In re Gould Mfg. Co.
| Decision Date | 12 June 1935 |
| Citation | 11 F. Supp. 644 |
| Parties | In re GOULD MFG. CO. |
| Court | U.S. District Court — Eastern District of Wisconsin |
Thompson, Gruenewald & Frye, of Oshkosh, Wis., for trustee in bankruptcy.
Lewis C. Magnusen, City Atty., and Charles F. Nolan, Special Counsel, both of Oshkosh, Wis., for City of Oshkosh.
R. C. Laus, Dist. Atty., of Oshkosh, Wis., for Winnebago County.
In these bankruptcy proceedings the respondent Breon became trustee in April, 1933. The taxes for the years 1930, 1931, and 1932 had been returned as delinquent. The tax for the year 1933 was assessed but not paid, and also returned as delinquent. All of such taxes were levied upon assessments which were made — it is not denied — conformably with the state law. The taxes (except for the year 1934) and assessments for the respective years are:
Tax Assessment
1930 ...... $3564.60 ............ $137,500
1931 ...... 3016.20 ............ 137,500
1932 ...... 2517.65 ............ 117,500
1933 ...... 2806.50 ............ 93,900
1934 (tax rate not fixed at time of
hearing this matter) 66,350
Upon petition of the trustee the property of the bankrupt was authorized to be sold free and clear of incumbrances, including tax liens. Such petition averred that: "The overhead of carrying the property, including watchmen, insurance, fuel, repairs, etc. will shortly eat up all the value of the property over and above taxes which are unpaid for approximately three years, and are a lien on said premises." And in the order authorizing such sale, the cash avails were directed to be used "to pay the expense of said sale, and to redeem the land, buildings, ventilating, sprinkling and heating systems sold at said public auction from the taxes now a lien and incumbrance thereon."
Thereupon, a sale by the trustee was held, upon which he realized an amount sufficient to pay or redeem taxes, but which he now holds; and when claim was made by the city and county for the payment of such taxes, the trustee filed objections to the allowance of the taxes for the years and upon the assessments hereinbefore set out, "for the reason that the assessments for each and all of said years are excessive, and largely in excess of the actual value for said respective years, and that the amount of taxes claimed is excessive and does not represent the correct tax due from the bankrupt."
Such "objection" after alleging the assessed values of the land and improvements, hereinbefore noted, continues: "That the actual value of such land and improvements so assessed did not exceed for each of the years 1930, 1931, 1932, $30,000, and for the year 1933, $20,000." And by way of comparison of the "assessed" with "true and actual" values for the years mentioned, the objections and the petition next to be referred to, set forth, in substance, the indicated excess, and also the amount of tax allowable upon the indicated "actual values":
Trustee's Reduced
Assessment Tax revaluation Excess tax
Year
1930... $139,175 $ 3564.60 $30,000 $109,175 $ 780
1931... 139,175 3016.20 30,000 109,175 663
1932... 119,175 2517.65 30,000 89,175 645
1933... 95,225 2806.50 20,000 75,225 600
-------- -----
11904.95 2688
The trustee concludes by objecting "to the allowance of any and all claims for taxes for said years * * * in excess of the amounts above set forth or in excess of the total amount of $2688.00."
Immediately following the making of claim for taxes, and the above objections thereto, the trustee filed a petition reiterating his objection and averring:
The trustee prayed: "That these matters may be heard and the correct amount of the taxes to be allowed and ordered paid may be determined and that the taxes and assessments for the respective years may be reduced in accordance herewith."
Upon such objections and the petition filed by the trustee, the referee directed the tax claimants to show cause why the matter should not be heard and determined. Whereupon, the county of Winnebago and the city of Oshkosh, through counsel, respectively, appeared and objected to the jurisdiction of the bankruptcy court to entertain the application as one for a reduction of taxes. The matter was heard by the referee, and a considerable amount of testimony was taken principally upon the value of the property of the bankrupt during the several tax years under consideration, to wit, 1930 to 1934, inclusive. The testimony given in support of the petition consisted of that given by the trustee himself, and that given by another witness, both of whom professed to express opinions on value for the respective years, viz.:
For the years 1930, 1931, 1932, $30,000.
For the years 1933, 1934, $20,000.
It will be noted that such valuations cut down the assessments for the years 1930 and 1931 approximately 11/14 and for the year 1932 approximately ¾; and the year 1933 approximately ¾ to 4/5 . Without attempting to summarize the testimony given by any of the parties, the values given on behalf of the trustee can find no support in the evidence (assuming either of the witnesses was qualified), excepting such as may be deduced from the fact or facts dealing with the decline of the bankrupt's business, its operating loss, and the like, for five or six years prior to bankruptcy. Much of the testimony offered on behalf of the city and county was directed to supporting the assessments as they and assessments of other like property were made from year to year by the assessors, and confirmation thereof by reviewing officials. Further reference to the testimony at this particular time is not necessary.
The referee overruled the objections to the jurisdiction, saying: "From these I determine that the bankruptcy court has absolute jurisdiction; that it is its duty to determine the question when presented; that it is not limited to the valuation placed on the property by the tax officers; that neither errors of law or fact on the part of local officers, nor negligence on the part of the taxpayers have any bearing upon the court's determination of the issue; that the bankruptcy court is not precluded from reducing the tax, although the bankrupt would be so precluded apart from the bankruptcy law; that any question which arises as to the amount, must be heard and determined by the Court with a view of ascertaining the amount really due; that the Court therefore is not precluded by the findings of the tax authorities; that the right of the bankruptcy court to determine the amount of all taxes cannot be thwarted or limited in any way by local statutes specifying the form and manner of filing tax returns or denying to tax payers all remedies for abatement and recovery of taxes improperly assessed unless such requirements are complied with."
He thereupon proceeded to a consideration and determination of the matter of value, and his observations are incorporated herein as showing his unwillingness to follow the testimony supportive of the trustee's petition respecting such values during the five years in question. The referee said:
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In re Lasky
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