*1 576 HANEY, (dissenting). status, Judge agreement marital but on written of guaranty. agreement specifically That is, think, opinion majority bound his agreement estate. Such is like an expressed in Hel with accord the views as any agreement payment of the guaranteeing 427, Fitch, 149, 60 S.Ct. vering v. 309 U.S. debt of promise another. In such case the 665; Fuller, U.S. Helvering v. 310 84 L.Ed. 69, is extinguished merely because the 1082; Helvering 784, 84 L.Ed. 60 S.Ct. guarantor dies. In addition the 780, Leonard, 60 S.Ct. v. 310 U.S. local law specifically seems to hold the ob- Commissioner, v. L.Ed. and Pearce ligation to Finally, continue. local law —. L.Ed. March 62 S.Ct. contrary bearing ques- even or on the trusts, the income alimony In the case of fact, tion by respondent. is cited income paid constitutes trust to the wife the either to the husband or to the spondent concedes obli- that the contractual wife, depend gation course, by saying: survives “Of If ing upon obligation. an the existence of husband’s estate for his debts becomes liable wife, even obligated husband is and obligations arising of contracts out of that though contingently, a satisfaction dependent upon personal are not his obligation constitutes income the trust * * *” services. wife because the husband but not to her on merely receiving payment latter is is circum- under these Nicolai, v. obligation. See Commissioner it cannot wife has stances be said that the 28, 1942,126F.2d carry March 927. failed ligation showing her an ob- burden of part on estate. of the husband’s escape apparent From this it is taxation, show there the husband must The decision should be reversed. obligation which is satisfied is no on his trust, from the by payments to the wife taxation, escape is seeks if it the wife who obligation must an she show that the Commissioner’s on the husband. Since correct, the presumptively is determination seeks is on whoever burden show error in the upset that Since determination. case, to over instant it is the wife who seeks determination, she turn the Commissioner’s proving the burden that the pursuant to trust made to from the her UNITED STATES GOLDBLATT of the husband. continuing obligation BROS., Inc. degree supra. The Pearce v. No. 7797. convincing proof required “clear and proof”. Id. S.Ct. L.Ed. -]. [62 Appeals, Seventh Circuit. Circuit Court agreement made The wife introduced May 23, 1942. husband, by which the her husband Rehearing Denied June up any agreed to make estate” “his agree- income. trust Such an deficiencies convincing clear a con- quite obligation as an much tractual payment guaranteeing princi- agreement alimony interest bonds in the trust pal and Leonard, supra, page at Helvering U.S., S.Ct., page 783 of 60 84 L. of 310 there, 1087. As said the fact that
Ed. might his good never have to make husband point”. promise is “beside the assumed, without so While duty deciding that the of the husband his pay support to the wife based estate mere- status, ly pre-existing marital husband, extinguished the death obligation of the husband nevertheless pre-existing on the based herein is not *2 unpaid owing taxes New Dahl. There jury was a trial without a fact, findings court made stated *3 thereon, conclusions of law and rendered plaintiff. for From
judgment, appeals. the defendant depart- Defendant is the ten owner of Chicago stores vicini- located ty. Prior New to November operated repair the shoe concessions in the stores. had no share in Defendant ownership noi of these concessions and management; voice in their the control inwas Norman Dahlman and the members family. his of immediate November, quite prior For sometime having financial New had been difficulties, year July and in of that mat- began to grew ters complain worse and creditors about the defendant unpaid defend- Dahl’s bills. Thereafter of meet- vice-president had number ant’s corpo- concerning his ings with Dahlman Yet, ag- financial troubles. ration’s continued, in November the gravation employes of Dahl to its pay checks Finally, on November “bounced.” 1937, regu- sale in. business, New Dahl sold of the lar course assets— of its the bulk to the defendant assets, physical consisting of all New Dahl equipment which machinery and retained business—and in its had used owing receivable nothing the accounts by its its officers and certain of to it Repair Com- subsidiary, Shoe the Crest uncollec- obligations were pany. These tible. parties pre- At time agreement pared and the affidavit re- Pritzker, Clinton, Nicholas Stanford J. Marks, by the Act. The quired Illinois Bulk Sales Ill., all Chicago, and Robert for was in usual form and at- affidavit tached appellant. purportedly all it was list C., Artnstrong, Washington, A. A. D. Dahl creditors as the date the New Clark, Jr., Atty. Gen., O. Ass’t Samuel J. ap- Government’s name the sale. of peared The. Joseph Jones, Sp. Louis Monarch and M. By the terms nowhere on that list. Atty. Gen., Woll, Ass’ts. and Albert U. S. J. assumed agreement, defendant of the Atty., Ill., Chicago, appellee. obligations discharge all the listed MAJOR, KERNER, Before and MIN- return for as- New Dahl in all
TON, Judges. Circuit sets, receivable owed accounts save the subsidiary. the officers KERNER, Judge. the listed sent all defendant States, required by the of sale claiming United the notice a credi- creditors Act; plain- none to the Law,1 under the it sent tor Illinois Bulk Sales Bulk Sales tiff, although sale, New purchaser of the sued defendant as major on the date tax liabili- following federal the assets the New Dahl Dahl had n knowledge of Corporation, had ty, recover indebtedness seq. 121%,
1 Ill.Rev.Stat.1941, Chap. et 78§ liability. existence If facie the returns were an in- computation of New Dahl: statement accurate Dahl’s obligations, the defendant had proving. burden of so The returns 717.5S Income Tax. evidence, were also substantial Social Taxes—Title other in the evidence case is not such as 373.07 IX . prima weaken the Government’s facie Nov. case. Security Taxes—Title 1937 Social The defendant next contends that in so 78.74 VIII . far as the 1937 Income and Title IX So- 1,311.79 Income Taxes. *4 Security concerned, cial taxes are Gov- the 1937 Social Taxes—Title ernment was not a New Dahl creditor 1,733.58 IX . Act, meaning within the of the because liability those items of liqui- were neither only ob- discharged listed Defendant ligations certain, dated and presently nor due $29,676.75, by cash of owing. 31, 1937, paid December $39.44 and on argument misinterprets The not Revenue Collector of Internal to account only liabilities, the nature tax but November Dahl’s applicabili also the extent ty. the statute’s Security taxes. VIII Social Title , sure, To be Bulk Sales Act “is plaintiff’s complaint the de The is that derogation penal common law and violated the Illinois Sales Bulk fendant nature, strictly must therefore be failing the bulk by to serve notice of Act construed,” Doss, 515, Coon v. 361 Ill. who, upon plaintiff, sales transaction 341, 343, 198 N.E. A.L.R. but knew, was a creditor defendant strict construction does not further liability is stat The bulk vendor. claimed quire reading of into the statute. The word creditor used in the limitations imposed that to the extent utory and is comply vendee has failed to sales bulk meaning sufficiently statute broad has a — Act.2 with the every broad creditors of class include against defendant’s initial The limitations, Winthrop, etc., without Co. there court’s is that the trial Kournetas, Ill.App. evi- nor sufficient admissible was neither is to those It claims, not restricted creditors whose upon binding estab- the defendant dence sale, liqui at the time were was New the Government lish that dated as the amount. statute makes for amount. listing by providing for this clear “the amounts owing to each as [creditor] Govern- discloses that The record ascertained.” near the New filed returns of used.the Corporation to latter’s establish the The amount of the 1937 Title IX objection to liability. The defendant’s tax tax could exactly have been determined on hearsay is it is and not that the evidence the date of the merely since it was evidence. the best upon based payroll. percentage of New Dahl’s In the case of tax, the income We believe court that trial days some 40 remained in the vendor’s properly admitted returns, only the tax not year, very but the nature of the instant liability as evidence the assessed tax transaction made it most unlikely that the 1936, but also of obliga for the 1937 tax vendor would continue in business. Ab It must tions. the the remembered special sent circumstance, even this a re were returns introduced establish approximation of the liability could liability primary Dahl, and not prepared have been and sent to Gov liability of primary the defendant. The part ernment required notice any, liability, defendant’s not be would the statute. such, unpaid taxes as for statutory liability of a to an bulk vendor Nor is word “creditor” limit aggrieved creditor the bulk vendee. ed in the statute to those whose claims competent Clearly the tax returns presently were are and owing. due If such were taxpayer’s liability case, evidence taxes, a merchandise creditor would not Tameling Cir., cf. creditor, be a bulk vendor’s within the 814-816, prima Act, 43 F.2d established unless the bill was
2 Ill.Rev.Stat., Chap. y2, 80-a. § 78 § ggo argues is sale. It date of defendant is due at or before only tax, liability for contains Dahl’s 1937 income significant statute taxpayer not because that was entitled to a That word “owing.” word liability $41,- that bad of a debt deduction in sense
used the limited 219.51,3 towas payable; the accounts receivable. due and has become to a liability contra-distinction cover a .The to claim a deduction depended contingent claim which statutory privilege. tax is Before the lia event before another occurrence of may have the benefit of deduc payer a con bility true was established: tion, prove is. his burden to that the debt damages for breach tingent obligation was a fide and that it be bona covered or for tort contract year ques came worthless the tax Plating Act, Superior the Bulk Sales That, the tion. did.not do. Co., 218 Ill Crafts Art Metal Works v. Affirmed. involved tax items here .App. but the Commissioner, 7 debts, Shepard v. cf. are MAJOR, Judge .(dissenting). and are within 101 F.2d notwithstanding they pay disagree *5 of the sále. relative to the 1937 and the the date income tax until after able 1937 In- Social taxes—Title IX. argues even defendant further The upon as the is predicated sofar the a creditor on was if the Government items, these two I think should it be sale, is not date of respects, approve. versed. In other I Bulk Sales provisions under keep is that the defendant important The contention in Act. to mind that the knowledge of predi- actual plaintiff’s did not sole to recover is have upon the Bulk claims. cated Act of Illinois. Sales complaint, It so declared in its duty under defendant’s It was the * * “* theory. case was tried and decided on that We, a notice in writ- send to statute therefore, are not concerned with of the vendor of the creditors ing to each plaintiff rights might had if which have attached statement the said named in [list procedure had other been invoked. some said vendee of whom the or to affidavit] * * knowledge have my thought direct in shall I desire to to two plaintiff quiries (1) Was creditor a — a fact found The trial court November New Dahl on within defendant, 17, 1937, the on November that through meaning the Illinois Bulk Sales agents, had actual its authorized so, any was (2) and com Act? read plaintiff’s claims. Our notice opinion, proof of such fact? In petent my reason for us record shows no ing of the questions must be both negative. answered in not upset finding as lower court’s to As to whether awas We attach supported by the evidence. determined the con creditor must be that defendant importance to the fact given that the Illinois struction term prior knowledge the sale and gained opinion re states: “It is not courts. agents other than notice was to claims, creditors whose stricted those actually the deal. who closed ones liquidated as to the time view, mis amount.” In this is a sight of the the lose We must not interpretation the Illinois cases. In purpose of the Act was fact that Plating Art Metal suddenly alienating Superior Works v. a debtor from prevent Co., Ul.App. no 218 a suit to assets without Crafts substantially all of his Doss, contract, damages su for breach of his creditors. Coon v. cover tice 102 whether a claimant was considering 198 N.E. A.L.R. pra, 361 Ill. meaning Act, common States is the creditor within 561. The United court, contrary, deciding and to the on millions of individuals creditor for “* * * this, Illl.App., corporations. light page In 151 218 said: many clearly applied not very of the Government’s should absence We think tort, parties holding list creditors claims in from vendor’s name reasoning defendant’s care would lead us to'conclude have invited the should same claim, responsibili inquiry. regard In this the holder of a such as this that one, ful uncertain, general unliquidated more than a admonition to which was ty was all creditors. not be contingent, to list vendor with- 3 Int.Rev.Oode, (K). § U.S.C.A. ” ** * This tainties and contingencies persist act. at least Stony approval holding until the year. was cited with end of the taxable The tax Stony S. can Island Bk., & Bk. Island St. made, T. S. assessed until a return is Ill.App. where required a tort case is not until March of the question presented. Again, following year. same Being assessed net Inc., Co., Inc., Johnson, income, 262 Ill. Smead dependent upon the amount is de- contract, App. 385, a suit for breach Congress provided ductions which argued personal exemptions, the term creditor should the form ordinary so necessary receive liberal construction expenses, business interest sort, any paid indebtedness, include one who has a claim of paid, losses, taxes contingent. court depreciation, depletion whether absolute and other items not rejected page necessary this and held at mention. Would one con- Ill.App.: could, 388 of 262 “Where the claim today, tend that he determine the contingent uncertain claimant his income tax for 1942? In should not considered a creditor.” contingencies addition suggested, number of this are cited a Illinois the law has not the situation dif effect cases to the that a for the been enacted. That is a matter which price ference the contract of Congress between tomorrow, determine next goods November, and the market value is un- sold sup- or even at a later time. liquidated. In Lawndale & Door pose, however, Sash opinion, under Savings v. West Side Trust and Bank date, Co. vendee of this the Bulk Sales under al., Ill.App. it was held et that a obligated recognize would be
lessor was a creditor at time of a claim, Government as creditor with a *6 payments provided bulk as to future sale liquidated owing, and certain amount. lease, theory for in on the that written a approxi- It is immaterial that “a reliable contingent upon such were oc liability mation of the could have been cupancy. prepared and sent to the Government” un- plaintiff a creditor within the less was requires, suggested as Statute Act, which, judg- opinion, owing, and that claim be ment, was not. generally courts held that Illinois have certain, liquidated it must be and not con- only support my opinion tingent. there is little room plaintiff’s claim is income tax plaintiff, for affirmative by filed New Dahl March turn question, sale in time had a delinquent return under Title IX against owing, New Dahl was April 12, filed both admitted over certain, liquidated contingent. and not No Thus, objection. the returns made in plaintiff by case is cited which affords April, by (not March New Dahl and any support to its contention this re- party litigation) instant held a spect Shepard unless it be v. Com- prove be admissible an fact to to essential missioner, Cir., 101 F.2d It is true existed on November claimed have debt, held we that a tax be a and we theory parte what these ex 1937. On “existing construed term in- debts” statements, long subsequent made subsequently clude Federal income taxes controversy, against are admissible event in by assessed In that Commissioner. defendant, is not clear. The feeble case, however, the court was not constru- they reason is advanced that are declara ing the term “creditor” as Il- used in the Assuming against tions interest. this is construing linois but was terma used Dahl, they correct as to New how could parties by agreement, an and took against declarations interest as understanding into consideration the and defendant, party to, was not who a and parties intention thereto. I doubt with, nothing to do had their utterance? any bearing decision has this opinion rely upon Plaintiff and the Tamel instant situation. ing v. F.2d claim, support admissibility any, what the case, however, these Government Just against returns. That was the income of a citizen suit as it is a received, and need not between Commissioner the tax be determined. What- nature, payer who apparent it seems had made the return. ever would liquidated, neither certain nor instant and it situation if plaintiff equally up- contingent obvious that it is the suit were between and cited, rule of on numerous future uncer- Dahl. No evidence is how- Such events. n none which ever, and know par- against third make them admissible ty, done.
as was admissible, holding After this evidence prima facie lia- it is said establish bur- bility, defendant had that the in these proving den inaccuracies overlooks This parte ex declarations. upon the fact that burden was by competent evi- complaint to establish its that the The record discloses dence. filed after New until turns were agent, which had visited a Revenue been controversy be- occasion defendant as tween New Dahl for the taxes. whether the latter return, up the agent made The Revenue not Dahl, from from the books paper fur- sheet figures certain agent of New Dahl. him
nished con- to be was entitled The defendant capable of evidence fronted with best plaintiff was production proof that as time of the at, of New n reference to cross-examine returns, of these The admission thereto. explanation source without explanation contents, without
their Dahl were not why to available, the books deprived only *7 cross-examination, but also burden improperly to it the shifted maintained have been which should plaintiff. se, Ill., Ligare, pro Chicago, George appellant. Woll, Atty., Albert U. S. W. S. J. White, Atty., U. Jr., Asst. S. both of Ill., appellee. Chicago, HARRIES. LIGARE v. EVANS, SPARKS, KER- Before No. 7893. NER, Judges. Circuit Appeals, Circuit. Seventh Court of PER CURIAM. May 20, 1942. (discharge by that his Plaintiff asserts- Progress Administration was unlaw- Works damages arising out of such un- For ful. discharge, brought suit in the he lawful Illinois court, which suit removed state where it was later dis- Federal court plain- motion. is- defendant’s- missed on order of dismissal from said appeal tiff’s us. here before granted leave Plaintiff pauper. directed the We proceed as up the Court to- send the District clerk of