Source: http://openjurist.org/329/us/362
Timestamp: 2013-12-12 15:47:45
Document Index: 599103352

Matched Legal Cases: ['§ 1400', '§ 1400', '§ 3466', '§ 191', '§ 191', '§ 1001', '§ 1101', '§ 801', '§ 1001', '§ 1400', '§ 1400', '§ 3466', '§ 3466', '§ 3466', '§ 21', '§ 21']

329 US 362 People of State of Illinois Gordon v. Campbell | OpenJurist
329 U.S. 362 - People of State of Illinois Gordon v. Campbell	Home329 us 362 people of state of illinois gordon v. campbell
329 US 362 People of State of Illinois Gordon v. Campbell 329 U.S. 362
67 S.Ct. 340
91 L.Ed. 348
PEOPLE OF STATE OF ILLINOIS ex rel. GORDON, Director of Labor,v.CAMPBELL, Collector of Internal Revenue.
[Syllabus from pages 362-364 intentionally omitted]
This case was companion to People of State of Illinois ex rel. Gordon v. United States, 328 U.S. 8, 66 S.Ct. 841, decided last term, but brings for settlement other problems raised by a conflict of claims between the United States and the State of Illinois. The conflict concerns whether one or the other claimant is entitled to priority of payment from assets of a common debtor. The Illinois Supreme Court dealt with both cases in a single opinion. 391 Ill. 29, 62 N.E.2d 537. Certiorari was granted in each. 327 U.S. 771, 66 S.Ct. 683; 327 U.S. 772, 66 S.Ct. 683. On the same day that People of State of Illinois ex rel. Gordon v. United States, supra, was decided this case was restored to the docket and assigned for reargument before a full bench, People of State of Illinois ex rel. Gordon v. Campbell, 66 S.Ct. 957, because of the presence of the questions not determined by that decision.
The controversy arose on June 29, 1942, when the Director of Labor of Illinois brought suit in the Circuit Court of Cook County, Illinois, to enforce against the Chicago Waste and Textile Company a statutory lien for unemployment compensation contributions due the state. Associated Agencies, Inc.,1 was a creditor of the Chicago Waste and Textile Company. In his complaint the Director alleged that Associated Agencies had obtained a judgment against its debtor in the Municipal Court of Chicago and that execution had issued on this judgment June 3, 1942, but that the interest of Associated Agencies was subordinate to that of the lien sought to be foreclosed. This, 'for the reason that the execution upon said judgment was issued long after notice of the lien of the Director of Labor was recorded with the Recorder of Deeds.'2 The Director alleged further upon information and belief that the Chicago Waste and Textile Company was insolvent and that 'the personal property subject to the lien herein being foreclosed, is scant secu ity for the debt due the Director of Labor * * * and that unless a receiver be appointed for all of said property, pending a full and complete hearing upon the issues herein, the plaintiff will suffer financial loss and said property will be wasted.'
Subsequently respondent, the Collector of Internal Revenue for the First District of Illinois, filed claims on behalf of the United States amounting to $1,954.07 plus interest. Of this amount, $522.91 was for federal insurance contribution taxes and $1,431.16 was for federal unemployment taxes. Of the federal insurance contribution taxes, $229.91 represented employees' taxes, see Helvering v. Davis, 301 U.S. 619, 57 S.Ct. 904, 81 L.Ed. 1307, 109 A.L.R. 1319, collected by the employer under statutory withholding provisions. Internal Revenue Code §§ 1400, 1401, 26 U.S.C.A. Int.Rev.Code, §§ 1400, 1401. The Collector also filed an intervening petition, alleging that the debtor was insolvent and asking that the claims of the United States be allowed as claims entitled to priority of payment immediately after costs of administration and before payment of other creditors. The Director of Labor answered, denying that the claims of the United States were entitled to priority over the claims of Illinois.
The state Supreme Court held that the United States was entitled to priority over the State of Illinois as to its claim for federal insurance contribution taxes.4 Whether it was correct to award this priority is the issue we now have to decide.
People of State of Illinois ex rel. Gordon v. United States, 328 U.S. 8, 66 S.Ct. 841, held that in circumstances which called into application Rev.Stat. § 3466, 31 U.S.C. § 191, 31 U.S.C.A. § 191, the claims of the United States for federal insurance contributions taxes under Title 8 of the Social Security Act, 49 Stat. 620, 636, 42 U.S.C.A. § 1001 et seq., and for federal unemployment compensation taxes under Title 9 of the Social Security Act, 49 Stat. at page 639, 42 U.S.C.A. § 1101 et seq., had priority over claims of Illinois for taxes under its Unemployment Compensation Act.5 That decision is controlling, of course, upon the same feature of this case, although the federal insurance contributions taxes claimed by the United States arise under the 1939 am ndments of the Social Security Act, rather than, as in the case last term, under the original act itself. Compare §§ 801, 802, 804, 807(c) of the original Social Security Act, 49 Stat. 620, 42 U.S.C.A. §§ 1001, 1002, 1004, 1007(c), with §§ 1400, 1401, 1410, and 1430 of the Internal Revenue Code, 53 Stat. 175 as amended by 53 Stat. 1381, 26 U.S.C.A. Int.Rev.Code, §§ 1400, 1401, 1410, 1430.
* But the state urges that § 3466 does not apply in the facts of this case. This argument, as well as another, that the lien of the state was so specific and perfected as to defeat the priority, if any, of the United States under Rev.Stat. § 3466, must be met before the case can be affirmed on the authority of People of State of Illinois ex rel. Gordon v. United States, supra.
The fifth act of bankruptcy, which is the one on which the Government relies as having brought § 3466 into operation, consists of a person's6 having,
'(5) while insolvent or unable to pay his debts as they mature, procured, permitted, or suffered voluntarily or involuntarily the appointment of a receiver or trustee to take charge of his property.' 52 Stat. 844, 11 U.S.C. § 21, sub. a, 11 U.S.C.A. § 21, sub. a.
This Court has noted that the view has been expressed that to satisfy the fifth act of bankruptcy 'the receivership must be general, as contrasted with a receivership incidental to the enforcement of a lien.' Duparquet Huot & Moneuse Co. v. Evans, 297 U.S. 216, 224, 56 S.Ct. 412, 416, 80 L.Ed. 591.7 It has not determined the correctness of that view, Emil v. Hanley, 318 U.S. 515, 521, note 5, 63 S