Document: 333 U.S. 611 68 S.Ct. 747 92 L.Ed. 968 COMMONWEALTH OF MASSACHUSETTS et al.v.UNITED STATES. No. 157. Argued Dec. 10, 1947. Decided April 19, 1948. Mr. Alfred E. Lo Presti, of Boston, Mass., for petitioner. Albert Hallett, Chicago, Ill., the State Illinois, as amicus curiae, by special leave Court. Helen Goodner, Washington, D.C., respondent. Justice RUTLEDGE delivered opinion 1 This case is all practical purposes a renewal litigation recently here in Illinois ex rel. v. United States, 328 8, 66 841, and companion People Gordon Campbell, 329 362, 67 340. The former unanimously held that States has priority, virtue Rev.Stat. § 3466, 31 U.S.C. 191, 32 U.S.C.A. payment from ani nsolvent debtor's estate federal insurance contribution taxes under Title 8 unemployment compensation 9 Social Security Act, 49 Stat. 620, 42 §§ 1001 seq., 1101 against state's claim imposed its statute conforming to act's requirements. Campbell case, which was reargued on other issues, rested this ruling disposition common issue concerning effect 3466. 2 facts are substantially identical with those States,1 except two respects. One fund available distribution more than sufficient pay either or taxes, though inadequate both, while not large enough satisfy tax full. Here too assignee paid commonwealth full amount claim,2 cases remained assignee's hands distribution. 3 District Court sustained priority capital stock full, 10 per cent claim. It therefore deferred any part until claims were fully paid. But court entitled remaining 90 claim, ground 9, 902,3 gives 'the alternative right' an approved state fund. Accordingly judgment ordered Massachusetts over $803.72 received assignee, funds priorities sustained, retain small balance after making payments apply taxes. 65 F.Supp. 763. action taken view that, our previous decisions had they determined question claims.4 4 However, appeal both parties, Circuit Appeals entitled, rulings, claims, including That affirmed Court's insofar it denied Government's As reversed ruling. 160 F.2d 614. 5 Because obvious confusion effects prior asserted differences betwen cases, certiorari granted. 332 754, 66. I. 6 seeks entire she received, claims. She agrees district 902 taxpayer 'optional payment, but does accept allocation creating To sustain broad would require reversal decisions. In no way, facts, could whole paid.5 7 curiae takes narrower position, conceding stand decisive adjudications disputing claims.6 position paying before rather 'satisfaction' them.7 Notwithstanding their substantial differences, states rest respective positions same basic arguments, upon examination turn out be vigorously presented earlier wording detail. Much made fact hands. Both urge taxpayer, his state. Moreover, respect requirement 3466 debts due shall first satisfied,' said resulting credit 'satisfies' debt much cash. foundation preference lay provision 902, payment.' There whatever gave 'alternae right.' precise whether right been cut off when he became insolvent. Obviously there have little point if, despite them, turned around immediately deprived Government established simply exercising make optional Nor sensible effective, purported retained fund, disallow if filed. We such ineffective capricious rulings. decision broadly intervention insolvency consequent bringing into play, taxpayer's take off.8 11 Our went merits merely rule proper party enforce exercise. debts; obligation attaching date Government, followed necessarily 'satisfy' giving 'credit.' very at one adjudicated. 'alternate contention 'satisfied' means 'credit' only verbal redressings decided cases. II. 12 true argument's bearing Illinois' Massachusetts' broader one. apparently support, brings forward less sweeping attack additional did adjudicate although purporting do so. present distinguishing between sharper factual focus For required, will remain, applied some form indeed posture brought here. 13 principal argument litigated courts, involved came Hence we acquire jurisdiction correct Campbell.9 surprising supreme court's adverse issue; explicit application reverse decision;10 necessity bring up secure order establish claim;11 finally opinion's clear terms, emphasis, deciding issue, together one, Illinois.12 14 idea completely misconceives action, serves confuse Campbell. Indeed infuse latter's denial priority. Not wholly incompatible position; ignores disposed opposite ways entirely different legal issues. 15 reach force create claims; rather, expressly avoided question. 391 Ill. 29, 32, 62 N.E.2d 537. because insolvent's assets court- appointed receiver, id. page 31, 538, situation 602(b) Revenue Act 1943, 58 77,13 allowed receiver tax. Supreme so held, alone Waste & Tx tile Co., 34, 537, 539. created legislative exception limited receivers, within times periods specified, taxes.14 16 common-law court-appointed official.15 So holding, 37, 541, meaning rejected 'in reality Nation * tantamount States,'16 also carefully guarded dispositive paragraphs17 directions given trial entering judgments remand differentiate avoid direction claims.18 thus left free partial satisfaction both. 17 own judgment. generally without distinction adjudicated decision, restriction placed nor hint found intended. asked done disregarded each sought favorable controversy issues presented.19 18 Court, basis exhaust dispose case. equally Neither essential other, necessary Illinois. eliminated required indication purpose. Since none given, cannot other. 19 While might independent grounds favorably neither course way manner. Instead, rightly record determination adjudication effective Insurance Trust 265 472, 44 621, 1110; Union Pac. R. Co. Mason City Ft. D.R. 199 160, 26 50 134; see Richmond Screw Anchor 275 331, 340, 48 194, 195, 72 303. III. 20 Finally, urged occasion consider hence discuss like this, where execept 100 must go may allocated then what remains claim.20 21 Closely related here,21 apparent concession insolvent nevertheless receive said, overpaid obligated refund excess. Then further corresponding credit, overpayment refund, start cycle again repeat credit.22 situation, short-cut well place, eliminate cycle. 22 concession, valid, goes toward cutting beneath position.23 heightened statement brief covered compliance conditions becomes impossible 'not Section operates exclude nullify it, terms itself deny (credit) can made.' understandable, work situation. say hypothetical stated away grounding 23 concessions accepted. depends insolvency, degree seems contemplate. And all. fulfilled. give valid altogether inconsistent rested. matter requires restatement. fundamentally distinguished from, unrelated to, Act. These distinct statutes, functions. 24 explicitly 'debts States' absolute, conditional. Once attaching, final conclusive. A ln g line 'debts' section.24 'contributions.' Prior attaches time insolvency,25 25 attaches, i.e., set aside extent conditional, absolute. Its effectiveness contingent happening subsequent events, namely, concurrence taking election this. short, never conclusively attached works retroactively occurrence contingencies upset applicable beyond scope term States.' destroy retroactively, 'debt' contingent. least doubtful statute's obligations ultimate maturity events fall due' insolvency.26 27 However be, know conditional priority.27 how consistently section's purposes. consistent seem indefeasible available, affected later payment.28 enacting Congress intent defeasible priorities. 28 defeasance conceded possible therefore, wih ineffectiveness (though 902) circumstances these destroys fundamental character thereby removes applies contemplates. Through section made, credit. actually another 602(a) and(b) noted above Part 29 If accepted, regarded applying or, indeed, treating just one.29 30 Accordingly, accepted apart concessions, rests ultimately applicability denies creates qualification terms. qualifications now contemplate tenuous, destrc tible sort 'priority' involve. 10-90 suggested mean encompass possibility. extended insolvency. adjudicated, something less. indicated, ignorant 902's allowance election. incidence Any 'contributions' them IV. pains decisions, earnestly questions. Ordinarily end matter. But, reasons, briefly should reversed. 33 Apart arguments already discussed, reasons change sought. reiterate contentions primary objects legislation defeated unless encouragement systems correspondingly taxpayers funds, insuring moneys benefits Treasury revenue. second emphasis amendments showing Congress' waive, progressively broadening still specified situations, original limitations securing credit.30 34 From drawn conclusion Congress, carefully, even meticulously relaxations, meant prescribed situations prescriptions. added amounts sum reiterating exaction 'tantamount States', disregard structure molded 'observe ignore substance legislation.' 35 answers 'while governments cooperate, underlying philosophy Federal keep separately administered.' 11, 843. considerations stated, however, add following ones, mentioned opinion, prefaced observation plea affords favor. 36 Thus many relaxations respecting permitted number careful limitation, show offering broadside exemption specifically defined.31 Rather intention disclosed limit allowing it. accords deliberate choice devices framing Act's structure. well-known techniques, adopted instance constt utional administrative rasons.32 motivations warn us wary disregarding chosen advisedly, substitute intended.33 37 off, money general revenue; compelled employees; defeated. several answers. 38 guaranteed solvency and, need revenues purpose.34 especially guaranty, likely state, saved assurance, once established, benefits. 39 remembered dealing assets. statutes distributed according local whenever operative. Only few place top.35 Depending standing ahead benefit particular certainty probability latter. reversing validity definite certain assurance acquired purposes.36 diverting extraneous objects. Especially smaller employers Ac' involved, often others.37 absence clearly implied believe intended contributions precedence authorize condition estate. evident purpose schemes 40 examples premises ofthe states' capable supporting conclusions draw them. Other stated. inferences counterbalanced opposing ones quite nearly tenable. greater weight. 41 follows shown inconsistency hand, achieving purposes, negating advisedly deliberation. dissent seemed close. No new consideration policy put forward. convincing litigation. persuaded erroneous. strict exceptions38 repeated quoting Emory, 314 423, 433, 317, 322, 86 315, 'only plainest warrant finding operation command 3466.' 12, See Remund, 330 539, 544, 891, 893. 43 Until taxing collect anticipate programs fail seriously impaired reason failure sums characteristically stake apparently, most produce similar controversy. rendered bankrupt contrary result. affirmed. 45 Affirmed. 46 JACKSON, whom FRANKFURTER, DOUGLAS BURTON join, dissenting. 47 announces unnecessarily ruthless interpretation best arbitrary favor government meritorious equitable, power. assertion supremacy policy. limitation itself, prevail policies. generalities lightly construed frustrate specific embodied statute. sued personal liability who, statutory Defendant concern assignment creditors. assests realize filed among things, 100% laid provides 90% Believing tax, Unemployment Compensation demanded Government. reasoning liable this: True literally, actual State. On statute, intervenes freezes Hence, prevents him grants him, collects windfall ten normally due, gets nothing construes prefer net prohibition courts marshaling equitable Judge declined support harsh reasoning. He whose views great weight, experience Steward Mach. Davis, 301 553, 57 883, 884, 81 1279, 109 A.L.R. 1293. considered option (65 764): 'The analysis me persuasive nature IX portrayed Machine 548, 1293, stressed. title objective stimulate creation funds. defeat Congressional down instead going direct claimants plans.' 51 consequences refusal follow reasonable Congress. What doing practically 52 1. exacted solvent circumstances. contemplated revenue, availed of, induce maintain condition. 53 2. depriving revenue tried assure used device impel collect. 54 3. unjust enrichment depletion accomplished holding prohibits simultaneous each, account payments, requiring total time, depletes thereafter obtain fairly equity usually do. 55 4. prejudices creditors placing $190 every $100 owing. example, maximum Governments Act—let $1,000. discharged $1,000, $900 $1,000 That, course, leaves undischarged, calls anything Thus, creditors, puts $1,900 far reject designed mitigate, least, harshness rule. 56 Priority gouge private spirit itself. Over century ago Story defined 'motives public policy' underlie adequate burthens discharge debts. *' Bank North Carolina, 1832, Pet. 35, 308. meet burdens enable assume unemployed. invoked deny, class aid promised meeting obligations. When enacted comprehensive field interest claimant's function, rarely, recently, hesitated interpret old yielding newer scheme. Cook County National 107 445, 561, 537; Guaranty New York, 280 478, 212, 74 556; cf. Callahan 285 515, 454, 76 914. 423 315. problem mere manifest another. lengths become committed adopts, unusual deference doctrine stare decisis declares bound hand foot I am unable detect commitment sees. agreed forecloses construction frankly admit unaware rights vested prejudicial reliance appear called attention act. Under circumstances, humiliation admitting always understand opinions why consciously wrong today unconsciously yesterday. 59 allow subject disbursed Here, debtor realized $1,135.11 sale amounted $963.08; $690.05; $21. commonwealth's Within allowed, $331.39 collector. leaving unpaid $358.66 plus undertaken indemnify $803.72, erroneously made. prevails $803.72. 639, provided program. Subsequent alter conception See, e.g., notes 13, 15. 'credit tax' incorporated Internal Code, 1601, Int.Rev.Code, 1601. thought moot reached 'had (by Spencer, D.C. 763, 765. ope 'nicely analyzed obligation.' Id., 764. note being 'make exclusion taxpayer?' (Emphasis added.) appeared leave, oral argument. disclaims supports reversal. 1, $327.75 claim; $475.97 complete Actually represents allocation, exactly Each somewhat method allocation. 20. transfers loses control property. 370, 345; Waddill, Holland Flinn Inc., 323 353, 355—358, 304, 305—307, 89 294; Oklahoma, 261 253, 260, 295, 297, 638. ordering about $150 tx es unpaid. fell 1601 note. text infra 14. almost uniformly involving indiscriminately. stating Questions Presented,' petition spoke 'Social excise Capital Stock taxes,' encompassing levies. repeatedly brief. Further, said: 'In petitioner subordinate arising Titles VIII looked form, substance, significance petitioner's claim.' briefs positive seeking follows: $58.73; $1,065.52; $1,284.36; due. $721.29. $1,010.81. insufficient override her recognized review provisions exempted stated: 620.' 842. throughout treated parity 8. payment' sound systems. 841. 367, n. 5, 343. 'But agree amend inapplicable claims.' types distinction. relaxing amendments, IV, years 1939, 1940, 1941 1942 cent, regard been, during period custody trustee, fiduciary by, competent jurisdiction.' 1943 77, relaxation 1936, 1937 1938, however December 6, 1940. formed Unted court. court, decree entered 'and remaining' 46, 544; 42, 543. inadvertently lost sight fact, noted, pages 39, oversight seemingly responsible award Cf. 9. Had amount, $128, awarded roughly $22 question, regarding prevented considering An claimed allowed. Instead official available. 541. 40, 542; of. ful amount' payroll (Title 9) 'taxes government.' instance, '100 levied,' 'continues government, continued, 'do imposed. They constitute purview Revised Statutes.' 41, 542, 543, 544. Ibid. remanded cause 'with enter deposit, accordingly.' 545. 11. obviously test settle generally, nd provide administration features. view, supra; 7. methods differing distribution, reduce pro rata Hypothetical Possibly argumentative positions. event, conclusive not, confession error. observations damaging forth sentence footnote appended. Flinn, 294 (unemployment Housing Administration transaction); Texas, 480, 350, 356 (gasoline taxes); York Maclay, 288 290, 323, 77 754 (income expenses incurred replacement buoy damaged insolvent); Spokane 279 80, 321, 73 621 penalties); Price 269 492, 180, 70 373 customs duties); Stripe 503, 182, 379 (income, excess profits, taxes). Judgments recovered Knott, 298 80 1321, 104 741 (against surety estreated bail bonds); Hunter 173, surety). are: Dept. Agriculture, Emergency Crop Feed Loans 891 (emergency loans Farm Credit Administration); 315 (sum Act); Bramwell Fidelity 483, 176, 368 (Indian deposited bank); Surety 254 73, 143 (losses contractor defaulted); Bayne 93 642, 997 (misappropriated Army paymaster funds); Lewis 618, 513 (funds Navy disbursing agents); 308 (bonds Fisher, Cranch 358, 304 (claim indorser protested bill exchange). supra. liberality. 500, 181, 373; 426, 319, matters contingency prioriy certain. Marxen, 307 200, 811, 83 1222. squarely arisen long history sustaining owing, adds implicit wording, viz., drew close at, commonly forms obligation. 24, 26. Again 'payment' pertinent. construe fulfilled urge, qualify word include exceptions (b) reference insolvents officials. II, 15, think cent. selective qualifying Of relating insolvents' estates text, etc. 602(a)(3) (b), official. mind. excluded nonjudicial custodians extend omission unintentional. withholding privilege. easing amendments. 1279. precisely technique offers gravest dangers perverting possibility ignoring expressed intent, limiting reaching limitations. Sections 904 1201 789, U.S.C.App. Supp. V, 1666, 1667, U.S.C.A.Appendix amended, Pub.L. 379, 80th Cong., 1st Sess., 4, 1104, 1321. employment Treasury, appropriated account. authorized dangerously low, repayment advances regains stable S.Rep. 477, Sess. 9—10. eG., Mass.Ann.Laws, c. 151A, (1942); Cal.Gen.Laws, 8780d, (1944); Iowa 96.14(3) (1946); Okl.Stat., tit. 224(c) (1941). Unless undertake say, do, relegated inferior Nothing suggests power disorder come typical, accurate bases business continues wound up. perhaps continued judicial otherwise. amendment obtained. Insofar mandate done. departures conceived property affected, mortgage, belonged third persons, debtor. Thelusson Smith, Wheat. 396, 271; Conard Atlantic Ins. 386, 189; Brent 596, 611, 547; Savings Loan Soc. Multnomah County, 169 421, 428, 392, 395, 803; 304; Hooe, 370. loath expand exceptions, S.T. 345, lien. Massachuset others felt Nat. 556.

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