In re Kerber Packing Company
Decision Date | 29 March 1960 |
Docket Number | No. 12781.,12781. |
Citation | 276 F.2d 245 |
Parties | Matter of the KERBER PACKING COMPANY, Debtor. UNITED STATES of America, Appellant, v. Nathan YORKE, Trustee, Appellee. |
Court | U.S. Court of Appeals — Seventh Circuit |
Charles K. Rice, Asst. Atty. Gen., Karl Schmeidler, Attorney, Tax Division, U. S. Department of Justice, Washington, D. C., Robert Tieken, U. S. Atty., Chicago, Ill., Lee A. Jackson, I. Henry Kutz, Attorneys, Department of Justice, Washington, D. C., John Peter Lulinski, Glenn R. Heyman, Asst. U. S. Attys., Chicago, Ill., Richard C. Bleloch, Nicholas Manos, Asst. U. S. Attys., Chicago, Ill., for appellant.
Jacob Cohen, Chicago, Ill., J. H. Schwartz, Chicago, Ill., for appellee.
Before SCHNACKENBERG and KNOCH, Circuit Judges, and JUERGENS, District Judge.
This is an appeal from the United States District Court for the Northern District of Illinois, Eastern Division, inquiring whether the United States is entitled to post-petition interest on unpaid taxes where its claims for taxes and interest have been secured by liens which arose and were perfected prior to the filing of the petition in reorganization.
The facts are not in dispute and generally stated are as follows:
The Kerber Packing Company filed a petition in reorganization under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq., on February 20, 1957.
The Government filed claims against the estate; these claims are for Federal Insurance Contributions Act, 26 U.S.C.A. (I.R.C.1954) § 3101 et seq., withholding, unemployment and corporation income taxes owing by the debtor plus interest thereon. Prior to the reorganization proceedings the Government had obtained liens for a part of the taxes due to secure payment of these taxes and interest. Included in the Government's claims is $5,440.19 for interest on $37,501.17, which interest accrued between the date of filing the petition in reorganization and April 30, 1959. The propriety of this interest charge is the only contested matter.
Although this is a proceeding under Chapter X of the Bankruptcy Act, the rights of creditors are no greater than in ordinary bankruptcy proceedings and the right to claim interest subsequent to filing of a petition under Chapter X must be dealt with the same as claims in bankruptcy proceedings generally. United States v. Edens, 4 Cir., 1951, 189 F.2d 876.
The United States does not claim any post-petition interest on claims upon which liens had not been perfected prior to the filing of the petition in reorganization.
The referee disallowed the Government's claim to the extent that it represented post-petition interest and allowed the balance. His action was affirmed by the District Court. The United States in its appeal asserts that the District Court erred in holding that the tax lien of the United States is not entitled to payment of post-bankruptcy interest from assets of the debtor company.
For the reasons hereinafter set forth we agree with the District Court.
As a general proposition of long standing, it has been held in bankruptcy and other insolvency proceedings that interest upon claims stops with the initiating of the proceedings. This proposition, however, is subject to three exceptions.
The Supreme Court in Thomas v. Western Car Co., 1893, 149 U.S. 95, 116, 13 S.Ct. 824, 833, 37 L.Ed. 663, said:
* * *"
The Supreme Court in City of New York v. Saper, 1949, 336 U.S. 328, 330, 69 S.Ct. 554, 555, 93 L.Ed. 710, had this to say relative to the interest question:
* *"
The three exceptions to the rule that in bankruptcy and other insolvency proceedings interest upon claims stops with the initiating of the proceedings are as follows: (1) where the bankrupt ultimately proves to be solvent; (2) where securities, held by the creditor, themselves produce income after the filing of the petition; and (3) where the amount of the secured creditor's security is sufficient to satisfy both principal and interest on the secured claim. In re Lykens Hosiery Mills, Inc., Debtor, D.C.S.D.N.Y. 1956, 141 F.Supp. 895; United States v. Bass, 9 Cir., 1959, 271 F.2d 129.
The Government contends that having perfected its tax lien prior to the date of filing, it became a secured creditor in...
To continue reading
Request your trial-
United States v. Ron Pair Enterprises, Inc
...exception for oversecured claims, it would not apply to tax liens); United States v. Bass, 271 F.2d, at 132; In re Kerber Packing Co., 276 F.2d 245, 247-248 (CA7 1960); see also In re Boston & Maine Corp., 719 F.2d 493, 496 (CA1 1983) (municipal property tax claim), cert. denied sub nom. Ci......
-
Boston and Maine Corp., In re
...and interest due on the secured claim. In re Walsh Construction, Inc., 669 F.2d 1325, 1330 (9th Cir.1982); In re Kerber Packing Co., 276 F.2d 245, 246-47 (7th Cir.1960); United States v. Bass, 271 F.2d 129, 130 (9th Cir.1959); In re Macomb Trailer Coach, Inc., 200 F.2d 611, 613 (6th Cir.195......
-
Matter of New York, New Haven and Hartford R. Co.
...in which case the post-bankruptcy income can be applied against post-bankruptcy interest on the main claim. In re Kerber Packing Co., 276 F.2d 245, 246 (7 Cir. 1960); In re New York, N.H. & H.R.R., supra, 304 F.Supp. at 1129-30; see also City of New York v. Saper, supra, 336 U.S. at 330, 69......
-
In re Metropolitan Metals, Inc.
...719 (4th Cir.1959), In re Ron Pair Enterprises, 828 F.2d 367 (6th Cir.1987), (Code case interpreting pre-code law), In re Kerber Packing Company, 276 F.2d 245 (7th Cir.1960), U.S. v. Bass, 271 F.2d 129 (9th Cir.1959), U.S. v. Mighell, 273 F.2d 682 (10th Cir.1959). At best, it is plainly a m......