Court Opinion

ID: 9418076
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:07:32.207306+00
Date Added: 2024-06-11T17:21:54.937342
License: Public Domain

Mr. Justice Harlan
(with whom concurred Mr. Chief Justice. Fuller and Mr. Justice Peckham)
dissenting.
The Chief Justice, Mr. Justice Peckham and myself dissent from the opinion of the court. In our judgment the “taxes” owing by a bankrupt to a State — which section 64a- of the bankruptcy act provides shall be paid in advance of the payment of .dividends to creditors — do not embrace an “annuál license fee Or franchise tax” (the. words of the New Jersey statute), which, strictly, is not a property tax, but only an exaction by the State for the privilege given to a corporation *495to do certain business under its charter. We think the bankruptcy act should be so construed. It cannot be otherwise construed without doing gross injustice to those creditors of the bankrupt corporation who have business transactions with it at its place of business. Here the bankrupt corporation did no business in New Jersey. So far as appears, it did not have, nor expect to have, any connection with that State except tc become incorporated under its laws. .It had its seat of operations and all its tangible property in the State of Illinois. It had no property in New Jersey. Its scheme was to get a charter from New Jersey and then go to another State for purposes of its business. "We do not think that Congress intended that in the distribution of the assets of a bankrupt preference should be-given to the claims of a State which have their origin in and are wholly based upon a bargain with the State whereby certain privileges are 'granted in exchange for certain payments — privileges which the State may grant or withhold at pleasure. In our opinion the word "taxes” in the bankruptcy act was intended to embrace only burdens or charges imposed in invitum and which were in their nature and in reality “taxes,” as distinguished from governmental exactions for privileges granted. The claim of New Jersey, whatever its true amount, should not be given priority, but should be placed upon the same footing with claims of other creditors. This view is consistent with the act of Congress.