60 N.J. Eq. 514 | N.J. | 1899
The opinion of the court was delivered by
This is an appeal from a decision of the chancellor, affirming the rejection by the receivers of the United States Oar Company . (an insolvent corporation) of the claim of the State of New Jersey to be paid the amount of a state tax assessed against the company, under the provisions of the miscellaneous corporation tax act, subsequent to the entry of the decree of insolvency and the appointment of the receivers.
Section 4 of the act under which the assessment was made, after providing for the imposition of a license fee upon certain specially designated corporations, among which the United States Oar Company is not included, declares that “all other corporations incorporated under the laws of this state, and not herein-before provided for, shall pay an annual license fee or franchise tax of one-tenth of one per centum on all amounts of capital stock issued and outstanding,” &c.; and section 6 enacts that “such tax shall be a preferred debt in case of insolvency.” Gen. Stat. p. 8335.
The receivers in the present case have not in their hands assets sufficient to pay those debts of the corporation which existed at the time of their appointment, nor have they continued the business of the corporation in any wajr, nor exercised any of its franchises. The question presented for decision by this court is whether under these circumstances the state is entitled to priority in payment, out of the assets in the hands of a receiver, of a tax assessed against the corporation, after his appointment.
In the court below it was considered that the liability of a receiver to pay such tax, to the detriment of the general creditors, depended upon whether the franchises of the company were a valuable asset in his hands, and whether he continued to use them, after his appointment, for the benefit of the creditors and stockholders of the corporation, and, reaching the conclusion that in the case now before us the corporate franchises were valueless, and it being admitted that they had not been used by the receivers, the court decreed that the tax assessed was not payable out of the funds in their hands until after all indebtedness existing at the time of the appointment of the receivers was discharged.
Applying this test, it is quite clear that the so-called tax was properly imposed in the present case. At the time of its imposition, although the company had been decreed to be insolvent, no decree of dissolution had been pronounced against it, but, on the contrary, its corporate life was continued for the benefit of its creditors pending the final distribution of its 'assets.
But it is contended on behalf of the receivers that even if it be considered that this “tax” was properly laid, still, by force of the statute under which it was assessed, it became “a debt due to the state when determined,” and that, as it was not “determined” until some months after the receivers were appointed, it was, distinctly, not a debt of the corporation at the time of their appointment, and consequently is not payable out of the assets in their hands, for the reason that, by their appointment, such assets were converted into a trust fund for then existing
It seems to us, however, that this contention cannot prevail without disregarding the statutory provisions which regulate the subject. Section 6 of the act under which this so-called tax is laid declares, as has already been stated, that such tax shall be a preferred debt in case of insolvency,” and section 68 of the Corporation act (P. L. of 1896 p. 209) provides that
“all the real and personal property of an insolvent corporation, and all its franchises, rights, privileges and effects, shall, upon the appointment of a receiver, forthwith vest in him, and the corporation shall be divested of the title thereto.”
It is manifest, therefore, that when the “tax” is assessed against an insolvent corporation, after the appointment of a receiver, the fund out of which its payment must be preferred is that which is in his hands, for there is no other fund upon which it can be charged, and, consequently, in no other way can each of these two statutory provisions be given full force and effect.
The decree appealed from should be reversed, and the receivers directed to pay into the state treasury the amount of the disputed tax.
For reversal — Depue, Van Syckel, Dixon, Garrison, Lippincott, Gummere, Ludlow, Bogert, Vredenburgh — 9.
For affirmance — The Chibe-Justice, Collins, Hendrickson, Nixon, Adams — 5.