Opinion
No. 37153.
November 15, 1939.
Louis P. Rosenberg, of Brooklyn, N.Y., for trustee.
John T. Clancy, of Long Island City, for Division of Placement and Unemployment Insurance of New York.
In Bankruptcy. Proceeding in the matter of the application of the Willett-Baker Lumber Corporation, debtor, for relief under chapter XI of the Bankruptcy Act. On motion for an order dismissing the petition of the Division of Placement and Unemployment Insurance of the State of New York to review an order of October 19, and for an order affirming a referee's order dated October 19, 1939.
Referee's ruling affirmed.
The referee's report follows:
To the Honorable Judges of the United States District Court for the Eastern District of New York:
I, Eugene F. O'Connor, Jr., referee in charge of the above entitled proceeding, do hereby respectfully certify:
That an order was duly made by me on October 19, 1939, reducing the priority claim of the Division of Placement and Unemployment Insurance of the State of New York filed herein in the sum of $317.40 to the sum of $146.66.
The order was made upon the record taken on September 12, 1939, and September 26, 1939, wherein the claimant conceded that the debtor had three employees in the years 1938 and 1939. The debtor was prepared to establish that simultaneously with the filing of the final return for the year 1936, written notice was given to the claimant that the debtor no longer had more than three employees and submitted an affidavit to the claimant in support of that fact. It is the claimant's contention that the giving of such notice in 1936 or early in 1937 was inadequate, and that notice should have been given in 1938 which would have been after the completion of one full year since the date when the taxpayer ceased having four or more employees.
I find that the legal tax due this claimant is in the sum of $146.66 for the years 1936 and 1937 and that the taxpayer (debtor) is exempt from taxes for the years 1938 and 1939.
Claimant relies on section 502 subd. 3(3)(e) of the New York State Unemployment Insurance Law, Consol. Laws N.Y. c. 31, Labor Law, art. 18, which reads as follows: "Any employer who has once become subject to this article shall cease to be subject hereto only after a written application by him and after a finding by the commissioner that he has not within any fifteen days in the preceding calendar year, employed four or more persons in any employment subject hereto."
It should be noted that there is no indication of the time requirement for the giving of such notice. The debtor gave notice in January of 1937 and the examination of the debtor's books would have resulted in a finding by the commissioner that the debtor had less than four employees for the years 1937, 1938 and 1939. While it is true that the debtor would not be exempt for the year 1937, nevertheless it would not be subject to said tax for the following years until such time as it again employed four or more persons.
Section 64 sub. a (4) of the Bankruptcy Act, 11 U.S.C.A. § 104, sub. a (4), grants jurisdiction to this court to determine the amount and legality of all taxes. Even assuming that the debtor's notice was insufficient, the claimant having conceded that if proper notice had been given the claim would amount to $146.66, this court should not permit to be proved and allowed a tax which was never intended to be imposed. In re Becker, 12 Am.Bankr.Rep. N.S. 732; In re Seaver-Howland Press, Inc., 16 Am.Bankr.Rep.N.S. 227, 231.
The petitioner claims a tax for 1938 and 1939, not because one was due and payable, but because the Department had not ascertained that none was due and payable. To agree to that position would be inequitable to other creditors. The referee's conclusion is sound, and his ruling is affirmed.
Settle order.