District of Columbia v. Wardell, 4762.

• Decision Date: 03 May 1940
• Docket Number: No. 4762.,4762.
• Parties: DISTRICT OF COLUMBIA v. WARDELL.
• Court: U.S. District Court — District of Columbia

32 F. Supp. 769

DISTRICT OF COLUMBIA v. WARDELL.

No. 4762.

District Court of the United States for the District of Columbia.

May 3, 1940.

Elwood H. Seal, Corp. Counsel, D.C., and Glenn Simmon, Asst. Corp. Counsel, both of Washington, D. C., for plaintiff.

Brice Clagett and Charles E. Wainright, both of Washington, D. C., for defendant.

LETTS, Justice.

The plaintiff is a municipal corporation and the defendant is the receiver of the District National Bank of Washington, an insolvent national banking association, appointed by and acting under the direction of the Comptroller of the Currency of the United States.

On November 29, 1938, the defendant reported to the assessor, D. C., that during the calendar year 1936 as such receiver he derived gross receipts in the amount of $149,239.07 from the operation in the District of Columbia of three apartment houses and one office building belonging to the receiver as such. Thereafter, the assessor levied an assessment against the defendant for business privilege taxes for the fiscal year ending June 30, 1938, and penalties for failure to file the return within the time required by law in the total amount of $1,030.67.

On November 29, 1938, defendant as receiver filed a return with the assessor, D. C., reporting gross receipts from the rental of real estate and the operation of an apartment house and office building, belonging to the receiver as such, in the District of Columbia, during the calendar year 1937 in the total amount of $65,089.60. Thereafter, the assessor made an assessment against the defendant in the amount of $315.94 for business privilege taxes for the fiscal year ending June 30, 1938 and penalties thereon.

In his answer the defendant alleges that any tax assessed against and collected from him as receiver of the District National Bank of Washington will diminish the assets necessary for the full payment of all of the depositors of the District National Bank of Washington and will diminish pro tanto the amount of the pro rata distributive share of said depositors in such assets. This allegation is not denied by the plaintiff and the fact, so pleaded, is regarded as fully established.

There is no factual dispute and the sole issue in the case being one of law is fairly presented by defendant's motion for summary judgment.

Section 5 of Title VI of the District of Columbia Revenue Act of 1937, 50 Stat. 688, c. 690, approved August 17, 1937, D. C. Code Supp. V, T. 20, § 970d provides that for the privilege of engaging in business in the District of Columbia each person so engaged shall pay to the Collector of Taxes of the District of Columbia for the fiscal year 1937-1938 a tax equal to two-fifths of one per centum of the gross receipts in excess of $2,000 derived from such business for the calendar year 1936. Section 1(a) of Title VI provides that the term "person" includes any individual, firm, copartnership, joint adventure, association, corporation (domestic or foreign), trust, estate, receiver, or any other group or combination acting as a unit, and Section 1(d) provides that the term "business" shall include the carrying on or exercising for gain or economic benefit, either direct or indirect, any trade, business, profession, vocation or commercial activity in or on privately owned property and in or on property owned by the United States Government in the District of Columbia. Section 4 requires that every person subject to the tax shall, within 30 days after the approval of the Act, furnish to the assessor, D. C., a return showing the gross receipts of such person during the preceding calendar year and Section 9 provides that any person failing to file a return within the time required shall be subject to a penalty of 10 per centum of the tax due plus 5 per centum of such tax for each month of delay or fraction thereof.

Title VI of the District of Columbia Revenue Act of 1937, as amended by the Act approved May 16, 1938 (52 Stat. 363, c. 223, D.C.Code Supp. V, T. 20, § 970 et seq.), imposed a tax for the privilege of engaging in business in the District of Columbia for the fiscal year ending June 30, 1939 (measured upon the gross receipts derived from such business during the calendar year 1937). The material provisions of the amended title are substantially the same as those of the original title, except that the definition of "business" was extended to include all rental of real estate and real and personal property regardless of whether such rentals were derived from the operation of a business. Returns under the amended title were required to be filed during the month of July, 1938, and penalties were imposed for late filing at the rate of 10 per centum of the tax due for the first month of delay plus 5 per centum of such tax for each additional month of delay or fraction thereof.

In support of his motion for summary judgment the defendant contends that in liquidating an insolvent national banking association under the direction of the Comptroller of the Currency he is not a "person" and is not "engaged in business" within the meaning of the taxing act; he denies that the statute imposing the business privilege tax applies to a receiver of an insolvent national banking association located in the District of Columbia and contends that the receipts obtained by him as such receiver in the course of liquidation are exempt from the tax; he claims that under the Revenue Act of 1937 national banks are exempt from the provisions of the taxing act, and hence the receiver of an insolvent national banking association is so exempted. It is further urged by the defendant that Section 570; Title 12, U.S.C., 12 U.S.C.A. § 570, makes the taxing act inapplicable to a receiver of an insolvent national banking association by reason of the provisions therein that where a bank has ceased to do business by reason of insolvency no tax shall be assessed or collected which diminishes the assets necessary for full payment of the depositors of the insolvent bank.

The authorities are uniform in holding that the receiver of an insolvent national bank, appointed by the Comptroller of the Currency, is an officer of the United States, and is the agent of the Comptroller of the Currency charged with carrying out the statutory duties relating to the administration and liquidation of the insolvent association. Auten v. United States Nat. Bank, 174 U.S. 125, 19 S. Ct. 628, 43 L.Ed. 920; Hulse v. Argetsinger, D.C., 12 F.2d 933; Leonard v. Gage, 4 Cir., 94 F.2d 19. Such receiver stands in the place of the bank and he represents the bank, the creditors and the stockholders. Scott v. Armstrong, 146 U.S. 499, 13 S.Ct. 148, 36 L.Ed. 1059; O'Connor v. Rhodes, 65 App.D.C. 21, 79 F.2d 146; Id., 296 U.S. 568, 56 S.Ct. 249, 80 L.Ed. 401. The possession of the assets of the bank under the direction of the Comptroller of the Currency is the possession of the United States. Port Newark Nat. Bank v. Waldron, 3 Cir., 46 F.2d...