delivered the opinion of the court.
On December 4, 1917, the District Court of the United States for the Southern District of New York appointed H. Snowden Marshall general receiver of the property of the All. Package Grocery Stores Company, a corporation organized under the laws of Delaware, but having a place of business and property in the State of New York. The latter State asked to have certain debts due to it declared payable as preferred claims out of the assets in the hands of the receiver. These debts consisted .of (a) ' amounts due for annual franchise taxes assessed under § 182 of "the New York Tax Law, and (b) amounts due for license fees or taxes for the privilege of doing business within the State, assessed under § 181 of that law and payable but once. The State asserted in its claim “that said taxes accrued and became a lien on all the property of the defendant corporation pursuant to the provisions of the Tax Law of the State of New York prior to the appointment of the receiver herein.” The District Court held that both
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classes of claims were taxes, but that the hen created by § 197 of the Tax Law applied only to annual franchise taxes and that no provision of the law gave a lien for license taxes until a levy was made therefor. It accordingly allowed the preference as to the amounts due for annual franchise taxes and denied it as to the amounts due for license taxes. Upon appeal by the State, the Circuit Court of Appeals held that, independently of specific statutory provision, the law of New York as declared by its courts gave to the State as sovereign a hen or priority for payment of taxes over unsecured creditors; that this priority was a prerogative right, not a mere rule of administration; and that it applied, therefore, in the federal courts, 262 Fed. Rep. 727. The case came here on writ of certiorari,
At common law the crown of Great Britain, by virtue of a prerogative right, had priority over all subjects for the payment out of a debtor’s property of all debts due it. The priority was effective alike whether the property remained in the hands of the debtor, or had been placed in the possession of a third person, or was
in custodia legis.
The priority could be defeated or postponed only through the passing of title to the debtor’s property, absolutely or by way of lien, before the sovereign sought to enforce his right.
Giles
v.
Grover,
9 Bing. 128, 139, 157, 183;
In re Henley
&
Co.,
9 Ch. D. 469. Comnare
United States
v.
*383
National Surety Co.,
decided by this court November 8, 1920,
ante,
73. The first constitution of the State of New York (adopted in 1777) provided that the common law of England, which together with the statutes constituted the law of the Colony on April 19, 1775,^should be and continue the law of the State, subject to such alterations as its legislature might thereafter make. This provision was embodied, in substance, in the later constitutions. The courts of New York decided that, by virtue of this constitutional provision, the State, as sovereign, succeeded to the crown’s prerogative right of priority; and that the priority was not limited to amounts due for taxes, but extended alike to all debts due to the State,
e. g.,
to amounts due on a general deposit of state funds in ¿ bank.
Matter of Carnegie Trust Co.
151 App. Div. (N. Y.) 606;
This priority arose and exists independently of any statute.. The legislature has never, in terms, limited its scope; and the courts have rejected as unsound every contention made that some statute before them for construction had, by implication, effected a repeal or abridgment of the priority.
2
The only changes of the right made by statute have been by way of enlarging its scope in
*384
certain cases. Thus, while by the common law of England,
The King (in aid of
Braddock) v.
Watson,
3 Price, 6, and by that of New York,
Wise
v.
L. & C. Wise Co.,
Whether the priority enjoyed by the State of New York is a prerogative right or merely a rule of administration is a matter of local law. Being such, the decisions of the
*385
highest court of the State as to the existence of the right and its incidents, will be accepted by this court as conclusive. Compare
Lewis
v.
Monson,
The State’s right to be paid out of the assets prior to other creditors does not, as pointed out in
In re Tyler, supra
(quoting
Greeley
v.
Provident Savings Bank,
98 Missouri, 458), arise from an express lien on the assets existing at the time they passed into the receiver’s hands.
State
v.
Rowse,
49 Missouri, 586, 592;
George
v.
St. Louis Cable & Western Ry. Co.,
44 Fed. Rep. 117, 118;
Hamilton
*386
v.
David C. Beggs Co.,
171 Fed. Rep. 157;
Coy
v.
Tide Guarantee & Trust Co.,
212 Fed. Rep. 520, 523; 220 Fed. Rep. 90. The right of priority has been likened to an equitable lien.
State
v.
Rowse, supra.
The analogous preference in payment given to claims for labor by state statutes, and to. which the Bankruptcy. Act gives priority, have been described as being “tantamount” to a lien.
In re Laird,
109 Fed. Rep. 550, 555;
In re Bennett,
153 Fed. Rep. 673, 677. The priority is a lien in the broad sense of that term which includes “those preferred or privileged claims given by statute or by admiralty law.” 2 Bouvier Law Diet. (15th ed., 1883) 88. The prerogative right of the State resembles the privilege accorded by the civil law of Louisiana to certain classes of debts which it was assumed in
Burdon Central Sugar Refining Co.
v.
Payne,
City of Richmond
v.
Bird,
Affirmed.
Notes
See in addition to cases cited in the text:
Matter of Receivership of Columbian Insurance Co.,
3 Abb. N. Y, Ct. App. Dec. 239, 243 [1866];
Central Trust Co.
v.
New York City & Northern R. R. Co.,
See Matter of Niederstein, 154 App. Div. (N. Y.) 238, 244-6; Matter of Wesley, 156 App. Div. (N. Y.) 403, 405,