In re Wyoming Valley Ice Co.

• Decision Date: 11 April 1906
• Docket Number: 558.
• Citation: 145 F. 267
• Parties: In re WYOMING VALLEY ICE CO.
• Court: U.S. District Court — Middle District of Pennsylvania

145 F. 267

In re WYOMING VALLEY ICE CO.

No. 558.

United States District Court, M.D. Pennsylvania.

April 11, 1906

George R. Bedford, for exceptions.

George J. Llewelleyn and W. S. McLean, opposed.

ARCHBALD District Judge.

An account was duly settled against the bankrupt corporation by the fiscal officers of the state of Pennsylvania, for $904.50, the taxes due from resident holders of its bonds for the years 1901 to 1902 inclusive. Priority of payment is claimed for this as a tax, under the provisions of Bankr. Act July 1, 1898, c. 541, Sec. 64a, 30 Stat. 563 (U.S. Comp. St. 1901, p. 3447), and the referee has allowed it. There can be no question as to its right to be so preferred, if such is its character (In re Prince & Walter, 12 Am.Bankr.Rep. 675, 131 F. 546; City of Chattanooga va. Hill 15 Am.Bankr.Rep. 195, 139 F. 600) but that is denied. And the mere fact that it is called a tax is not conclusive, if not really so (In re Cosmopolitan Power Co., 14 Am.Bankr.Rep. 604, 137 F. 858), nor even though in its origin, that may be said of it, with truth.

By the Pennsylvania revenue act of June 30, 1885 (P.L. 193) 'all mortgages, money owing by solvent debtors, whether by promissory note or penal or single bill, bond or judgment,' are made 'taxable for state purposes, at the rate of three mills on the dollar of the value thereof annually,' which by subsequent acts is increased to four mills, without in other respects changing it. Act June 1 1889, (P.L. 420); Act June 8, 1891 (P.L. 229). To facilitate the collection of this tax on the bonded and other indebtedness of corporations, it is provided in the act first named:

'Sec 4. That hereafter it shall be the duty of the treasurer of each private corporation, incorporated by or under the laws of this commonwealth, or the laws of any other state, or of the United States, and doing business in this commonwealth, upon the payment of any interest on any scrip, bond, or certificate or indebtedness, issued by said corporation to residents of this commonwealth, and held by them, to assess the tax imposed and provided for state purposes upon the nominal value of each and every said evidence of debt, and to report on oath annually on the first day of November, to the Auditor General the amount of indebtedness of the corporation owned by residents of this commonwealth, as nearly as the same can be ascertained; and it shall be his further duty to deduct three mills (changed to four mills as stated above) on every dollar of the interest paid as aforesaid, and return the same into the state treasury within fifteen days after the thirty-first day of December in each year; and his compensation for his services shall be the same that city and borough treasurers receive for similar services; and for every failure to assess and pay said tax and make report as aforesaid, the Auditor General shall add ten percentum as a penalty to the amount of the tax; on payment of said tax by a corporation the bonds, certificates or other evidences of indebtedness, issued by it shall be exempt from all other taxation in the hands of the holders of the same.'

The treasurer of every corporation doing business in the state is thus bound to collect, in the manner prescribed, from resident bondholders, the tax which is so imposed, and, upon his failure to do so, the corporation is, no doubt, liable. But the cases, one and all, make it clear that the obligation of the corporation is one of collection only, and does not made the tax its own. Says Clark, J., in Commonwealth v. Del. Div. Canal Co., 123 Pa. 594, 618, 16 A. 584, 587, 1 L.R.A. 798:

'The act constitutes the company of its treasurer, as such, the collector of the tax, and, upon failure to discharge the duty imposed by law, the settlement if properly made against the company, whose servant he

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