Source: http://supreme.nolo.com/us/268/315/case.html
Timestamp: 2019-04-21 07:33:48+00:00

Document:
1. Under the Bankruptcy Act, as amended February 5, 1903, and June 15, 1906, debts owed the United States are not entitled to priority. So held of claims for freight, storage, and demurrage growing out of federal control of railroads and claims on bills of exchange and checks. P. 268 U. S. 317.
2. Section 64(b) of the Bankruptcy Act, giving priority to debts "owing to any person who, by the laws of the states or the United States, is entitled to priority," construed with other provisions of this and prior bankruptcy acts and held not to include the United States as a "person," and thus make applicable the priority provision of Rev.Stats. § 3466. Id.
Nos. 786, 787; 1 F. 2d 860, 864 affirmed.
Certiorari to three judgments of the circuit court of appeals, the first two denying and the third allowing claims of the United States to priority of payment in bankruptcy proceedings. See also In re Tidewater Coal Exchange, 280 F. 648.
The first and second of these cases are claims for freight, storage, and demurrage proved in bankruptcy proceedings by the federal agent, for which the agent asserts priority on the ground that such claims arising during federal control of the railroads in 1918 are debts due to the United States and are preferred by Rev.Stats. § 3466, and by the Bankruptcy Act of July 1, 1898, c. 541, § 64, amended by Acts of February 5, 1903, c. 487, § 14, 32 Stat. 800, and June 15, 1906, c. 3333, 34 Stat. 267. The third is a claim by the United States for amounts paid by the Postmaster General to the bankrupts for bills of exchange and checks drawn by the bankrupts and unpaid, together with protest fees, etc., as to which priority is asserted on the same grounds. The prority was denied in the first two cases by the Circuit Court of Appeals for the Fourth Circuit. 1 F.2d 860, ibid., 864, but it was allowed in the Second Circuit without any reported opinion, following an earlier case in that Circuit, In re Tidewater Coal Exchange, 280 F. 648.
"The court shall order the trustee to pay all taxes legally due and owing by the bankrupt to the United States . . . in advance of the payment of dividends to creditors."
This, taken by itself, would seem to exclude other debts. But the section goes on in "b" to give priority in the order named to "(5) debts owing to any person who by the laws of the states or the United States is entitled to priority," and the government argues that, by § 1(19), "persons" shall include corporations and that the United States is a corporation, and therefore within these words. Being within them, it is said, it is entitled to priority by a law of the United States, the well known R.S. § 3466. It is said that no other person except the United States itself can be discovered who is given the right by its laws.
574, at a time when it was not necessary for the majority to speak upon it. The priority claimed by the United States is not given to it by the law.
Decrees in 786 and 787 affirmed.
MR. JUSTICE SUTHERLAND was absent, and took no part in this decision.

References: § 3466
 § 3466
 § 64
 § 14
 § 1
 § 3466