Price v. United States, 454

CourtUnited States Supreme Court
Writing for the CourtBUTLER
Citation269 U.S. 492,46 S.Ct. 180,70 L.Ed. 373
Docket NumberNo. 454,454
Decision Date11 January 1926

269 U.S. 492
46 S.Ct. 180
70 L.Ed. 373



No. 454.
Argued Nov. 23, 1925.
Decided Jan. 11, 1926.

Page 493

Mr. Godfrey Goldmark, of New York City, for petitioner.

[Argument of Counsel from pages 493-494 intentionally omitted]

Page 495

Messrs. W. D. Mitchell, Sol. Gen., of Washington, D. C., and Jerome Michael and Henry Gale, both of New York City, for the United States.

[Argument of Counsel from pages 495-497 intentionally omitted]

Page 498

Mr. Justice BUTLER delivered the opinion of the Court.

October 2, 1923, Charles H. Mears, a simple contract creditor, brought suit on behalf of himself and other creditors against J. M. Gidding & Co., a New York corporation. Among the facts alleged in the complaint are these. Defendant was engaged in the business of importing and selling wearing apparel at retail in New York and four other cities. It owed plaintiff $10,000 on a promissory note; its debts were large, and it was without money to pay those then due and shortly to become due.

Page 499

If its assets could be sold in the usual course of business they would be in excess of its debts. Some of the creditors were pressing their claims, and others had commenced suit; and, if the assets were not taken into judicial custody, some creditors might obtain inequitable preferences as against plaintiff and other creditors; and the assets might not be enough to pay all. And, averring no adequate remedy at law, the complaint prayed the court to determine the rights of all creditors, and to appoint a receiver to take possession and control of all defendant's assets, and that, when just and proper, the assets be ordered sold and the proceeds distributed to those entitled thereto. On the same day, defendant filed its answer admitting the allegations and joining in the prayer of the complaint. The court immediately entered its decree granting the relief prayed, and appointed appellant temporary receiver with authority to take possession and control of, and to make disbursements to preserve, the assets. January 9, 1924, the court appointed appellant permanent receiver. Thereupon the assets were found insufficient to pay all the claims; general creditors will not receive more than 40 per cent.

The United States filed proof of claims for income taxes for the year 1920, and for unpaid customs duties. A special master sustained the claim of the United States to priority, and fixed the amount of the income tax at $11,331.07, and the amount of the duties at $1,086.70. The District Court directed appellant, out of the assets of defendant, to pay these amounts as priority claims. The Circuit Court of Appeals affirmed the decree on the authority of Liberty Mutual Insurance Co. v. Johnson Shipyards Corporation, 6 F.(2d) 752. The case is here on writ of certiorari. Section 240, Judicial Code (Comp. St. § 1217).

The word 'debts,' as used in R. S. § 3466 (Comp. St. § 6372), includes taxes.

The claim of the United States does not rest upon any sovereign prerogative; but the priority statutes were

Page 500

enacted to advance the same public policy which governs in the cases of royal prerogative; that is, to secure adequate public revenue to sustain the public burdens. United States v. State Bank of North Carolina, 6 Pet. 29, 35, 8 L. Ed. 308. And to that end section 3466 is to be construed liberally. Its purpose is not to be defeated by unnecessarily restricting the application of the word 'debts' within a narrow or technical meaning. Cf. Miller v. Robertson, 266 U. S. 243, 248, 45 S. Ct. 73, 69 L. Ed. 265. The meaning property to be attributed to that word depends upon the connection in which it is used in the particular statute and the purpose to be accomplished.

In the absence of another remedy made exclusive, an action of debt lies to recover taxes where the amount due is certain or readily may be made certain. United States v. Chamberlin, 219 U. S. 250, 262, 31 S. Ct. 155, 55 L. Ed. 204; Savings Bank v. United States, 19 Wall. 227, 239, 22 L. Ed. 80; Stockwell v. United States, 13 Wall. 531, 542, 20 L. Ed. 491; Meredith v. United States, 13 Pet. 486, 493, 10 L. Ed. 258...

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    ...States v. Stevenson, 215 U.S. [190, at] page 197, 30 S.Ct. 35, 54 L.Ed. [153] 156." (Italics ours.) In the case of Price v. United States, 269 U.S. 492, 46 S.Ct. 180, 181, 182, 70 L.Ed. 373, decided January 11, 1926, the court in discussing the procedure for the collection of taxes, where t......
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    ...priority act (U.S.C.A. 31, Section 191; R.S. § 3466), gives priority to claims of the United States. Price, Receiver, v. United States, 269 U.S. 492, 46 S.Ct. 180, 70 L.Ed. 373; United States v. Butterworth-Judson Corporation, 269 U.S. 504, 46 S.Ct. 179, 70 L.Ed. 380; New York v. Maclay et ......
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