The Experimenter Publishing Company was adjudged bankrupt March 6, 1929. The Irving Trust Company became trustee. Upon its petition the referee, July 1, 1929, directed that 'proof of any and all claims which the State of New York may have against the estate of the above named bankrupt,' shall be filed within sixty days after service of this order; otherwise, they shall be forever barred. Proper service was had July 18, 1929.
October 20, 1929, the State filed notice of a possible demand for additional franchise taxes for 1917 to 1928 and stated that definite claim therefor would be presented when necessary reports, etc., could be obtained. No further proof has followed.
March 30, 1931, the trustee asked and obtained a referee order striking from his files the notice of October 20th. He held that the claim for taxes 'cannot be filed after the expiration of the bar order date' and declared, 'The State has only itself to blame for the situation it finds itself in as the record indicates that facts were within its knowledge upon which it could have filed this claim prior to September 16, 1929.' The District Court approved this action and the Circuit Court of Appeals affirmed its judgment, 'but without prejudice to an application by the people of the state of New York presenting an actual claim which can be audited and showing lawful reasons why it should be paid, at which time the trustee may contest the right to payment.' In re Experimenter Pub. Co., Inc., 58 F.(2d) 980, 981.
The only question properly presented by the application for certiorari is whether the District Court had power to grant the motion to expunge. Petitioners claim that such power is incompatible with State sovereignty as defined in Marshall v. New York, 254 U.S. 380, 41 S.Ct. 143, 65 L.Ed. 315.
Nothing adjudged below conflicts with any thing said in Marshall v. New York. There we recognized the prior right of the State to be paid license taxes, unsecured by specific lien, from the assets of an insolvent estate. Here, no such question is presented.
The bar order against the State, as finally modified, may be revoked upon proper showing until termination of the cause-it remains within control of the court. See United States v. Elliott (C.C.A.) 57 F.(2d) 843. And if the District Court has power to make any such order against a State, this one seems appropriate to the circumstances.
An ill-digested brief for the State beclouds its present position. But we consider only the point relied upon in the petition for certiorari, and that is without merit.
The Federal Constitution clothes the Congress with power to establish uniform laws on the subject of bankruptcies.
The extant Bankruptcy Act-section 2 (11 USCA § 11)-declares the United States District Courts shall be courts of bankruptcy and undertakes to give them jurisdiction to adjudge persons bankrupt; to allow or disallow claims; to take charge of the property of bankrupts; to cause their estates to be collected, reduced to money, and distributed; to determine controversies in relation thereto; to close estates when fully administered; and make such general orders as may be necessary for enforcement of the Act. Section 64 (11 USCA § 104) requires payment of taxes due to the United States, state, county, district, or municipality in advance of dividends to creditors. Section 57n provides that claims shall not be proved after six months subsequent to adjudication. Act May 27, 1926, c. 406, § 13, 44 Stat. 666 (11 USCA § 93(n).
It is admitted here, that as the United States and the States are not mentioned in the limitation of section 57, they are not bound thereby. The consequent necessity for bar orders is apparent. Otherwise, estates could not be promptly closed. Lewis v. United States, 92 U.S. 618, 23 L.Ed. 513; United States v. Thompson, 98 U.S. 486, 490, 25 L.Ed. 194; New Jersey v. Anderson, 203 U.S. 483, 27 S.Ct. 137, 51 L.Ed. 284; Guarantee Title & Trust Co. v. Title Guaranty & Surety Co., 224 U.S. 152, 32 S.Ct. 457, 56 L.Ed. 706; United States v. Birmingham Trust & Savings Co. (C.C.A.) 258 F. 562; Villere v. United States (C.C.A.) 18 F.(2d) 409, 53 A.L.R. 571; Wechsler v. United States (C.C.A.) 27 F. (2d) 850.
In re Wood & Henderson, 210 U.S. 246, 254, 28 S.Ct. 621, 625, 52 L.Ed. 1046: 'Congress has the right to establish a uniform system of bankruptcy throughout the United States; and, having given jurisdiction to a particular district court to administer and distribute the property, it may, in some proper way, in such a case as this, call upon all interested to appear and assert their rights.'