Opinion
No. 210.
March 10, 1942.
Appeal from the District Court of the United States for the Northern District of New York.
Proceeding in the matter of the reorganization of the Fonda, Johnstown Gloversville Railroad Company, debtor.
See, also, 126 F.2d 604.
Judson Zimmer, substituted trustee of Fonda, Johnstown Gloversville Railroad Company, has appealed from an order so far as it denied a motion by him to expunge a claim for franchise taxes amounting to $1,883.55 filed by the State of New York pursuant to Section 184 of the New York Tax Law, Consol.Laws N Y c. 60, and so far as it allowed the claim to the extent of $61.92. The New York State Tax Commission has appealed from the order in so far as it expunged a claim for franchise taxes in the sum of $3,106.20 filed by the State of New York under Section 183 of the Tax Law for the year beginning January 1, 1934, and in so far as it expunged any part of the claim for franchise taxes in the sum of $1,883.55 filed by the State of New York under Section 184 of the Tax Law for the year ending June 30, 1934. The order is reversed in so far as it disallowed the foregoing claims on the part of the State and is otherwise affirmed.
Maider Maider, of Gloversville, N.Y. (Wesley H. Maider and Lydon F. Maider, both of Gloversville, N.Y., of counsel), for appellee-appellant, Zimmer, Trustee.
John J. Bennett, Jr., Atty. Gen. (Henry Epstein, Sol. Gen., and Timothy F. Cohan and Edward J. Grogan, Jr., Asst. Attys. Gen., of counsel), for appellant-appellee, New York State Tax Commission.
Before SWAN, AUGUSTUS N. HAND, and CLARK, Circuit Judges.
Franchise taxes are here involved that cover a period subsequent to the making of the order of April 20, 1933, approving the petition of the Fonda, Johnstown Gloversville Railroad Company for reorganization under Section 77 of the Bankruptcy Act, 11 U.S.C.A. § 205, and prior to the passage of the Act of Congress that went into effect June 18, 1934. Section 124a U.S.C.A. Title 28. The question of the trustee's liability under the New York law for franchise taxes accruing during the pendency of this proceeding either before or after June 18, 1934, is dealt with in our opinion, 126 F.2d 604, filed herewith, on the appeal from Order No. 169. For the reasons there given the franchise taxes, claimed by the State of New York, involved in the present appeal should be allowed and paid by the trustee as part of the expenses of administration.
We think that irrespective of the Act of Congress effective June 18, 1934, a trustee in a proceeding for reorganization under Section 77 was liable under New York law for franchise taxes accruing under Sections 183 and 184 of the Tax Law. Central Trust Co. v. New York C. N.R.R. Co., 110 N.Y. 250, 18 N.E. 92, 1 L.R.A. 260; Thompson v. State of Louisiana, 8 Cir., 98 F.2d 108; Thompson v. State of Arkansas, 8 Cir., 98 F.2d 112.
Order No. 168 is accordingly reversed in so far as it expunged and disallowed the claim of the State of New York for franchise taxes amounting to $3,106.20 and also its claim for such taxes amounting to $1,883.55, but is otherwise affirmed.