Court Opinion

ID: 9424487
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:11:45.567179+00
Date Added: 2024-06-11T17:22:50.529532
License: Public Domain

*518Mr. Justice Blackmun,
whom The Chief Justice, Mr. Justice Black, and Mr. Justice Stewart join, dissenting.
I cannot escape the conviction that the Court’s ruling on this very narrow issue dishonors property of the United States and effects a windfall for those who benefit from the ruling.
The amount in issue consists of income and FICA taxes actually withheld from wages of employees. These are not taxes of the debtor. Were it not for the withholding scheme, the amounts would have been paid out to the employees as gross wages and it would have been their obligation, as it was prior to the adoption of withholding, to pay those taxes. Instead, the employer now withholds, and § 7501 (a) of the Internal Revenue Code of 1954, 26 U. S. C. § 7501 (a), appropriately impresses a trust upon the amounts withheld. The Court today defeats the trust only because the arrangement debtor in possession, a corporation which the Court has characterized as “an officer of the bankruptcy court,” Nicholas v. United States, 384 U. S. 678, 690 (1966), flagrantly disobeyed the arrangement court’s specific order to pay the withholding amounts into a separate bank account. The respondent trustee concedes that if the order had been obeyed, the trustee would have no case. Tr. of Oral Arg. 34.
The decision in Nicholas does not demand the result reached by the Court. That case concerned interest accruing during bankruptcy, not the tax on which the in*519terest was asserted. The present decision is a long step down the road beyond Nicholas.
Neither am I persuaded by the suggestion made by the trustee, and seemingly reflected in the Court’s opinion, that a contrary decision would leave little or nothing for administrative costs of the bankruptcy proceeding and therefore would deter orderly administration of bankrupt estates. I suspect that the fact of bankruptcy administration of a vast number of small- or no-asset cases is a sufficient refutation of that suggestion.
I find myself in accord with the views expressed by the Second, Sixth, and Ninth Circuits. City of New York v. Rassner, 127 F. 2d 703 (CA2 1942); In re Airline-Arista Printing Corp., 267 F. 2d 333 (CA2 1959), aff’g 156 F. Supp. 403 (SDNY 1957); Hercules Service Parts Corp. v. United States, 202 F. 2d 938 (CA6 1953); United States v. Sampsell, 193 F. 2d 154 (CA9 1951). I would reverse.