Laugharn v. Carter

SHENK, J. — This is an appeal by the defendants from a judgment in favor of the plaintiff in the sum of $1758 paid to the state under protest.

The plaintiff is the trustee of Commercial Rock Company, a bankrupt corporation. The corporation owned and operated twenty-three trucks on the public highways of this state prior to January 1, 1939, and from that date until March 6, 1939, at which time a petition in bankruptcy was filed in the United [455]States District Court for the Southern District of California. On March 28, 1939, the district court appointed receivers who continued to operate the trucks and conduct the trucking business until August 1, 1939, on which date the corporation was adjudicated a bankrupt and the plaintiff herein was appointed the trustee in bankruptcy. On January 1, 1939, the registration fees applicable to the trucks pursuant to section 378 of the Vehicle Code, and the vehicle license fees, or “in lieu” tax, as provided by section 6 of the Vehicle License Fee Act (Stats. 1935, p. 1312; Deering’s Gen. Laws, 1937, Act 5135) became delinquent. On February 5, 1939, the sum of $1758, called a penalty, was added to the amount required by the statute to be paid on the trucks because the corporation had failed to make payment of the registration and license fees, hereinafter called taxes, during the period from January 1, 1939 to February 5, 1939. On May 11, 1939, the receivers tendered to the state the amount of the taxes without the penalties and demanded license plates and registration of the trucks. The defendants refused to comply with the demand unless the penalties which had accrued on February 5, 1939, were also paid. The trucks were operated without the payment of the taxes until after the trustee was appointed when on August 9, 1939, the referee in bankruptcy directed the trustee to pay the penalties under protest and sue to recover the same by the action herein. Judgment was entered for the plaintiff, doubtless on the theory that section 57(j) of the Bankruptcy Act avoided the payment of penalties. That section, with an exception not here applicable, provides: “Debts owing to the United States or any State or subdivision thereof as a penalty or forfeiture shall not be allowed . . .” in the bankruptcy proceeding.

The defendants advance two theories, on either one of which it is contended that the judgment is erroneous. First, that the so-called penalties were a part of the taxes-; that the whole thereof was secured by a lien which attached prior to the filing of the petition in bankruptcy; that the lien continued until after the adjudication; that the taxes were collectible in bankruptcy as a lien claim, and the fact that they were called penalties is immaterial. And, second, that as the receivers operated the trucks for more than thirty days from the date of the filing of the petition in bankruptcy on March 6, 1939, and for more than thirty days after their appointment as receivers on March 28, 1939, and for more than thirty