*1 STATES. v. UNITED EXECUTRIX, KING, al. et 14, 1964. December 19, 1964. Decided Argued October No. *2 David S. Bate argued the cause for petitioners. With him on the brief was Paul T. Murphy.

Alan S. Rosenthal argued the cause for the United With, States. him on the brief wére Solicitor General Cox, Assistant Attorney Douglas, General W. Hadley Libbey and Frederick B. Abramson.

Mr. Justice Harlan delivered opinion the Court.

This is an action brought by the United against States of executrix George King,1 a deceased distributing agent for a debtor in a Chapter XI proceeding, and against his surety. The Government alleged was personally liable under R. S. 3467, 31 U. S. C. § (1958 ed.), because he satisfied of nonpriority claims creditors with knowledge of an outstanding government claim, consequence of which the Government could not paid in full.

The facts of the case were stipulated and are essen- tially as follows. On 1, October 1946, Seeley Tube & 1King died after testate commencement of the suit and his execu trix was substituted party as a by, defendant court order. An action by the against United States a fiduciary under R. 3467,31U. S. § S. C. (1958 ed.), §.192 against survives his estate. See United States v. Dewey, 39 F. 251. filed a corporation, Jersey New Inc., a Company, Box ofXI Chapter reorganization for petition 52 Stat. amended, as 563, Stat. Act, 30 Bankruptcy Seeley notified States thereafter, Soon default, Seeley’s because terminate, intended Picatinny Seeley and between contracts federal two Department War installation Arsenal, pur-r its signified further Government States; for liable Seeley to hold contracts relet pose ap- referee 1947, March On costs. excess as president, Seeley’s was who King, pointed On $10,000. for bond surety his accepted arrangement plan hearing, a 1947, after March Government confirmed; the Seeley was submitted petition, Seeley’s creditor aas listed schedule annexed in an noted were contracts Picatinny corpo- Seeley, called plan executory. The *3 $160,193.68 agent distributing with deposit ration, checks by court to orders pursuant distributed by countersigned and by the signed for provision written no contained plan The referee. unliquidated yet payment claim. unfiled place took colloquy following hearing, At Seeley: counsel Freeman, Mr. referee between Picatinny ^of a claim Is there Referee.

“The Arsenal? have may Picatinny Arsenal The Freeman.

“Mr. claim. some money to enough up put we Have Referee. “The it? meet No.

“Mr. Freeman. there? problem there Is Referee. “The money, them owe doWe “Mr. Freeman. st ateto I want in. bring them want we will. company further Honor your deposit any sum of money that is represented by any claim Picatinny Arsenal may file in these proceedings within a time your Honor directs them to file it.

“The Referee.' Have you any notion of what they might claim?

“Mr. Freeman. We think they may claim $20,000. “The Referee. you Have $20,000 available? “Mr. Freeman. We have $94,000 available to pay them if necessary, and we represent-to your Honor that there will be at all times $20,000 or more avail- able to dispose of that claim, in cash . . . The record shows that King present in the courtroom on the day of the hearing.

Thereafter the court entered order directing the Government to file its claim before May 9, 1947. On 9May the Government duly filed its preliminary con- tingent proof of claim in the amount of $26,818.82, later amended to $34,125.03, alleging a priority 64 of the Bankruptcy Act, 11 U. S. C. § 104 (1958 ed.), and R. § S. 3466, 31 U. S. § C. 191 (1958 ed.). However, in the seven weeks between the hearing and the filing of this claim, King, as distributing agent, paid had out by checks duly countersigned by the referee, all but $6,085.01 of the $160,193.68 deposited with him; $42,829.76 was paid to King himself as a creditor of the company.2 A long-liti- gation then commenced on the issue of whether the Gov- ernment timely filed its claim, with an ultimate deter- mination being made in January in favor of the Government the Court of Appeals for the Third *4 Circuit. The court stated, “The disclosure by the debtor at the referee’s hearing on confirmation of the plan that 2This-fact, was not stipulated,-but appears in King’s petition final and report, tvhich was attached as Exhibit A to the Government’s complaint. See Brief for Respondent, p. 7, n. 4. .

333 per a creditor was ... had become the Government the Act and amounted to duty of its under formance list of creditors included an informal amendment Seeley In re Tube & Box in. the debtor’s schedules.” Co., 350 389, 391, denied, 219 2d U. S. F. cert. which still King $6,085.01

After had distributed the gone ($3,620.39 in his hands remained August On States) report he filed his final and account. them and dis- Bankruptcy approved Court charged King surety.3 and his July commenced this 3, 1958,

On the United States against King4 suit for the balance outstand- $25,831.08, determined, ing finally against on the claim as and surety $10,000. for The Govérnment’s contention was 192 for personal liability § incurred by paying amount the claims of the debtor’s non- unpaid priority thereby depleting creditors and so the debtor’s assets that the Government’s claim could not be paid provides: full. Section or

“Every executor, administrator, assignee, or person, other who in whole or in debt pays, part, person due or estate for whom or for which he acts before he to the pays satisfies and the debts due person estate, United States from such or shall become in his own estate to person answerable the extent of payments the debts so due to States, may or for so much thereof as remain due unpaid.”

The District Court complaint theory dismissed on the distributing agent that a is not included within 192 as administrator, “executor, assignee, or other person” alleged complaint It was in the Government’s in this action that events, allegation received no notice of these but this denied in stipulated the answer not mentioned in the facts. 1, supra. See note *5 334

because he, unlike those fiduciaries mentioned specifically in the statute, personal not a representative of the arm and a representative of the bankruptcy court. 208 Supp. F. 697. The decision was reversed on appeal, 322 2d 317, F. and, because a conflict among the circuits on the proper interpretation of 192,5 we granted certiorari, 375 U. S. 983.

I. Section 191,6 which government establishes priorities any on debts owed an insolvent debtor to the United States, and gives which assurance that such debts will be paid, are part of single statutory structure. The precursor of 191§ appeared first in 1789 in an act estab- lishing customs (1 duties 29, 42). Stat. Section 21, relat- ing to collection bonds for the payment of duties, pro- vided: in all cases “[A]nd or insolvency, any where estate in the hands of executors or administrators shall be insufficient to pay all the debts due from the-^deceased, the debt due to the United any States on such bonds shall be first satisfied.” In 1792 the was extended to voluntary assignments for the benefit of 5 Compare Stephens, States v. 208 F. (C. 2d 105 A. 5th 1953), Cir. with Crocker, States v. (C. 2dF. A. 9th 1963) Cir. and the decision of the court present below in the case. provides: Section 191 any person “Whenever indebted to the United States is insolvent, or whenever the estate of debtor, deceased in the hands of the executors or administrators, is insufficient to all the debts pay due from the deceased, the debts due to United' States shall be first satisfied; and the priority established shall extend as well to cases in which a debtor, having property sufficient pay debts, all his voluntary makes a assignment thereof, inor which the estate and effects of an absconding, concealed, or absent debtor are attached by process law, as to cases in which an of bankruptcy act committed.”- of “abscond- property of the and to attachments creditors as to cases as well absent” debtors concealed ing, com- have been shall bankruptcy legal “an act of passage 263. Prior 18,§ 1 Stat. mitted,” established, had been internal revenue “An Act in the place; taken extensive transactions *6 necessarily become many persons which, course Fisher, States v. United States.” to the indebted United the section 1797, Act of the 358, By 392. 2 Cranch officer, or other involving “any revenue to cases extended States, to the becoming indebted United hereafter person Price v. See 1 Stat. 515. or by otherwise.” bond 1799, in Con- Then, States, 501. 492, S. United 269 U. adding by here us step which concerns took the greás establishing per- in § embodied now provision the those who frustrated liability for sonal priority: any or where insolvency, all cases of and in

“. . . executors, administrators of the estate in hands all the debts pay or shall be insufficient assignees, to the or debts due deceased, from the the debt due be bonds, or shall any bond States, on United or administrator, executor, satisfied; first and any debt pay shall person, other assignees, or who which, or for whom, from person or estate by due or debts due to the debt they acting, previous being or person from such estate the United States shall become duly paid, answerable first satisfied and estate, for the debt or debts person their and own in States, or so much thereof so due to the United 1 may unpaid remain . . . .” due Stat. extending section, proviso in same stat-

Later, is assignments absconding voluntary ute to debtors included,. also

336 separate into in the provisions of the sections

Division in any change purpose Statutes “did not'work Revised States, 269 Price v. United 492, 501. U. S. meaning.” or 192 be inter §§ must Thus, evident so stated in United materia. The pari Court preted Corp., 269 U. S. 504, 513, States v. Butterworth-Judson in Bramwell v. United States interpreted and so them- Co., Guaranty Fidelity & S. where it said: U. ways in 3466 of the insol- specification “The [§ 191] designation aided vency may manifested is persons made answerable of the 192] [§ from pay for failure States first or from inadequate estates of deceased debtors living persons The insolvent estates debtors. ‘every executor, administrator, assignee, held are or other person.’ generality language The significant. together, Taken these sections mean required a debt due the States is first to possession be satisfied when the and control of the *7 given any person charged estate of the insolvent is to duty applying payment with the of the of the to insolvent, rights priorities debts of the the and of as S., may appear.” creditors be made to 269 U. at 490. II.

Petitioners, oral argument, conceded the Govern- in ment’s claim under 191. priority contention, Their relying on United States Stephens, v. 208 F. 2d is that a agents as class are nonetheless excluded category from the of by fiduciaries covered § 192 because they agents are of the court rather than personal repre- sentatives of debtor, the and person” the words “or other are “limited those who stand as personal representa- tives the not.only by the application of [of debtor] the ejusdem generis of principle language qualify- any debt part or in whole in pays ‘who one as ‘person’ ing he which or or whom estate person for by the for due Id., at 108. acts” per a between distinction on a emphasis

Petitioners’ mis is court of the an representative sonal purpose The of §§ in context the placed into make those Bramwell, is in recognized as of § assets debtor’s possession control hands whose the that seeing responsible placed, the falls within not or paid. Whether responsibility whom on fiduciaries of category posi his of on the title not depends, placed be should practical but, in appointment, his of mode the tion position a in he is of control degree the upon terms, the of among creditors allocation the over assert appointment That his in possession. assets debtor’s opera inhibit decisively not does the court of officer express by the inclusion.within -is shown §of tion administrat court-appointed of the of statute scope per besides others that showed Bramwell. And ors7 included may of representatives sonal 192§ that indicated Court this case 192, for function charged with official ato state apply would official although assets, bank’s a liquidating representative personal acting as clearly in that Bramwell distinguish would Petitioners bank. whereas control, large measure a official state not vitiate does hand, one on this, not,8 but King did representative personal not be need one point other, 192, and, §of coverage within come the assets over control element it is the emphasizes decisive. n *8 7 court, been included has officer bankruptcy, A trastee Kaplan, 2d F. 74 v. States person,” “other as an 317, at 322. King, F. 2d States v. See agree We with Judge Browning, writing in United Crocker, v. States 313 F. 2d 946, 949, that “the paid debts by a liquidating receiver [and, we add, distributing agent], like those paid an executor,'administrator, assignee for the benefit creditors, primary obliga- are tions of the debtor; the phrase ‘for whom, or for which he acts’ should be general read as a acknowledgment of this fact rather than as imposing a restriction upon the reach of Section 192 inconsistent with the overall purpose (cid:127) this section and Section 191.” reject, We therefore, proposition that because distributing agents in Chap- ter XI proceedings act primarily for the court rather than for the debtor they categorically excluded from the coverage §of 192.

III. . It remains to inquire King, by whether acting as an arm of the court under court instruction approval lacked the degree of control necessary §make 192 oper- ative as to him. argue Petitioners that distributing agents exercise no discretion in the discharge of their duties, perform only ministerial pay- function of ing out deposited funds in conformity with the court’s orders. Indeed, it is contended that inclusion of distrib- uting agents within the coverage of § 192 would have placed King on the horns of a dilemma, that he must either have personal incurred liability Government or risked being held in contempt by the Bankruptcy Court. But this assumes that plan of arrangement, once submitted to the court, was immutable. In fact, if King had objected at the confirmation hearing to paying out deposited funds to nonpriority creditors before Government’s claim was surely provided for, there can.be little doubt that he would have obtained satisfaction.9 generally See 8 Collier on Bankruptcy, (14th 1963). ¶5.33 ed. *9 unlikely that such most confirmation after Even respon- been, Had it ignored. have would been objection claim Government’s of frustration for the sibility we court, and upon completely have devolved would , case. very different with a faced would rule general articulate prepared not areWe make agents to distributing of responsibility defining the on King, only that holdWe objections. press As responsibility.10 such a have case, did of this the facts been have he must corporation of the president likely most claim; potential Government’s of the aware plan formulation in the role an active he took Picatinny a reference to appended which arrangement appointed had been He contracts. pres- and was hearing, the confirmation day before was likelihood, present he all In day. that in court ent claim government of the possibility when the the time at counsel, made company’s Freeman, the Mr. arose it. meet was available $94,000 that representation major distributees one was himself he Finally, think we circumstances In these plan. the distribution over control degree of of a sufficient King possessed was in his posses- of the assets among creditors the allocation see- § 192 for responsibility rise to give sion to responsi- paid, government ing that no made reveals, as the record far King, so bility acted that say This is discharge. effort to intended he positively any way or dishonestly in have may well He claim. thwart avail- $94,000 was representation either on relied knowl- full with corporation president or, able, led facts underlying whatever finances, on of its edge 192§But representation. to make Mr. Freeman (1835). States, 9 Pet. v. Field Cf. required more of King than an honest belief that Government woüld be paid. It imposed upon him a duty to see that this was done.

Affirmed. Justice Black Mr. Douglas and Mr. Justice share the views of the Court of Appeals . for the Fifth Circuit, United States v. Stephens, 208 F. 2d 105, as to the con- struction of the statute, and would therefore reverse the judgment below.

Mr. Justice White, concurring.

In the typical Chapter XI case initiated by the debtor under § 322 it is the debtor that remains in possession and that has prepared and filed the petition and schedules and that proposes the arrangement. It is only after the arrangement has been approved by the creditors that a distributing agent is appointed and charged with the dis tribution to specified recipients of the deposit required by the Act. The agent, qua agent, has no reason or duty to know or to learn of unscheduled debts, priority or other wise, and lacking such knowledge from-some other source such as his prior or current position with the debtor I would think he would be beyond the reach of 31 U. S. C. § 192 (1958 ed.) if a government priority claim is unsched uled and unpaid.* * Even if a distributing agent does learn of government the claims it may be that he should not be held liable under 192, if such knowl

edge is not obtained until after confirmation. As the claim was neither scheduled nor prior filed to confirmation the Government would not be entitled to share in deposit the and a disbursement from deposit the to.the United States would probably subject the distributing agent to liability to creditors entitled to share in the composition. In re J. B. Poliak Co., 86 F. 2d 99. Only if the confirmation were set ¿side prior to distribution of the deposit, which normally occurs immediately, provision could be made pay to government the claim. In respect this it should be noted that Court’s observation the distributing task the have does agent But the sufficient a include to required is deposit and the deposit exceptions), some (with claims priority all pay sum unliqui- disputed as scheduled those even (2) 737§C. 11 U. S. (2), Act, § Bankruptcy dated. [2], at 5.33 Bankruptcy, ¶ Collier ed.); 8 (1958 XI Chapter under responsibility His 1963). (14th ed. enough far 192 extends 191 and §§C.S. 31 U. under he deposit the ascertain obligation the impose the specified claims pay ample handling is toas And law. required disbursed and is statute not, or undis- disputed liquidated claims, scheduled sufficient with furnished puted, not responsibility him the upon fasten knowledge to defeat as to deposit so out paying court deter- a least without at Government do so. he should mination Al- case. this difficulty in however, remains,

There revealed petition with filed papers though the'Government, with contracts had certain creditor. as a States the United list did schedules contracts terminated later However, Government a claim the existence hearing confirmation at the him- referee The made known:. States the. *11 payment providing question up brought self the testb I read told, as and was claim Government’s defray to any sum include did deposit that the mony, have would that of this claim any part make and would claim satisfy the to available sums ample it was directed purpose for this deposit deposited funds paying out object “to waited .had if even surely claim before nonpriority creditors unlikely that “it most after confirmation until provided for” per- ante, pp. 338, while ignored,” been objection would have oversimplified case, greatly this particular facts haps on the true generally. position distributing agent’s apply to meant if make. The debtor’s attorney, however, made it clear the debtor was disputing the claim of the United States. In effect, the situation at that point was as though a disputed and unliquidated claim had been In re Seeley Tube & Box Co., 219 F. 2d scheduled. 389, cert. denied, 350 U. S. 821. An arrangement may not be confirmed if a deposit does not inchfde an amount to take care all of. scheduled priority claims including those which are unliquidated. 8 Collier on Bankruptcy, 5.32 ¶ If the [8]. referee, as he apparently did here, con firmed the arrangement without having in hand a deposit to pay the debt to the Government if proved and allowed, it could well be argued that a distributing agent should not be required to have remonstrated with the referee or to bear the burden of the referee’s unauthorized act, for the distributing agent’s “control possession” limited to the deposit.

We need not pursue this phase of the matter further, however, since other justify facts holding the distributing agent accountable in particular this case. As the Court points out, the agent was an officer of the debtor, was undoubtedly familiar with its affairs and took no excep- tion to the attorney’s statement there would be ample funds to pay the government claim. peti- This tioner was not an uninformed distributing agent doing only what he was told to do but was both a distributing agent and an officer of the debtor, with ample notice of the Government’s claim and of the referee’s expéctation proved when and allowed it would be paid. In pay- ing out the deposit without provision for the claim of the United States he acted at his own risk and became per- sonally liable 192 when Government’s claim became liquidated.