In re Ever Krisp Food Prods. Co., 4.
Decision Date | 29 November 1943 |
Docket Number | No. 4.,4. |
Citation | 307 Mich. 182,11 N.W.2d 852 |
Parties | In re EVER KRISP FOOD PRODUCTS CO. |
Court | Michigan Supreme Court |
OPINION TEXT STARTS HERE
Proceedings in the matter of the petition of Donald Cameron and others, constituting a majority of the Board of Directors of the Ever Krisp Food Products Company, for the dissolution of the corporation, wherein a receiver was appointed to liquidate the business, and who petitioned the court for instructions for payment of tax claims by the United States of America, the Michigan Unemployment Compensation Commission, the City of Detroit, and the County of Wayne. From an order determining the priority of tax claims, the United States appeals and the Michigan Unemployment Compensation Commission cross-appeals.
Affirmed in part and remanded.Appeal from Circuit Court, Wayne County, in Chancery; Theodore J. Richter, Judge.
Before the Entire Bench.
Samuel O. Clark, Jr., Asst. Atty. Gen., Sewall Key, J. Louis Monarch, and Muriel Paul, Sp. Assts. to the Atty. Gen., and John C. Lehr, U. S. Atty., and Arnold W. Lungerhausen, Asst. U. S. Atty., both of Detroit, for the United States, appellant.
Herbert J. Rushton, Atty. Gen., Edmund E. Shepherd, Sol. Gen., of Lansing, and Florence Clement Booth and Daniel J. O'Hara, Asst. Attys. Gen., for Michigan Unemployment Compensation Commission, cross-appellant.
Paul E. Krause, Corp. Counsel, and John G. Dunn and Alfred S. Stolinski, Asst. Corp. Counsels, all of Detroit, for City of Detroit and Albert E. Cobo, Treasurer of City of Detroit.
William E. Dowling, Pros. Atty., and Samuel E. Brezner and Helen W. Miller, Asst. Pros. Attys., all of Detroit, for Wayne County and Jacob P. Sumeracki, Treasurer of Wayne County.
This case arises out of the dissolution of the Ever Krisp Food Products Company, an insolvent Michigan corporation, and involves the question of priority of several tax claimants. The United States of America claims priority for Federal social security taxes for the years 1938, 1939 and 1940, and for a capital stock tax for the year 1940. The city of Detroit claims a lien for personal property taxes assessed against the corporation for the years 1938, 1939 and 1940. The county of Wayne claims a lien for personal property taxes assessed against the corporation for the year 1939. The Michigan unemployment compensation commission claims that neither the United States, the city of Detroit or the county of Wayne are entitled to priority of payment, and that it is entitled to a pro rata distribution of its claim for contributions from the corporation as an employer, under the Michigan unemployment compensation act and section 15362, 3 Comp.Laws 1929 (Stat.Ann. § 27.2427), defining priority of payment under assignments for the benefit of creditors.
The problem before the court therefore is to determine the priority of payment to which each of the several claimants is entitled, (1) the United States, (2) the city of Detroit, (3) the county of Wayne, (4) the Michigan unemployment compensation commission. It is conceded by all parties that the corporation is insolvent and that its assets are not sufficient to pay these several claims in full. However, the importance of the questions here presented for decision cannot be measured by the amount of money involved. The apparent conflict between State legislation and city charter provisions relating to taxes for governmental purposes, and recent Federal and State enactments for social security purposes and unemployment compensation benefits has not heretofore been before this court.
On May 20, 1940, a majority of the board of directors of Ever Krisp Food Products Company, a Michigan corporation, filed in the circuit court for the county of Wayne in chancery, a petition for dissolution of the corporation. The court assumed jurisdiction and in due course of time a decree was entered declaring the corporation to be insolvent. By the decree the corporation was dissolved and a permanent receiver appointed to liquidate its business pursuant to the provisions of chapter 40 of Act No. 314, Pub.Acts 1915 (3 Comp.Laws 1929, § 15310 et seq., Stat.Ann. § 27,2354 et seq.).
On October 2, 1942, the receiver petitioned the circuit court for the county of Wayne for instructions for payment of tax claims. The receiver reported $1,475.38 on hand, available for administration expenses, payment to creditors, and for distribution. Petitions filed for payment of administration expenses were reported as approximately $1,000. Preferred tax claims on file were reported by the receiver in excess of $1,600.
The United States filed two claims of priority, for payment of social security taxes amounting to $1,011.50 and a capital stock tax of $17.84, a total of $1,029.34. The city of Detroit filed a claim of a lien for personal property taxes for 1938, 1939 and 1940, amounting to $236.41. The county of Wayne filed a claim of lien for personal property taxes for 1939, amounting to $14.49. The Michigan unemployment compensation commission filed a claim for unemployment compensation contributions for 1938, 1939, to June 28, 1940, amounting to $645.04. The court held a hearing in open court on the petition of the receiver for instructions and entered an order, the pertinent parts of which are as follows:
‘That the tax liens of the city of Detroit and the county of Wayne are of equal dignity and entitled each to payment in full out of available funds in the hands of the receiver as prior, superior and paramount liens to all other liens and claims, and the court further finding that the claim of the United States government is inferior to the liens of the city and county and is therefore entitled to payment after the city and county liens have been satisfied, and the court having further found that the claim of the Michigan unemployment compensation commission is junior to the foregoing liens and claims and is entitled to payment after these claims have been satisfied out of the balance of the funds remaining, if any, in the hands of the receiver;
‘Now, therefore, it is ordered and adjudged that Joseph J. Oldani, permanent receiver of the Ever Krisp Food Products Company, a Michigan corporation, pay or cause to be paid out of the funds in his hands remaining after the payment of administration expenses, as ordered by this court under date of October 30, 1942, the tax liens and claims in the following order, each claim to be paid in full in consecutive order before payment of the claim next in order as follows:
‘1. The lien of the city of Detroit amounting to $236.41 and with interest to date being in the total amount of $272.61, and the lien of the county of Wayne amounting to $14.49 and with interest to date being in the total amount of $16.54, being claims of equal dignity are each ordered paid in full;
‘2. Next in order the receiver shall satisfy the debt claim of the United States government amounting to $776.53 and with interest to date being in the total amount of $793.48, out of the balance of funds in his hands then remaining;
From this order the United States appeals, and the unemployment compensation commission cross-appeals. The city and county for obvious reason are content with the order.
We quote from the brief filed by counsel for the United States, stating the basis of its claim for priority of payment as follows:
‘In seeking to enforce payment of a tax liability as against the competing claims of the city of Detroit, and the county of Wayne and the Michigan unemployment compensation commission, the United States relies upon the Federal statute, section 3466, Revised Statutes of the United States.
‘This statute is as follows:
(U.S.C.1940 Ed., title 31, section 191 [31 U.S.C.A. § 191.])
In support of its claim, the substance of the argument for the United States is that:
The basis of the claim of counsel for the city of Detroit and the county of Wayne is that the personal property ad valorem tax liens of both city and county were complete, perfected and specific liens on July 15th and December 1st of each year respectively, and...
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