Legal Document

379 U.S. 329 85 Supreme Court Reporter 427 13 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 315 Elizabeth Simonson KING, etc., et al., Petitioners,v.UNITED STATES. Number 16. Argued Oct. 19, 1964. Decided Dec. 14, David S. Bate, Montclair, N.J., for petitioners. Alan Rosenthal, Washington, D.C., respondent. Mr. Justice HARLAN delivered the opinion of Court. 1 This is an action brought by against executrix George King,1 a deceased distributing agent debtor in Chapter XI proceeding, and his surety. The Government alleged that King was personally liable under R.S. § 3467, 31 Code KF62 192 (1958 ed.), because he satisfied claims non-priority creditors with knowledge outstanding government priority claim, consequence which could not be paid full. 2 facts case were stipulated are essentially as follows. On October 1, 1946, Seeley Tube & Box Company, Inc., New Jersey corporation, filed petition reorganization Bankruptcy Act, 30 Statutes-at-Large 563, amended, 52 905. Soon thereafter, notified it intended to terminate, Seeley's default, two federal contracts between Picatinny Arsenal, installation War Department States; further signified its purpose relet hold any excess costs. March 17, 1947, referee appointed King, who president, accepted surety bond $10,000. 21, after hearing, plan arrangement submitted confirmed; listed creditor petition, but noted annexed schedule executory. called Seeley, deposit agent.$160,193.68 distributed pursuant orders court checks signed countersigned referee. contained no written provision payment Government's yet unliquidated unfiled claim. 3 At following colloquy took place Freeman, counsel Seeley: 4 'The Referee. Is there claim Arsenal? 5 'Mr. Freeman. Arsenal may have some 6 Have we put up enough money meet it? 7 8 problem there? 9 We do owe them money, want bring in. N Immigration Nationality Decisions state your Honor company will sum represented file these proceedings within time directs it. 10 you notion what they might claim? 11 think $20,000. 12 $20,000 available? $94,000 available pay if necessary, represent at all times or more dispose cash * *.' 14 record shows present courtroom on day hearing. 15 Thereafter entered order directing before May 9, 1947. duly preliminary contingent proof amount $26,818.82, later amended $34,125.03, alleging 64 104 3466, 191 ed.). However, seven weeks hearing filing this agent, had out referee, $6,085.01 the.$160,193.68 deposited him; $42,829.76 himself company.2 A long litigation then commenced issue whether timely ultimate determination being made January 1955, favor Appeals Third Circuit. stated, disclosure referee's confirmation become performance duty Act amounted informal amendment list included debtor's schedules.' In re Co., 219 Federal Reporter, 2nd 389, 391, cert. denied, 350 821, 76 46, 100 L.Ed. 734. 16 After still remained hands ($3,620.39 gone States) August 2, 1956, approved discharged surety.3 17 July 3, 1958, suit King4 $25,831.08, balance finally determined, contention incurred personal liability unpaid paying nonpriority thereby so depleting assets Section provides: 18 'Every executor, administrator, assignee, other person, pays, whole part, debt due person estate whom acts satisfies pays debts from such estate, shall answerable own extent payments States, much thereof remain unpaid.' 19 District dismissed complaint theory 'executor, person' he, unlike those fiduciaries mentioned specifically statute, representative arm bankruptcy court. 208 F.Supp. 697. decision reversed appeal, 322 317, and, conflict among circuits proper interpretation 192,5 granted certiorari, 375 983, 84 519, 472. I. 20 191,6 establishes priorities owed insolvent 192, gives assurance paid, part single statutory structure. precursor first appeared 1789 act establishing customs duties (1 29, 42). relating collection bonds duties, provided: '(A)nd cases insolvency, where executors administrators insufficient deceased, satisfied.' 1792 extended voluntary assignments benefit attachments property 'absconding, concealed absent' debtors well 'an legal been committed,' 18, 263. Prior passage 1797, 'An internal revenue established, extensive transactions taken place; course which, many persons necessarily indebted States.' versus Fisher, Cranch 358, 392. By section involving 'any officer, hereafter becoming otherwise.' 515. See Price 269 492, 501, 46 180, 181, 70 373. Then, 1799, Congress step concerns us here adding now embodied frustrated priority: 21 '* executors, assignees, bonds, satisfied; whom, acting, previous their 676. 22 Later, same section, proviso extending statute absconding also included. 23 Division provisions into separate sections Revised Statutes 'did work change meaning.' 181. Thus, evident §§ must interpreted pari materia. stated Butterworth-Judson Corp., 504, 513, 179, 380, Bramwell Fidelity Guaranty 483, 176, 368, said: 24 specification 3466 (§ 191) ways insolvency manifested aided designation 3467 192) anwerable failure inadequate estates living debtors. held 'every person.' generality language significant. Taken together, mean required when possession control given charged applying insolvent, rights appear.' U.S., 490, S.Ct., 178. II. 25 Petitioners, oral argument, conceded 191. Their contention, relying Stephens, 105, agents class nonetheless excluded category covered rather than representatives debtor, words 'or 'limited stand (of debtor) only application principle ejusdem generis qualifying 'person' one 'who acts'.' Id., 108. 26 Petitioners' emphasis distinction misplaced context 192. recognized Bramwell, make whose placed, responsible seeing paid. Whether falls responsibility should placed depends, title position mode appointment, but, practical terms, upon degree assert over allocation possession. That appointment officer does decisively inhibit operation shown express inclusion scope court-appointed administrators.7 And showed others besides indicated s would apply official function liquidating bank's assets, although clearly acting bank. Petitioners distinguish large measure control, whereas did not,8 this, hand, vitiate point need come coverage other, emphasizes element decisive. 27 agree Judge Browning, writing Crocker, 313 946, 949, 'the receiver (and, add, agent), like assignee creditors, primary obligations debtor; phrase 'for acts' read general acknowledgment fact imposing restriction reach inconsistent overall 191.' reject, therefore, proposition primarily categorically III. 28 It remains inquire instruction approval lacked necessary operative him. argue exercise discretion discharge perform ministerial funds conformity court's orders. Indeed, contended horns dilemma, either risked contempt But assumes arrangement, once court, immutable. fact, objected surely provided for, can little doubt obtained satisfaction.9 Even most unlikely objection ignored. Had been, frustration devolved completely faced very different case. 29 prepared articulate rule defining press objections. case, responsibility.10 As president corporation aware potential claim; likely active role formulation appended reference contracts. He day. likelihood, possibility arose company's counsel, representation Finally, ws major distributees distribution plan. circumstances possessed sufficient give rise far reveals, effort discharge. say acted dishonestly way positively thwart relied available, or, full finances, whatever underlying led Freeman representation. honest belief imposed him see done. Affirmed. BLACK DOUGLAS share views Fifth Circuit, v construction therefore reverse judgment below. 32 WHITE, concurring. 33 typical initiated has schedules proposes arrangement. specified recipients Act. qua reason know learn unscheduled debts, otherwise, lacking source prior current beyond ed.) unpaid.* 34 task include (with exceptions), even scheduled disputed unliquidated. 337(2), 737(2) ed.); Collier Bankruptcy, 5.33(2), 696 (14th ed. 1963). His extends impose obligation ascertain handling ample disbursed law. claims, liquidated not, undisputed, furnished fasten defeat 191, least without so. 35 There remains, however, difficulty Although papers revealed certain Government, creditor. terminated existence known. question providing told, testimony, defray sums satisfy directed make. attorney, clear disputing States. effect, situation though scheduled. An confirmed take care including 5.32(8). If apparently here, having hand proved allowed, argued remonstrated bear burden unauthorized act, agent's 'control possession' limited deposit. 36 pursue phase matter further, since justify holding accountable particular points out, undoubtedly familiar affairs exception attorney's statement petitioner uninformed doing told both notice expectation allowed risk became liquidated. died testate commencement substituted party defendant order. fiduciary survives estate. Dewey. C.C., 39 KF105 F3 251. stipulated, appears King's final report, attached Exhibit complaint. Brief Respondent, Page 7, n. 4. received events, allegation denied answer facts. note supra. Compare 105 (C.A.5th Cir. 1953), 946 (C.A.9th 1963) below 'Whenever whenever exectors administrators, established extend welll makes assignment absconding, concealed, absent process law, committed.' trustee bankruptcy, 'other person,' Kaplan, Cir., 74 664. 322. generally 5.33 Cf. Field Pet. 182, 94 (1835). until confirmation. neither nor entitled disbursement probably subject composition. baron Pollak 86 99. Only set aside deposit, normally occurs immediately, respect Court's observation waited object 'to for' 'it ignored,' ante, Pages 338, 339, while perhaps true greatly oversimplified meant generally.

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