Thompson v. State of Louisiana
Citation | 98 F.2d 108 |
Decision Date | 18 July 1938 |
Docket Number | No. 11101,11120.,11101 |
Parties | THOMPSON v. STATE OF LOUISIANA et al. |
Court | U.S. Court of Appeals — Eighth Circuit |
James M. Chaney, of St. Louis, Mo., for appellant.
Charles J. Rivet, Sp. Asst. to Atty. Gen. of State of Louisiana (Gaston L. Porterie, Atty. Gen., and D. M. Ellison, Sp. Asst. to Atty. Gen., on the brief), for appellees.
Before GARDNER, WOODROUGH, and THOMAS, Circuit Judges.
The question presented by this appeal is whether appellant, trustee for the Missouri Pacific Railroad Company, debtor, a Missouri corporation, in reorganization proceedings under Section 77 of the Bankruptcy Act, 11 U.S.C.A. § 205, is liable for the corporate franchise or annual excise tax imposed by the laws of Louisiana upon foreign corporations doing business in that state, Act La. No. 10 of 1935, 1st Ex.Sess. The trustee having refused to pay the tax for the year 1935, the State and its Secretary of State, who was charged with the duty of collecting such taxes, brought this suit under the Declaratory Judgment Act, Jud.Code § 274d, 28 U.S.C.A. § 400, seeking to have it adjudged that the trustee is subject to the payment of such taxes.
The lower court made findings of fact and conclusions of law in favor of petitioners, and entered decree as prayed. From the decree so entered the trustee prosecutes this appeal. He seeks reversal on the grounds that he is not liable because (1) a trustee in reorganization proceedings under Section 77 of the Bankruptcy Act, 11 U.S. C.A. § 205, becomes vested with the title to the property of the corporation, and hence, the corporation has no property nor business in the state subject to tax; (2) that the Louisiana statute, Act La. No. 10 of 1935, 1st Ex.Sess., does not purport to impose a tax upon him as trustee; and (3) that Section 124a, Title 28 U.S.C.A., in no manner affects the liability of the trustee nor enlarges it, for the reason that it does not relate to corporate franchise taxes, but that if it did it would be unconstitutional.
The facts are not in dispute. Before the Missouri Pacific Railroad Company was adjudged a debtor under the Railroad Corporation Reorganization Act, it was engaged in the railroad business in Louisiana and other states, and owned railroad property in Louisiana. It was adjudged a debtor on March 31, 1933. The trustee appointed has continued to operate the railroad, both in interstate and intrastate commerce, in Louisiana. There is no dispute as to the amount of the tax, and if valid it became due October 1, 1935. By orders entered from time to time, the trustee was directed to pay the cost of maintaining the corporate existence of the debtor, to take any necessary action to protect the corporate organization, to maintain its railroads and property wherever situate, to manage and conduct its business, to reimburse counsel for expenses incurred in connection with the maintenance of its corporate existence and organization, and the trustee was authorized to exercise the powers of an equity receiver.
The statute here involved, Acts La. No. 10, of 1935, 1st Ex.Sess., requires foreign corporations, if authorized to do or doing business in the state, or if using any part or all of their capital or plant in the state, to file a report containing certain information with the Secretary of State on or before October 1, 1935 and annually thereafter. Section 2(4) provides:
The Supreme Court in United States v. Whitridge, 231 U.S. 144, 34 S.Ct. 24, 58 L.Ed. 159, held that the Federal corporation tax law which imposed an excise tax on the doing of business by corporations, was not applicable to a receiver of a corporation appointed in a state court, holding that the receiver was not liable for corporation taxes accruing subsequent to his appointment. It was said that the receiver operated the property as an officer of the court and not as an officer of the corporation.
In Michigan, by Haggerty v. Michigan Trust Co., 286 U.S. 334, 52 S.Ct. 512, 76 L.Ed. 1136, the court considered the applicability of a statute of Michigan, which imposed a tax upon corporations for the privilege of doing business within that state. A receiver had been appointed by a Federal court and the state authorities asked for an order directing him to pay the franchise taxes due. This being denied, the case was taken to the Supreme Court, where the decree appealed from was reversed. In the course of the opinion by Mr. Justice Cardozo it was, among other things, said (page 514):
In Bright v. State of Arkansas, 8 Cir., 249 F. 950, the property of a railroad corporation was...
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