Document: 28 L.Ed.2d 273 91 S.Ct. 991 401 U.S. 513 UNITED STATESv.William L. RANDALL, Trustee in Bankruptcy. No. 125. Argued Feb. 22, 1971. Decided March 24, Syllabus The debtor corporation, kept possession of its business by court order under Chapter XI the Bankruptcy Act, did not comply with requirements that it deposit withheld taxes a special tax account. It was later adjudicated bankrupt, and United States asked bankruptcy to pay amount prior payment costs expenses proceedings, pursuant 26 U.S.C. § 7501(a), which provides 'shall be held fund trust for States.' referee denied request, District Court Appeals agreed. Held: Section 64(a)(1) is an overriding statement federal policy on question priorities, clearly first priority payments from bankrupt estates belongs administration incurred proceedings. Pp. 515—517. 419 F.2d 1068, affirmed. Richard B. Stone, Washington, D.C., petitioner. Kevin J. Gillogly, Chicago, Ill., respondent. Mr. Justice DOUGLAS delivered opinion Court. 1 Halo Metal Products, Inc. (the debtor) 11 701 et seq. required open three separate bank accounts general, payroll, indebtedness make appropriate disbursements those accounts. Salaries wages paid were credited against payroll account checks income social security after approval referee. Checks into Withdrawals this allowed only welfare obligations. 2 requirements. Although employees, them them, as required, States. 3 Later bankrupt. States, had previously filed proof claim proceedings taxes, now request. agreed affirmed denying payment, 1068. case here petition writ certiorari we granted (400 817, 34, 27 44) because conflict among circuits, cf. City New York v. Rassner, Cir., 127 703; Sampsell, 9 193 154; Hercules Service Parts Corp. 6 202 938. 4 relies 7501(a) provides: 5 'Whenever any person collect or withhold internal revenue other over such so collected shall assessed, collected, same manner subject provisions limitations (including penalties) are applicable respect arose.' argument favor answered debtor-in-possession failed segregate withheld; hence there no trust. To replies since court-appointed officer, misconduct officer should defeat trust.1 And, continues, creditors unfairly harmed funds never asset estate. 7 We deal, however, Act conclude priorities. 104(a)(1) (1964 ed., Supp. V), 8 'The debts have priority, advance dividends creditors, full out estates, (1) * *. Where entered proceeding chapter title directing proceeded with, ensuing unpaid superseded *.' Until 1926 claims administrative subordinate claims.2 In year they placed ahead taxes.3 trustee were, still preserving recovering assets.4 1952 amended give proceeding.5 10 then progressive legislative development marks decline grant preference (2) ascending administration. think statutory subordinating would served creating enforcing trusts eat up estate, leaving little nothing officers whose goods services created assets. Nicholas 384 678, 690—692, 86 1674, 1683—1684, 16 853, rejected Internal Revenue Code entitled interest accruing arrangement during bankruptcy. allow run counter 'strong Act.' Id., at 691, 1683. present claimed principal token grain Act. 12 This construction conforms literal reading second sentence makes payable 'in conformity read words history So read, taxes. See re Green, 264 F.Supp. 849, 851. 13 What decide today also accord decisions hold specific priorities Congress govern generalized statutes giving wide range situations.6 Guarantee Title & Trust Co. Guaranty Surety Co., 224 152, 32 457, 56 L.Ed. 706; Davis Pringle, 268 315, 45 549, 69 974. 14 Affirmed. 15 BLACK dissents. BLACKMUN, whom THE CHIEF JUSTICE, BLACK, STEWART join, dissenting. 17 I cannot escape conviction Court's ruling very narrow issue dishonors property effects windfall who benefit ruling. 18 consists FICA actually employees. These debtor. Were withholding scheme, amounts been employees gross their obligation, adoption withholding, Instead, employer withholds, 1954, appropriately impresses upon withheld. defeats possession, corporation has characterized 'an court,' 690, 1683, 853 (1966), flagrantly disobeyed court's respondent concedes if obeyed, case. Tr. Oral Arg. 34. 19 decision does demand result reached That concerned bankruptcy, asserted. long step down road beyond Nicholas. 20 Neither am persuaded suggestion made trustee, seemingly reflected opinion, contrary leave therefore deter orderly estates. suspect fact vast number small- no-asset cases sufficient refutation suggestion. 21 find myself views expressed Second, Sixth, Ninth Circuits. 703 (CA2 1942); Airline-Arista Printing Corp., 267 333 1959), aff'g 156 403 (SDNY 1957); 938 (CA6 1953); 154 (CA9 1951). reverse. 'Where received public receiver owner without further tracing.' 5A. Scott Trusts 521, p. 3652 (3d ed. 1967). 3A Collier 2046—2048, 2155—2156 (14th 1969). 44 Stat. 662. Collier, supra, n. 2, 2049, 2050 15. 66 426. 'Unless provision necessary liquidate, administer close estate proceeding, all expenses, always danger breakdown There assurance him, bond insurance premiums, conducting sale compensation his attorney, will assets liquidated administered him expenses.' S.Rep.No.1395, 82d Cong., 2d Sess., 5. 1966 dischargeable due owing more than years except, inter alia, others but over. July 5, 1966, 80 270. competing Rev.Stat. 3466, read: indebted insolvent, whenever deceased debtor, hands executors administrators, insufficient deceased, satisfied; hereby established extend well having debts, voluntary assignment thereof, absconding, concealed, absent attached process law, act committed.'

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