249 F. 953 | 8th Cir. | 1918
This is a companion case to No. 4961, of like title (249 Fed. 950, — C. C. A.-), in which the opinion is filed herewith. Reference is made to the opinion in that case, for a more general statement of the facts and of the reasons for the conclusion in this case. Upon intervening petitions of the state of Arkansas, the county of Washington, and the collector of Benton county in Riley v. Kansas City & Memphis’ Railway Company, the court below ordered its receivers to pay the taxes for the years 1913, 1914, and 1915, and the penalties for failure to pay those taxes which accrued upon tire railway company’s property for the use and benefit of the state of Arkansas, of the two counties, and of certain municipalities and subdivisions thereof. Conceding the legality of the order for the payment of the taxes the ■ receivers, by an appeal, challenge that part of the order which directs them to pay the penalties, upon the grounds (1) that receivers operating the property of a defendant railway company are not liable for the penalties imposed by state statutes for the failure to pay the taxes lawfully levied upon that property, and that the only proper method of collecting the taxes is by petition to the court which-is in possession of the property, and not by the threat or imposition of penalties for failure to pay them; and (2) that if the receivers ought in equity to pay the penalties in this case the court erred in adjudging the amount thereof to be 25 per cent, of the taxes levied when it should have limited that amount to 10 per cent, thereof.
It is the settled rule now that after the property of an insolvent corporation is taken into the possession or dominion of a court for the benefit of its creditors, and while it is held by the court for that purpose, a legal sale of it cannot be made without the permission of that court for the purpose of enforcing payment of taxes or penalties upon it. Wiswall v. Sampson, 14 How. 52, 14 L. Ed. 322; Barton v. Barbour, 104 U. S. 126, 26 L. Ed. 672; In re Tyler, Petitioner, 149 U. S. ,164, 13 Sup. Ct. 785, 37 L. Ed. 689; In re Eppstein, 156 Fed. 42, 84 C. C. A. 208, 17 L. R. A. (N: S.) 465; Dayton v. Pueblo County, 241 U. S. 588, 590, 36 Sup. Ct. 695, 60 L Ed. 1190. Counsel cite
But the penalties which the state, its municipalities, and subdivisions here seek are not invalid. They arose and fastened themselves as Hens t'pon the real estate of the corporation, now in the hands of the receivers, by virtue of and in accordance with the statutes of the state, and, if the receivers and the creditors they represent: arc to have the benefit of that real estate, there is no better reason why they should escape the payment of the penalties than there is why an individual, who has been unable to pay his tax upon his homestead when due, should escape the payment of the legal penalty for that failure. The real property of an insolvent corporation is not relieved from the penalties lawfully attaching to it for failure to pay the taxes thereon by its seizure by receivers on the order of the court for the purpose of applying it to the payment of its debts, and there was no error in the direction of the court below that the receivers in this case pay the penalties imposed by the statutes of Arkansas upon the real estate of the corporation for the failure to pay the' taxes thereon. First National Bank v. Ewing, 103 Fed. 168, 190, 43 C. C. A. 150, 173 (5th Circuit); Coy v. Title Guarantee & Trust Co., 220 Fed. 90, 93, 135 C. C. A. 658, 661, L. R. A. I915E, 213, 218 (9th Circuit); Gray v. Logan County, 7 Okl. 321, 54 Pac. 485, 487; High on Receivers, § 394b, p. 508.