In re Lazaroff, 462.
| Decision Date | 06 July 1936 |
| Docket Number | No. 462.,462. |
| Citation | 84 F.2d 982 |
| Parties | In re LAZAROFF. CITY OF NEW YORK v. GOLDSTEIN. |
| Court | U.S. Court of Appeals — Second Circuit |
Paul Windels, Corp. Counsel, of New York City (Paxton Blair, Oscar S. Cox, and Sol Charles Levine, all of New York City, of counsel), for appellant.
Leibowitz & Steinberg, of New York City (Jacob H. Steinberg, Jesse S. Raphael, and Max Milstein, all of New York City, of counsel), for appellee.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
Isidor Lazaroff was adjudged a bankrupt on a petition filed May 3, 1935. The appellant filed a verified claim June 28, 1935, stating that between December, 1934, and March 8, 1935, the bankrupt had become indebted to it in the sum of $283.22 for sales taxes which had been imposed under Local Law No. 24 published No. 25, p. 164 for the year 1934. This local law is known as the Sales Tax (Emergency Relief) Law. Neither the amount of the debt nor the collection of the taxes by the bankrupt is disputed by the trustee, and he does not object to the allowance of the debt as a general claim against the estate, but he prays that it be rejected in so far as it asks priority. The referee in bankruptcy denied the claim priority and allowed it as a general claim. We granted leave to appeal from an order entered by the District Court confirming the report of the referee.
Local Law No. 24 (1934) imposed a tax of 2 per cent. upon the amount of receipts from certain sales in New York City. The tax was to be paid by the purchaser to the vendor for and on account of the city of New York, and the vendor was liable for its collection, and was charged with the duty of periodically paying over to the city the amount collected. Where the purchaser failed to pay and a vendor failed to collect the tax, it became payable by the purchaser directly to the Comptroller.
The appellant's contention is that its claim against the vendor is entitled to priority under either section 64b (6) or (7) of the Bankruptcy Act, as amended by Act May 27, 1926 (11 U.S.C.A. § 104(b) (6,7), as being both a claim "for taxes due and owing by the bankrupt to the City of New York or a claim by a person who, under the laws of the State of New York, is entitled to a priority."
The court below followed In re Goldstein, 13 F.Supp. 991 (D.C.S.D.N.Y.) which relied on Nolte v. Hudson Nav. Co., 8 F. (2d) 859 (C.C.A. 2), as establishing that the claims of the city against the vendor is not one for taxes but a mere debt as to which the city is given no right of priority. In the Nolte Case, the holding was that the obligation which a carrier owed the United States to pay over transportation taxes collected from passengers and shippers was a debt and not a tax, and therefore not a preferred claim in the receivership of the carrier. The distinction between the obligation of a taxpayer to pay a tax imposed and the debt which one who has collected a tax owes therefor to the taxing agency is well settled. Commonwealth of Pennsylvania v. York Silk Mfg. Co., 192 F. 81 (C.C.A. 3), certiorari denied 232 U.S. 724, 34 S.Ct. 602, 58 L.Ed. 815; In re Waller, 142 F. 883 (D.C.Md.); In re Wyoming Valley Ice Co., 145 F. 267 (D.C.M.D.Pa.). The fact that the city is granted the remedy of distraint against a vendor who fails to pay over the taxes he has collected does not serve to change the nature of his obligation.
Although a dictum in Price v. United States, 269 U.S. 492, 501, 46 S.Ct. 180, 70 L.Ed. 373, criticizes the differentiation between taxes and debts owed the taxing unit, the Bankruptcy Act, in section 64b (6), 11 U.S.C.A. § 104(b) (6), gives priority merely to taxes as such, and not to debts unless priority is accorded them by the state law. We must follow this distinction then, since the city's claim is not for a tax, and inquire whether the debt owing by the bankrupt to the city is entitled to payment prior to other creditors.
While it is well settled that the state of...
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In re Jayrose Millinery Co.
...orders was sought by the city, for the reason, no doubt, that they conformed to the law as it was then supposed to be. In re Lazaroff, 84 F.2d 982 (C.C.A.2). Subsequently, however, after decision by the Court of Appeals in Matter of Atlas Television Co., Inc., 273 N.Y. 51, 6 N.E.2d. 94, the......
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City of New York v. Feiring
...of the court below to follow our decision in New York City v. Goldstein, 299 U.S. 522, 57 S.Ct. 321, 81 L.Ed. 384, reversing Matter of Lazaroff, 2 Cir., 84 F.2d 982, and of the asserted conflict in principle of the decision below with that of the Court of Appeals for the Tenth Circuit in Ba......
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In re Harris
... ... * * *' ... We ... might agree with that conclusion [referring to the opinion of ... the U.S.C.C.A. in Matter of Lazaroff [2 Cir.], 84 ... F.2d 982, hereinafter discussed, which held the city not ... entitled to preference on such a claim in a bankruptcy ... ...
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In re National Studios, 171.
...made liable for their payment to the Comptroller; the duty of the purchaser being to pay the vendor. We first had occasion in In re Lazaroff, 2 Cir., 84 F.2d 982, to decide whether this local law imposed upon the vendor taxes which should be allowed as a prior claim against the estate of a ......