Legal Document

329 U.S. 565 67 Supreme Court Reporter 467 91 L.Ed. 504 GARDNERv.STATE OF NEW JERSEY. Number 92. Argued Dec. 20, 1946. Decided Jan. 1947. Rehearing Denied Feb. 17, See 330 853, 768. [Syllabus from pages 565-567 intentionally omitted] Mr.James D. Carpenter, Jr., of Jersey City, N.J., for petitioner. Mr. Benjamin C. Van Tine, Trenton, respondent. Justice DOUGLAS delivered the opinion Court. 1 This case, here on certiorari, presents important problems under § 77 Bankruptcy Act. 49 Statutes-at-Large 9 1, 11 United States Code KF62 205, Annotated KF65 U5 205. The Central Railroad Company New (the debtor), which petitioner is trustee, filed its petition reorganization in 1939 shortly after receiving notice Attorney General that he would apply to a state court summary judgment unpaid taxes debtor and seek sell property satisfaction judgment. tax assessments years 1932 had been extensively litigated both federal courts results were most part adverse debtor.1 By end claims State against debtor, exclusive interest penalties, exceeded $15,000,000, while liquid assets available pay them apparently less than half amount. stayed suits collect but time entered orders directing make specified installment payments account various years. 2 In 1941 legislature passed law designed lessen burden railroads State. P.L.1941, chapter 290; 291, N.J.S.A. 54:29A—1 et seq. was implemented somewhat modified 1942. P.L.1942, chs. 169, 241. These acts included changes rates provided full principal amount without or due before December 1940. statutory settlement conditioned (1) execution payment plans first installment, (2) waiver all rights contest legality any assessment made prior 1941, together with written consent discontinuance dismissal pending concerning such assessments. authorized settle compromise delinquent accordance provisions these acts. Petitioner undertook comply requirements, filing documents required taxpayer, discontinuing litigation, consenting appeals.2 officials—the General, Treasurer, Comptroller—did not accept tenders.3 Instead, instituted suit enjoin Treasurer carrying out 1942 result holding violated constitution. Wilentz versus Hendrickson, 135 N.J.Eq. 244, 38 Atlantic Reporter, 2nd Series 199. 3 Meanwhile set within should be filed. compliance therewith Comptroller behalf claim owing it.4 proof stated over $18,000,000 paid claim, leaving some $12,000,000, plus $7,700,000, additional those sums also owed secured by 'a lien paramount other liens upon lands tangible franbchises company this State'. 4 trustee initial objections claim. They contended grossly overvalued systematically discriminated making objected penalty contending, inter alia, no accrued date when debtor's during period collection enjoined good faith contesting their validity. Subsequently they further ground allowed governed terms tendered legislature. personal property. Like group security holders an indenture trustee. State's it representing entitled equal general mortgage. 5 Jersey, through her replies stating, finally adjudicated lawfully owing, priority 64 Act, 104, lands, property, franchises debtor. 6 Shortly supra, decided, adjudication Jersey's substance recapitulated his earlier asked binding; alternatively, if binding, determination extent relative rights, priorities claimants assets. 7 thereupon special appearance proceedings, claiming, entertainment constitute prohibited State, as respects lien. 8 referred master consider contention well previous thereto. rendered report 1945 found proofs properly officers acting pursuance authority; confers jurisdiction kind asserted proceeding construction Act unconstitutional; (3) entire custodia legis subject lienholders, proper determine validity lien, limitations Arkansas Corporation Commission Thompson, 313 132, 61 888, 85 1244, did think presently involved proceedings. report. overruled adopted confirmed took appeal Circuit Appeals. She writ prohibition she challenged rulings same grounds. 10 Appeals treated questions presented covered supra. It held 'only matters left open' mathematical error computation legal assessment. accordingly reversed order dismissed application prohibition. 152 Federal 408, 418. First. We think, contrary position allowance exercise power Section deals only private parties public agencies well. 77, sub. b, defines 'creditors' 'all whatever character whether otherwise provable Act'. And 'claims' are defined include 'debts, liquidated unliquidated, securities (other stock option warrants subscribe stock), liens, interests character.' c (7), provides prompt fixing reasonable 'claims creditors' may manner allowed. words claims' have qualification sufficiently broad parties. creditors unsecured claims. find slightest suggestion Congress large class recurringly appears reorganizations often assumes, here, proportions. expressly among 57, n, 52 840, 867, 93, n.5 sweeping, inclusive definitions leave room exception it. 12 When files court, using traditional method collecting debt. A is, course, prima facie evidence Whitney Dresser, 200 532, 26 316, 50 584. But bankruptcy whose aid sought enforcement bound treat conclusive. made, duty pass them. That process indeed, basic importance administration estate objective liquidation reorganization. Without sifting process, unmeritorious excessive might dilute participation legitimate claimants. 13 who invokes offering demanding must abide consequences procedure. Wiswall Campbell, 93 347, 351, 23 923. If claimant procedure transmitted into because entertains seeking something No whole proof, allowance, distribution speaking, claimed res. none rejected toto, reduced part, given inferior claimed, satisfied way cash. becomes actor fund waives immunity respecting Clark Barnard, 108 436, 447, 448, 878, 882, 883, 27 780; Gunter Coast Line R. Co., 273, 284-289, 252, 256-258, 477; Missouri Fiske, 290 18, 24, 25, 54 78 145. 14 constitutional authority respect People York Irving Trust 288 329, 53 89, 815. case sustained barred fixed stated, Page 333, 391, 'If desires participate bankrupt, submit appropriate requirements controlling power; otherwise, orderly expeditious proceedings impossible fundamental purpose frustrated.' 15 present circumstances there therefore, collision between Constitution. 16 Nor can we conclude Comptroller, 'Institute direct prosecution * just debts state'. N.J.R.S. 52: 19 10, subd. c, see id., 19—15. resisted 'Attend generally party involved'. Id., 17—2g. master, adopted, what officials authority. For conclusion relied statutes mentioned practice judge District weight. Steele Mills, 439. nothing imperaches To hold might, imperil so vigorously asserts. has expired rule at late come too late.6 17 Second. contends scheme another saying since attached filed, equity satisfied. 18 do agree conclusion. partially answered reviewed broad, nature contained b. As plain, assert 'liens' moreover, gives powers types liens. Thus plan 'Shall modifying altering generally, them, unsecured, either issuance new otherwise'. b(1). provide 'the sale free fair upset price'. b(5). (It lics added.) assets, proceeds derived thereof, having therein'. Or modification liens' curing defaults'. (Italics comprehensive language suggesting included, beyond reach court. While valid existing commencement always preserved, long function ascertain liquidation. Wenman, 198 539, 552, 25 778, 781, 1157; Isaacs Hobbs Tie & Timber 282 734, 737, 738, 51 270, 271, 272, 75 645; Straton New, 283 318, 321, 465, 466, 1060. Moreover, receivership cases, Maclay, 290, 323, 754; Texas, 314 480, 62 350, 86 356, Huffel Harkelrode, 284 225, 115, 76 256, American Law Reports 453; deal recognized. cases task resolving disputes common one Group Institutional Investors Chicago, M. St. Pacific KF135 P2 P.R. 318 523, 569, 63 727, 751, 87 959. Indeed, accord equitable disentangled ascertained. problem, reorganizations, acute railroad field. 20 lacked assertion pull chunks transfer struggle corpus bureaus tribunals. seriously impair administer adversely affect Interstate Commerce promulgate plan. Ecker Western Corp., 466-475, 692, 704-708, 892; Smith Hoboken Railroad, Warehouse Steamship Connecting 328 123, 66 947. fly teeth grants 'Exclusive wherever located'. limited prevention interference use trustee; 'extends title.' Ex parte Baldwin, 291 610, 616, 551, 554, 1020; Thompson Texas Mexican Ry. 134, 140, 937, 942. preserve railway unit going concern prevent being divided up dismembered piece-meal. Only continuous operation road assured effected safeguards compatible interest. Continental Illinois Nat. Bank Chicago Rock Island Pac. 294 648, 55 595, 79 1110; W. S.C. 21 read historical background light practical cannot conceive gave replete sweeping suggests. 22 grant settled. constitutionally empowered ba krupt clear taxes. including asserts extends claims.7 24 Third. redetermine purposes value where already determined afforded ample protection railroad's rights. adhere decision. Its ruling precludes redetermination valuations underlying authorities used basis therefore entertain tender issues. tribunals issues litigated, still open year, and, circumstances, courts. Township Hillsborough, Somerset County, N.J. Cromwell, 326 620, 445. length challenging underlie Pages 411—414. standards adequate, relitigation question appropriate. Fourth. does not, however, preclude adjudicating raised view, took, fails recognize historic which, pointed out,8 arsenal granted 77. Illustrating limiting range inquiry local creates asserted; perfected cf. supra; whether, inchoate time, could subsequent petition, Lyford York, Cir., 140 840; though paramount, subordinate expenses wither rule, City Hall, 139 935, rule,9 Collier (14th Ed.) 77.21. Warren Palmer, 310 60 865, 84 1118. lien—to applies, restricted realty covers revenues well—are 489, 503, 714, 721, 892. 28 adjudicate pertaining crossing forbidden line marked There example, swollen inclusion thus meet j 'penalty forfeiture'10 shall What accruing proved 'penalties', Jersawit, 263 493, 44 167, 68 405, Meilink Unemployment Reserves Commission, 564, 389, 458; applicability s 77;11 liability penalties incurred business, Boteler Ingels, 308 521, 29, 78, 442; interest, any, accrues Vanston Bondholders Protective Committee Green, 156, 237, 29 (4) noted Case Los Angeles Lumber Products 106, 130, 14, 110, useful fitting claims, interminable litigation ended expedition promulgating served. power, Act12 our Order 3313 77.14 Through authorize approve adjustments reduce claimant, another, res legis. 30 urged so-called binding law; even valid, conduct altered portion contests each contentions. 31 phase controversy re (entered decision unconstitutional) compromise, more hand event, constitutionality giving opportunity hearing argument issue. now different posture. emerge—whether controls case; unconstitutional act so, alleged effective; 32 points briefed argued here. difficulty neither nor solely jurisdiction—whether adjudications sovereign stood determinations. it, too, concerned jurisdiction. 33 bristle pass, assume benefit views judges sit greater familiarity practices we. Huddleston Dwyer, 322 232, 1015, 1018, 88 1246; Brillhart Excess Insurance 316 491, 497, 1173, 1176, 1620; Hammond Schappi Bus Line, 275 164, 48 66, 68, 72 218; Wilson Cypress Del Pozo Y Marcos, 236 635, 656, 657, 35 446, 454, 59 758. review dissenting Brandeis California 280 145, 165, 71, 76, 74 234. advised denying join defendant stay until question.15 granted, Magnolia Petroleum 309 478, 483, 628, 630, 876; 619, 555, 1020, phases will authoritatively course followed, resolved record adequate review. Whatever followed versed intricacies niceties questions. 34 intimate merits controversy. view validity, character, priority, except involving On know prolonged question. Hence, said limitation judicata law, affords 36 affirm reverse remand cause conformity opinion. 37 So ordered. Affirmed part; remanded. history case. Application 408—411. Delinquencies subsidiary companies included. increased franchise right 136 633, contains facts episode. subsidiaries Haw. Hawai‘i KFH45 A2 Rep. 1409, 75th Cong., 1st Sess., 13; S. 1916, 3d 5, 16. Meyer Fleming, 327 161, 382, 387, footnote 'Sec. (7) 'shall promptly fix evidenced shown.' (5 (1944) 537) permits equitable, chargeable laches, distributed (see Conklin Shipbuilding C.C., KF105 F3 1006, 1009, 1010; Pennsylvania Steel 740—742); unduly delay Guaranty (of York) Henwood, 353 (108 1020).' 64, determines tax'. reserved applicable alone sustain 137 782, 785, 786. 645, 'while decree liquidation.' approved 'during pendency section addition conferred powers, inconstent section, appointed receiver purpose.' j, reads full: 'Debts subdivision thereof forfeiture allowed, pecuniary loss act, transaction, arose, actual costs occasioned thereby thereon according law.' l, provides: 'In consistent duties liabilities creditors, persons voluntary day filed.' 27, 50, 'The may, approval arising deem best estate.' 33, following 53, 'Whenever receiver, possession arbitration estate, controversy, clearly distinctly forth matter reasons why settled compromise.' 305 U.S.App. note 11, a, 9, 8808. stipulation jurisdictional instant decided. 163 44.

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