W.A. Robinson, Inc. v. Trawler Leretha Inc.

• Decision Date: 09 June 1954
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: , 54-2 USTC P 9484, 48 A.F.T.R. 1495 W. A. ROBINSON, Inc. v. TRAWLER LERETHA, Inc.

Page 385

120 N.E.2d 385

331 Mass. 477, 54-2 USTC P 9484, 48

A.F.T.R. 1495

W. A. ROBINSON, Inc. v. TRAWLER LERETHA, Inc.

Supreme Judicial Court of Massachusetts, Bristol.

Argued April 5, 1954.

Decided June 9, 1954.

George Fingold, Atty. Gen., Stephen F. Lo Piano, Jr., Asst. Atty. Gen., for Director of Division of Employment Security submitted a brief.

Francis J. DiMento, Asst. U. S. Atty., Everett, John M. Doukas, Special Asst. to Regional Counsel, Internal Revenue Service, Washington, D. C., for the United States.

Before QUA, C. J., and RONAN, WILKINS, SPALDING and COUNIHAN, JJ.

COUNIHAN, Justice.

This case comes here upon an appeal from and exceptions to the entry of a decree in proceedings arising out of a bill for a receivership brought by a judgment creditor against a debtor corporation, Trawler Leretha, Inc. G.L. (Ter.Ed.) c. 156, § 51.

The bill alleged that the plaintiff recovered judgment against the dobtor and that it had neglected for thirty days after demand on execution to pay the amount due with officer's fees or to exhibit to the officer real or personal property belonging to it and subject to be taken on execution sufficient to satisfy the same. The bill sought the appointment of a receiver. A decree was entered, the debtor although duly served not being represented, appointing a receiver of the estate, property, money, debts, and effects of every kind and nature of or belonging to the debtor, and the receiver was directed to collect, get in, and take charge of all and singular thereof, and to hold the same subject to the order of the court.

Subsequently the receiver filed a report, an account, and a request that he be authorized to pay the balance of the receivership assets to the United States of America for tax claims. In his report he recommended for allowance these claims of the United States for taxes and also a claim of the Commonwealth of Massachusetts through the division of employment security for contributions from the debtor as an employer. This report in substance was allowed by the court. A decree was entered allowing payment of expenses and fees of the receiver and directing that a balance of $716.93, which was insufficient to pay both of these claims, be turned over to the clerk of courts for the county of Bristol to be held by him until further order of the court determining the question of priority of the United States for tax claims over the priority of the Commonwealth for payments due it.

Subsequently on motion of the United States the judge made the following order for a decree: 'It appearing from an examination of the records that the defendant corporation was insolvent, in the sense that its property was, as of the time of the appointment of the receiver, insufficient to pay its debts, the motion of the United States of America that the clerk, Charles E. Harrington, Esquire, be ordered to pay to it the sum of $716.93 is allowed. Let a decree enter accordingly.' On the same day a decree was entered ordering the clerk of courts to pay the United States the said sum of $716.93 by check to the order of the Collector of Internal Revenue for the district of Massachusetts. The Commonwealth appealed from and excepted to the entry of this decree.

There was no error.

The only question to be decided is whether the United States or the Commonwealth is entitled to this money. The applicable statutes appear in the margin. ¹

The Commonwealth does not argue that it is incompetent for the United States to provide by statute that debts due it shall have priority as provided in U.S.C. (1946 ed.) Title 31, § 191 [31 U.S.C.A. § 191], U.S.Rev.Sts. § 3466, Act of March 3, 1979, but it asserts that former § 3466 is not applicable for the reason that no act of bankruptcy was committed by the debtor. It appears that years ago this court did decide that insolvency of itself, in circumstances similar to those existing here, did not give the United States the priority it sought under former § 3466. Commonwealth v. President, etc., of Phoenix Bank, 11 Metc. 129, 147-156. United States v. Commissioner of Banks, 254 Mass. 173, 177-179, 146 N.E. 883.

The present basic bankruptcy act is that of 1898. Until 1903 the judicial appointment of a receiver was not considered as an act of bankruptcy except by a small minority which held that such a receivership was the equivalent of a general assignment within the scope of the fourth act of bankruptcy or something which might amount to...