Nashville White Trucks, Inc., In re, 83-5289

• Decision Date: 12 April 1984
• Docket Number: No. 83-5289,83-5289
• Citation: 731 F.2d 376
• Parties: 10 Collier Bankr.Cas.2d 547, 11 Bankr.Ct.Dec. 1090, Bankr. L. Rep. P 69,856 In re NASHVILLE WHITE TRUCKS, INC., (a/k/a Mobile Truck & Trailer Service, Inc.), Debtor. Martha B. OLSEN, Commissioner of Revenue for the State of Tennessee, Plaintiff-Appellant, v. Irwin A. DEUTSCHER, Trustee, Defendant-Appellee, United States of America, Intervenor-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 376

731 F.2d 376

10 Collier Bankr.Cas.2d 547, 11 Bankr.Ct.Dec. 1090,

Bankr. L. Rep. P 69,856

In re NASHVILLE WHITE TRUCKS, INC., (a/k/a Mobile Truck &

Trailer Service, Inc.), Debtor.

Martha B. OLSEN, Commissioner of Revenue for the State of

Tennessee, Plaintiff-Appellant, v. Irwin A. DEUTSCHER, Trustee, Defendant-Appellee, United States of America, Intervenor-Appellee.

No. 83-5289.

United States Court of Appeals, Sixth Circuit.

Submitted March 5, 1984.

Decided April 12, 1984.

William M. Leech, Jr., Atty. Gen. of Tenn., Jimmy G. Creecy, Karen Neal, Asst. Attys. Gen., Nashville, Tenn., for plaintiff-appellant.

James R. Kelley, John Brittingham, Joe B. Brown, U.S. Atty., Nashville, Tenn., for defendant-appellee.

Tracy J. Whitaker, Peter M. Lancaster, Civil Div., U.S. Justice Dept., Washington, D.C., for intervenor-appellee.

Before ENGEL and MARTIN, Circuit Judges, and WEICK, Senior Circuit Judge.

PER CURIAM.

The Commissioner of Revenue for the State of Tennessee appeals from an order prohibiting her, pursuant to the Bankruptcy Act's automatic stay provisions, 11 U.S.C. Sec. 362 (1982), from taking any action to collect or assess from the trustee in bankruptcy unpaid sales taxes incurred by the debtor while operating under the provisions of Chapter 11 of the Bankruptcy Act. This action challenging the application of section 362's automatic stay provisions to the State of Tennessee was instituted by the Commissioner in United States Bankruptcy Court for the Middle District of Tennessee. The bankruptcy court entered a declaratory judgment that section 362 could be constitutionally applied to the Tennessee Commissioner of Revenue and that the statute prohibited her from attempting to collect the unpaid sales taxes. The United States District Court for the Middle District of Tennessee initially reversed and remanded the case to the bankruptcy court; however, after granting the trustee's and the United States' petitions for reconsideration, the district court vacated its earlier order, adopted the conclusions of the bankruptcy judge, and dismissed the Commissioner's appeal.

The facts of this case have been stipulated and are succinctly set forth in the Commissioner's brief:

Nashville White Trucks, Inc. operated its business as a debtor-in-possession under Chapter 11 of the Bankruptcy Act from January 10, 1980 until July 2, 1980. Various records and journals maintained by the debtor-in-possession indicate that the debtor-in-possession charged sales taxes on its transactions during the period from January 10, 1980 to July 2, 1980 except such transactions that the debtor-in-possession considered to be exempt. Such tax funds, however, were not placed in a separate segregated account but instead were deposited in the general operating account of the debtor-in-possession. This accrued tax liability of $13,817.57 in unpaid sales and use taxes, penalties and interest owed to the Department of Revenue of the State of Tennessee arose under the provisions of T.C.A. Sec. 67-3001 et seq. and under 28 U.S.C. Sec. 960.

On July 2, 1980, Irwin A. Deutscher was appointed Chapter 11 Trustee (hereinafter "trustee") of the estate of Nashville White Trucks, Inc., thereby terminating the debtor-in-possession proceeding. From and after July 2, 1980 the trustee submitted monthly sales and use tax returns to the Department of Revenue summarizing the continued operations of Nashville White Trucks, Inc., and paid all corresponding sales and use taxes that accrued after his appointment. However, the taxes that accrued and were collected prior to his appointment by the debtor-in-possession were not paid.

In addition to the post-petition accrued sales tax liability, the estate of Nashville White Trucks, Inc. has incurred various administrative and priority claims, many of which remain unpaid. Virtually all of the estate's assets are encumbered to...