In re E.J. Hibner Oil Co.

• Decision Date: 20 January 1920
• Docket Number: 2740.,2731
• Citation: 264 F. 667
• Parties: In re E. J. HIBNER OIL CO. v. HINES, Director General of Railroads. CENTRAL TRUST CO. OF ILLINOIS
• Court: U.S. Court of Appeals — Seventh Circuit

264 F. 667

In re E. J. HIBNER OIL CO.

CENTRAL TRUST CO. OF ILLINOIS v. HINES, Director General of Railroads.

Nos. 2731, 2740.

United States Court of Appeals, Seventh Circuit.

January 20, 1920

Rehearing denied May 4, 1920.

Edward R. Tiedebohl, of Chicago, Ill., for petitioner and appellant.

F. W Flott, of Chicago, Ill., for respondent and appellee.

Before BAKER, ALSCHULER, and EVANS, Circuit Judges.

ALSCHULER Circuit Judge.

The claim is by the United States for unpaid freight charges due from bankrupt on oil shipments made in August, 1918, over the New York Central Railroad, which was then being operated under federal control. The only question before us is as to the propriety of the order of the District Court according the claim priority in payment over bankrupt's general creditors.

If the claim is property of, and constitutes a debt due to, the United States, then concededly its priority was properly found. Rev. Stat. U.S. Sec. 3466 (Comp. St. Sec. 6372); U.S Bankruptcy Act, Sec. 64b (Comp. St. Sec. 9648). Section 12 c. 25, of the Act of Congress of March 21, 1918 (40 Stat. 451 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, Sec. 3115 3/4l)), known as the 'Federal Control Act,' provides:

'Moneys and other property derived from the operation of the carriers during federal control are hereby declared to be the property of the United States. Unless otherwise directed by the President, such moneys shall not be covered into the Treasury, but such moneys and property shall remain in the custody of the same officers, and the accounting thereof shall be in the same manner and form as before federal control. * * *

'At such periods as the President may direct, the books shall be closed and the balance of revenues over disbursements shall be covered into the Treasury of the United States to the credit of the revolving fund created by this act. If such revenues are insufficient to meet such disbursements, the deficit shall be paid out of such revolving fund in such manner as the President may direct.'

The 'revolving fund' referred to is the $500,000,000 appropriated by the same act (section 6, c. 25 (section 3115 3/4f)) for paying just compensation to railroad companies, and for maintenance and betterments as therein specified.

It is contended for the trustee that under correct interpretation of the act--

'uncollected transportation charges constitute a debt between the carrier and the...