United States v. Anderson
| Decision Date | 19 October 1964 |
| Docket Number | No. 20400,20659.,20563,20400 |
| Citation | 334 F.2d 111 |
| Parties | UNITED STATES of America, Appellant, v. C. Gordon ANDERSON, Trustee, Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Morton Hollander, Chief, Appellate Section, Carl C. Davis, Atty., William E. Gwatkin, III, Atty., Dept. of Justice, Washington, D. C., Lloyd G. Bates, Jr., Asst. U. S. Atty., Miami, Fla., John W. Douglas, Asst. Atty. Gen., William A. Meadows, Jr., U. S. Atty., for appellant.
William P. Simmons, Jr., Miami, Fla., Francis D. Wheeler, Jacksonville, Fla., Ben Lawson, Miami, Fla., M. James Spitzer, New York City, W. G. Troxler, Miami, Fla., Claude Pepper, Miami Beach, Fla., John F. Hunt, Jr., New York City, Edward W. Patton, Jackson L. Peters, Miami, Fla., Irwin L. Langbein, West Palm Beach, Fla., Malcolm S. Mason, Irma S. Mason (of the District of Columbia Bar), New York City, James R. Humkey, Miami, Fla., for appellee.
Carl C. Davis, Atty., Dept. of Justice, Washington, D. C., Irwin L. Langbein, West Palm Beach, Fla., Malcolm S. Mason, New York City, William E. Gwatkin, III, Atty., Dept of Justice, Washington, D. C., for appellant.
William P. Simmons, Jr., Miami, Fla., Francis D. Wheeler, Jacksonville, Fla., Ben Lawson, Miami, Fla., M. James Spitzer, New York City, W. G. Troxler, Miami, Fla., Claude Pepper, Miami Beach, Fla., John F. Hunt, Jr., New York City, Edward W. Patton, Jackson L. Peters, James R. Humkey, Miami, Fla., David Ferber, Assoc. Gen. Counsel, Paul Gonson and Robert W. Cox, Attys., S.E.C., Washington, D. C., Inman P. Crutchfield, Herman Ulmer, John D. Corse, Lewis S. Lee, Jacksonville, Fla., Stuart W. Patton, George H. Salley, Miami, Fla., Ulmer, Murchison, Kent, Ashby & Ball, Jacksonville, Fla., for Florida Towing Corp., Wayland T. Coppedge and Son Corp., Miller Electric Co. of Florida, White Stack Towing Corp., and St. Johns Bar Pilots Assn., appellees.
Lloyd G. Bates, Jr., Asst. U. S. Atty., Miami, Fla., William E. Gwatkin, III, Atty., Dept. of Justice, Washington, D. C., for appellant.
William P. Simmons, Jr., Miami, Fla., Shutts, Bowen, Simmons, Prevatt & Boureau, Miami, Fla., for C. Gordon Anderson, Trustee, appellee.
Before RIVES, JONES and WISDOM, Circuit Judges.
Certiorari Denied October 19, 1964. See 85 S.Ct. 147.
This proceeding under Chapter X of the Bankruptcy Act, 11 U.S.C.A. §§ 501-676, for the reorganization of TMT Trailer Ferry, Inc., has been pending for more than six years, and has been before this Court on three prior occasions.1 The United States is now appealing from an order which denies priority to its nontax claims.2 The United States also appeals from subsequent orders of the district court amending, confirming and authorizing consummation of a plan of reorganization which fails to recognize the priority of the Government's nontax claims.3
The basic issue presented by the appeals is whether R.S. § 3466, 31 U.S.C.A. § 191,4 is operative to give all debts due to the United States priority in this Chapter X corporate reorganization proceeding. The district court held that the only debts due the United States granted priority in Chapter X reorganization proceedings are those for taxes and customs duties, and that the controlling statute is section 199 of the Bankruptcy Act, 11 U.S.C.A. § 599.5 Two of the nontax claims6 were held not entitled to priority in any event because, according to the district court, "at the time the petition herein was filed they were not owed to the United States."
Any priority allowed to claims of the United States must be founded upon statute. As was said by Mr. Justice Story in the early case of United States v. State Bank of North Carolina, 1832, 31 U.S. (6 Pet.) 29, 35, 8 L.Ed. 308:
Mr. Justice Story then referred to the duty-collection act of August 4, 1790, ch. 62, sec. 45, to the Act of March 3, 1797, 1 Stat. 515, and to the Act of March 2, 1799, 1 Stat. 676. The pertinent provisions of the latter two Acts have remained substantially unchanged throughout nearly the entire history of our Nation, and are now embodied in R.S. § 3466, quoted in footnote 4, supra. As was more fully developed in an even earlier case, that priority extends to debts of all kinds, equitable as well as legal, and even to endorsements of a bill of exchange of which the Government is a holder. United States v. Fisher, 1805, 2 Cranch (6 U.S.) 358, 383-397, 2 L.Ed. 304.
Acts on the subject of bankruptcy were enacted in 1800 (2 Stat. 19), which Act was repealed in 1803; in 1841 (5 Stat. 440, 614), which Act was repealed in 1843; and in 1867 (14 Stat. 530, R.S. § 5101), which Act was repealed in 1878.
The 1800 Act provided, in sec. 62 thereof, that:
"Nothing contained in this law shall, in any manner, effect the right of preference to prior satisfaction of debts due the United States as secured or provided by any law heretofore passed."
The 1841 Act provided, in section 5 thereof, that all creditors should share in the bankrupt's estate pro rata, without preference or priority:
"except only for debts due by such bankruptcy to the United States."
The 1867 Act carried forward the priority in section 28 thereof by providing that:
While these Acts were in effect there was, therefore, no question but that nontax claims of the United States had priority in bankruptcy proceedings. From the time the 1867 Act was repealed in 1878 until the present Bankruptcy Act was enacted in 1898, we had no federal bankruptcy laws.
The Bankruptcy Act of 1898, as originally enacted, was construed by the Supreme Court to give priority only to "all taxes, legally due * * * to the United States," and not to afford priority for ordinary debts due to the United States. Davis v. Pringle, 1924, 268 U.S. 315, 317-319, 45 S.Ct. 549, 550, 69 L.Ed. 974.
By the amendment of 1926 (44 Stat. at L. 662, chap. 406), Congress repealed the effect of that decision by adding the words now in section 64, sub. a(5) 11 U.S.C.A. § 104 which specifically include the United States within the definition of the word "persons" to whom a priority status was given. So at the present time, by reason of the provisions of section 64, sub. a(5) as amended in 1926, all claims of the United States, whether tax or nontax, are given priority in conventional bankruptcy proceedings under Chapters I to VII of the Act, just as they were under the 1867 Act until it was repealed.
This Chapter X reorganization is, of course, not a conventional bankruptcy. Section 64 (11 U.S.C.A. § 104) is expressly made inapplicable to Chapter X proceedings by section 102 of Chapter X (11 U.S.C.A. § 502). Section 64 being thus excluded, the appellees argue that Davis v. Pringle, supra, teaches that R.S. § 3466 is not applicable to bankruptcy proceedings in the absence of a provision to that effect in the Bankruptcy Act, or otherwise stated, that we must look solely to the Bankruptcy Act for any priority status that must be recognized.7 That is true, however, only when the terms of the Bankruptcy Act evidence an intention to cover all matters of priorities or when they are inconsistent with previous statutes such as R.S. § 3466. Davis v. Pringle, supra; Guaranty Title and Trust Co. v. Title Guaranty and S. Co., 1911, 224 U. S. 152, 32 S.Ct. 457, 56 L.Ed. 706; New York v. Saper, 1949, 336 U.S. 328, 340, n. 18, 69 S.Ct. 554, 93 L.Ed. 710.
Chapter X proceedings resemble equity receiverships more closely than they resemble conventional bankruptcy proceedings. As Mr. Justice Cardozo said in Lowden v. Northwestern National Bank & Trust Co., 1936, 298 U.S. 160, 163, 56 S.Ct. 696, 698, 80 L.Ed. 1114:
"A proceeding to reorganize is not a bankruptcy, though an amendment to the bankruptcy act creates and regulates the remedy."
The legislative history of Chapter X indicates the reasons for not adopting the strict priority provisions of section 64, and that the priorities used in equity receiverships would be preferable. Mr. Gerdes, one of the draftsmen of Chapter X, testified in the hearings before the Senate Judiciary Committee on H.R. 8046, 75th Cong., 2d sess. 1937, 1938, p. 79:
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