Liquidators of Exchange Nat. Bank v. United States, 6777.
| Decision Date | 31 May 1933 |
| Docket Number | No. 6777.,6777. |
| Citation | 65 F.2d 316 |
| Parties | LIQUIDATORS OF EXCHANGE NAT. BANK OF SHREVEPORT v. UNITED STATES. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Richard H. Switzer, of Shreveport, La., for appellants.
Philip H. Mecom, U. S. Atty., and Elmer A. Mottet, Asst. U. S. Atty., both of Shreveport, La., and W. F. Evans, Sp. Atty., Bureau of Internal Revenue, of Washington, D. C., for the United States.
Before BRYAN, FOSTER, and HUTCHESON, Circuit Judges.
By this suit the liquidators seek to recover back as wrongfully collected a tax exacted of the bank, as transferee of the National Securities Company. Neither the amount nor the validity of the tax as against the securities company is in question, nor is it denied that the bank received assets from the company in excess of the value of the tax; but it is vigorously contended that the bank was not a transferee within the meaning of the statute under which the collection was made.1
This section "provides the United States with a new remedy for enforcing the existing `liability, at law or in equity'" of a transferee. Phillips v. Comm., 283 U. S. 594, 51 S. Ct. 608, 610, 75 L. Ed. 1289. It does not create or impose an obligation not already fixed by municipal law. It merely provides a summary remedy for its direct enforcement. Phillips v. Comm. supra. Hatch v. Morosco Holding Co. (C. C. A.) 50 F.(2d) 138. In short, the act is procedural only, operating to put in the place of the taxpayer a transferee of his who has received money or property under circumstances making the transfer void or voidable as to creditors.
Appellants urge that the transfer was a valid one, unimpeachable at law or in equity. The government insists that it was not, claiming that the transfer was a voluntary one made while the transferor was insolvent, and therefore in fraud of its creditors. It insists that articles 1980 and 1984, Louisiana Civil Code strike the transaction down.2
That the securities company was insolvent when it made the transfer to the bank is not disputed, but it is denied that the transfer was either gratuitous or in fraud of creditors, it being insisted that the transfer was in discharge of a prior contract validly made upon good and sufficient consideration. The facts underlying these contentions are that Payne and others, stockholders of the Exchange National Bank, being stockholders of the National Securities Company, a corporation they had formed to take over some of the questionable paper of the bank, sold their stock in the bank with an agreement of guaranty on the part of Payne as to bills receivable and accounts due, and as against indebtedness which might affect the capital, surplus, and undivided profits of the bank. As security for this guaranty, Payne deposited in the bank $43,750 cash. This transaction occurred on February 7, 1925. Thereafter the securities company, desiring to obtain the benefit of any sums which might be realized by a return of the deposit in whole or in part, and believing that there would be a substantial equity coming to Payne, authorized by its directors, assumed Payne's guaranty to the bank and stepped into his shoes. This assumption was undertaken not to benefit Payne, but because it was believed that benefits would accrue to the company from it. It was testified to without dispute that, at the time the securities company passed the resolution and took over the guaranty, all parties in interest thoroughly discussed the matter, and there was no doubt that the object of the guaranty was to come in on the excess funds if there were any left. That the parties in interest thought and believed that the funds on deposit were more than enough to take care of any bad paper the bank would have, and that there would be a considerable amount in excess to turn over to the company. Matters turning out differently from what it had hoped they would, and the deposit fund having been exhausted, it became necessary for the company, in discharge of the guaranty it had undertaken, to turn over to the bank, all of its assets. It is this transfer which the government declares makes the bank a transferee under the act.
We do not think it does. It is undoubtedly the law that a corporation may not, as against its creditors, gratuitously transfer to, or incumber its assets for the benefit of,...
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