.'
This taken by itself would seem to exclude other debts. But the section goes on in b to give priority in the order named to '(5) debts owing to any person who by the laws of the States or the United States is entitled to priority,' and the Government argues that by section 1 (19) being section 9585, 'persons' shall include corporations and that the United States is a corporation and therefore within these words. Being within them, it is said, it is entitled to priority by a law of the United States, the well known Rev. Stat. § 3466. It is said that no other person except the United States itself can be discovered who is given the right by its laws.
We attach little value to this logical concatenation as against the direct effect of section 64, taken according to the normal usages of speech. It is incredible that after the conspicuous mention of the United States in the first place at the beginning of the section and the...
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