*1
MAGRUDER,
Judge,
Before
Chief
COMMONWEALTH OF MASSACHU-
HARTIGAN,
WOODBURY and
Circuit
SETTS v. THOMPSON.
Judges.
In
PLYMOLD
re
CORP.
MAGRUDER,
Judge.
Chief
by
appeal
This
the Commonwealth
from an order of
Massachusetts
Appeals,
Court of
United States
for
Dis-
District Court
United States
First Circuit.
affirming
trict of
an order
Massachusetts
June
1951.
stopped
of a
Referee
the running of interest on a tax claim of
the Commonwealth as of the date
filing
petition
briefly.
essential facts can be stated
petition
in involuntary
was
against
debtor, Plymold
filed
Corpora-
tion, August 23,
on
Thereupon,
1947.
with-
adjudication, proceedings upon
pe-
out
stayed,
tition were
later that
month the
petition
debtor filed
for
XI of the
Act of
amended
Chandler
seq. Delay
ensued
necessity
occasioned
set-
tling
re-negotiation
claim of the United
States,
plan
but an amended
ment was
January
filed on
day.
was
things
allowed the next
All
necessary
complete
the consummation of
having
complied
amended
been
Woodbury,
Judge,
dissented.
with on
was
June
days
confirmed three
later on
The Commonwealth of Massachusetts
seasonably filed
against
its claim
Employment
contributions under its
Se-
curity Law, St.1941,
c.
statutory
claimed interest thereon at the
per
rate of
annum down to the date of
6%
payment.
claim,
The Referee allowed the
but refused to include interest after
petition
date of the
filing of
August
doing
1947. In
so he
upon City
relied
York
New
Harry
Levowich, Counsel,
Division of
and the court below affirmed relying
Employment
Security, Boston, Mass.
upon the same case.
(Francis
Kelly, Atty. Gen.,
E.
of Massa
chusetts,
Brennan,
Chief Coun
In our
the order should
af-
John
Boston,
sel,
Employment
Division of
Security,
firmed for the reasons stated in United
ss. with him
appellant.
on brief), for
States
Ma
v. General Engineering and Manu-
(Friedman, Atherton,
Lee
Friedman
M.
facturing Co.,
Cir.,
1951,
11
**
11
306(1),
unsecured debts
by Judge Sanborn
think,
§
the
we
eventual-
the end that
706(1), to
City of U.S.C.A.
of
reasoning
§
the
clear that
makes
and
328,
satisfy his creditors
ly
can
1949,
336 U.S.
New York
his busi-
unsupervised
of
control
710,
resume
involved
554,
93 L.Ed.
69 S.Ct.
bury a
to
bankruptcy is
equally
The end
ness.
of
bankruptcy
is
proceeding,
straight
a
Chapter XI
business;
the end
an
dead
applicable
proceeding
to
one.
Bankruptcy arrangement is to cure a sick
Chapter XI of the
ment under
present for-
contrary
would
Act.
the
of
bankruptcy the interest
Thus in
in the admin-
practical difficulties
midable
wiped
involved is
property
owner
the
in
Chapter
of
XI.
istration
out,
proceedings
arrangement
whereas in
would
Chapter
is
Indeed it
under
it not.
XI
is af-
The
the District Court
order of
even
interest cannot
seem that the owner’s
firmed.
Co.,
be
U.
affected. S. E. C. v.
S.
1044,
1940,
84
452,
310
60 S.Ct.
434,
U.S.
WOODBURY,
Judge (dissent-
deci-
L.Ed. 1293. This difference under
ing).
Supreme
of the
to be mentioned
sions
Court
definitely,
Certainly
Saper
the
case holds
presently
require that a
seems to me to
authoritatively,
of
that
and
course
bankruptcy
distinction be drawn between
like
claims
tax claims are now
other
proceedings
far
con-
arrangement
and
so
as
they
the
in that
bear interest after
do not
present
cerns interest
like the
on debts
holding is
of
But
date
that
of
under 64
the
§
controlling
although
not
here
874,
104,
11
U.S.C.A. §
petition in
proceeding
this
started with a
given priority,
are
and are entitled
to
involuntary
promptly
bankruptcy it was
paid
bankrupt
in full
in ad-
out of
estates
Chapter
arrangement
XI
converted into
payment
of
vance
the
of dividends to cred-
proceeding which it
to be there-
continued
itors.
And,
many of
tech-
although
after.
the
procedures
Although
recognize
I
niques
administrative
and
of
are
involved,
proceedings
difficulties
it
me that to
arrangement
used in
under
seems to
XI,
Chapter
remains
claim
nevertheless the fact
Commonwealth’s
would
proceedings
bankruptcy have
run afoul of the so called “absolute
that
in
priority” rule,
entirely
purpose
different
and
from
sometimes referred to as the
aim
principle”,
“fixed
proceedings
for an
enunciated
the Su-
preme
pur-
in
Chapter
Court Louisville Trust
XI.
has for its
Co. Lou-
isville,
Ry. Co., 1899,
pose
orderly, expeditious and
N. &
economi-
C.
U.S.
674,
liquidation
bankrupt’s
applied
43 L.Ed.
cal
of the
in
available
assets,
Railway
Boyd,
Pacific
proceeds
Northern
and the distribution of
Co. v.
equitable
basis
they
go
as far as
will
S.Ct.
57 L.Ed.
firmly
creditors,
to the
to the
established in
end
creditors
Case v. Los
may
possible
Lumber
realize as
from
Products
much
estate,
bankrupt
may
and the
be freed
U.S.
from
110. Ac-
cording to
or principle,
his burden of accumulated
that he
rule
debt so
this
“the stock-
in
holder’s
can start anew
XI
interest in the property
business.
is subordin-
rights
creditors;
proceedings,
first,
ate
of
on the other
to
of
hand,
purpose
liq-
creditors”,
then of unsecured
for their
not the
secured and
have
parties
“any arrangement
a business but its financial re-
of the
uidation of
purpose
rights
of an arrange-
subordinate
habilitation.
which the
interests
permit
attempted
to
the debtor to continue
are
to be
ment
first
of the stockholders
prior
management
expense
his
of
rights
business under
secured at
court,
put
or
it
creditors comes
supervision
to
class
within
either
Louisville
temporarily
management
judicial
a re-
denunciation.”
Trust
under the
Ry. Co.,
trustee,
A. &
a Co. v. Louisville N.
C.
su-
ceiver or
and second
establish
settlement, satisfaction,
page 684,
pra, 174
or
“for the
* *
principle
payment
830,
“fair as words art used 77B, Chap-
in old now *3 X, seq., ter Case v. Co., supra, Los Lumber Products pages page U.S. at at parity rea- L.Ed. clear also
soning it is included in the 366(3) same
XI. 52 766(3). 11 U.S.C.A. § supra,
See S. E. v. C. U. S. page Hence,
L.Ed. the fact priority interest entitled to the same principal, Consolidated Rock Products Bois,
Co. Du cases cited L.Ed.
it seems to me that to
Commonwealth’s tax claim while permitting
the debtor to ownership continue in
its property and the control its business
would be pri- to subordinate the right of a
ority creditor to the interest owners business, stockholders, in this case run thus counter the “ab- priority”
solute rule.
NATIONAL LABOR RELATIONS BOARD WESTEX BOOT & SHOE CO. Appeals States Court of
United Fifth Circuit. 25, 1951. Alexandre, Atty.,
Maurice A. Norman Somers, Counsel, Asst. Gen. David Findling, Counsel, Associate Gen. National C., Board, Washington, Labor- Relations D. petitioner.