183

BUTLER, J., dissenting.

MR. JUSTICE BUTLER, dissenting.

In proceedings instituted on complaint of shippers in 1922, the Secretary, July 27, 1923, approved a 15 per cent reduction of market agencies' charges. In May, 1932, the agencies filed tariffs, which were not challenged by shippers or suspended by the Secretary, making additional reductions of about 10 per cent. These rates remained in force until November 1, 1937. Then there became effective a new schedule established by agreement between the agencies and the Secretary. There being no question as to reasonableness of charges made since that date, the appellees were not required to continue making deposits to secure their compliance with the Secretary's order of June 14, 1933 challenged in this suit, and so impounding ceased.

The money on deposit in the district court is made up of amounts taken from charges as low as, or lower than, those so put and kept in force and applied until November 1, 1937. In the proceedings pending before him, the Secretary may not order reparation (see § 309; also Arizona Grocery Co. v. Atchison, T. & S. F. Ry. Co., 284 U. S. 370, 389) and is without jurisdiction to do more than prescribe charges to be applied after the effective date of that order if one shall be made. The challenged order having been adjudged invalid because made in violation of the Act, Morgan v. United States, 304 U. S. 1, the appellees immediately became entitled to the money that, in pursuance of the restraining order, was deposited in court by them to secure their compliance with the Secretary's order if found valid. The record contains nothing to support the idea that the pledge was for any other purpose, or to justify or excuse withholding it for another use. For the reasons stated in its opinion, 24 F. Supp. 214, the district court rightly held appellees entitled

to have their money returned to them. Its decree should be affirmed.

MR. JUSTICE MCREYNOLDS and MR. JUSTICE ROBERTS join in this opinion.

UNITED STATES v. MARXEN, TRUSTEE.

CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT.

No. 544. Argued March 28, 1939.-Decided May 15, 1939.

R. S. § 3466, giving to the United States priority in payment of debts due to it by any person who is insolvent, is inapplicable to a general claim in bankruptcy which was transferred to the United States, or to which it became subrogated, after the filing of the petition in bankruptcy. P. 207.

So held as to a claim-assumed to be a claim of the United States-upon a note assigned to the United States by a bank after the filing of a petition in bankruptcy by the maker. The note was covered by a policy of insurance issued to the bank under the National Housing Act; the maker had defaulted; and the balance due was paid to the bank by U. S. Treasury check subsequently to the filing of the petition in bankruptcy.

QUESTION certified by the Circuit Court of Appeals upon an appeal from an order of the District Court, 24 F. Supp. 463, which confirmed and approved an order of the referee in bankruptcy denying priority to a claim.

Assistant Attorney General Whitaker, with whom Solicitor General Jackson, and Messrs. Paul A. Sweeney, Edward J. Ennis, and Abner H. Ferguson were on the brief, for the United States.

Mr. Clarence Hansen, with whom Mr. Thomas S. Tobin was on the brief, for Marxen, Trustee.

By leave of Court, Mr. Harry Loeb Mostow filed a brief, as amicus curiae, urging that the question certified be answered in the negative.

MR. JUSTICE REED delivered the opinion of the Court.

The case is here on certificate from the Circuit Court of Appeals for the Ninth Circuit with a request for instructions needed in a pending cause. § 239, Jud. Code; 28 U.S. C. § 346. The following facts are stated: On August 10, 1934, the Federal Housing Administrator issued a policy of insurance, under the provisions of the National Housing Act, Title 1, § 2, to the California Bank, a banking corporation. On January 2, 1936, the California Bank, under the protection of this policy, made a loan to the Monterey Brewing Company. The company paid part of the indebtedness but defaulted on the balance on February 2, 1937. On April 5, 1937, it filed a petition in bankruptcy and was adjudicated a bankrupt. Under the insurance contract the bank had to wait until 60 days after default before making claim upon the Administrator. The 60 days expired two days before bankruptcy of the company. The bank, however, did not present its claim to the Administrator until July 3, 1937; the latter paid August 4, 1937, by draft drawn on the

1

"Sec. 2. The Administrator is authorized and empowered, upon such terms and conditions as he may prescribe, to insure banks ... which are approved by him as eligible for credit insurance, against losses which they may sustain as a result of loans and advances of credit, and purchases of obligations representing loans and advances of credit, made by them. . . for the purpose of financing alterations, repairs, and improvements upon real property. In no case shall the insurance granted by the Administrator under this section to any such financial institution exceed 20 per centum of the total amount of the loans, advances of credit, and purchases made by such financial institution for such purpose . . ." Act of June 27, 1934, c. 847, 48 Stat. 1246.

Opinion of the Court.

307 U.S.

Treasury of the United States; the bank assigned the note to the "United States of America." Later the Administrator filed a claim upon the note in the name of the United States of America.

The referee allowed it as a general claim only. The district court approved. In re Monterey Brewing Co., 24 F. Supp. 463. On the appeal to the circuit court of appeals the following question, decisive of the controversy, was certified:

"Where, prior to the filing of a petition for and adjudication in bankruptcy of the maker of a promissory note payable to a bank, the Federal Housing Administrator, under the provisions of the National Housing Act, insured the payee bank against the nonpayment of the note by its maker, upon which note the maker became in default more than sixty days prior to said filing and adjudication, and upon demand of the insured bank made after the adjudication, the Federal Housing Administrator paid to the bank its claim arising from such default, and procured an assignment to the United States of the claim of the insured bank against the bankrupt which claim had not been presented or proved in bankruptcy by the insured bank, and presented such claim in the name of the United States to the trustee in bankruptcy having before him other allowed claims against the bankrupt, is such claim entitled to priority over such other claims under sec. 3466 of the Revised Statutes (31 U. S. C. A. § 191) by reason of the provisions of sec. 64 (b) (7) [11 U. S. C. A. § 104 (b) (7)].”

Section 64 (b) (7) conferred priority upon "debts owing to any person who by the laws of . . . the United States is entitled to priority: Provided, that the term

2 United States v. Mayer, 235 U. S. 55, 66; cf. Wheeler Lumber Co. v. United States, 281 U. S. 572, 577; Indian Motocycle Co. v. United States, 283 U. S. 570, 573.

'person'. . . shall include . . . the United States Section 3466 of the Revised Statutes, the basis for the claimed priority, provides that "Whenever any person indebted to the United States is insolvent ... the debts due to the United States shall be first satisfied; and the priority hereby established shall extend . . . to cases in which an act of bankruptcy is committed."

Although an amendment of the National Housing Act authorized the Administrator to sue and be sued in any court of competent jurisdiction, state or federal,* it is not necessary in answering the present certificate to determine whether by this addition the Congress intended to give the Administrator the status of a corporation or other entity distinct from the United States and by such status to confer on or withhold from claims of the Federal Housing Administration against bankrupts the advantages of § 3466.5 We can deal only with a claim of the Federal Housing Administration assigned to the United States after the adjudication in bankruptcy of the obligor. It is assumed that such a claim belongs to and is made by the United States."

Act of May 27, 1926, c. 406, 44 Stat. 667, 11 U. S. C. § 104 (b) (7). This section has been amended by the Act of June 22, 1938, c. 575, § 64, 52 Stat. 874.

'Act of August 23, 1935, c. 614, § 344 (a), 49 Stat. 722.

'The purpose of the amendment was said to be "clarifying." Sen. Rep. No. 1007 on H. R. 7617, 74th Congress, 1st Session, p. 24. The House Report merely stated its substance. H. R. Rep. No. 1822 on H. R. 7617, 74th Congress, 1st Session, p. 57. The Congressional Record is silent on this clause of the Banking Act of 1935.

A corporation wholly owned by the United States is held without the advantages of § 3466. Sloan Shipyards v. U. S. Fleet Corporation, 258 U. S. 549, 570.

'Cf. Wagner v. McDonald, 96 F. 2d 273, 274; In re Dickson's Estate, 84 P. 2d 661, 664; DuPont de Nemours & Co. v. Davis, 264 U. S. 456; Clallam County v. United States, 263 U. S. 341; North Dakota-Montana Wheat Growers Assn. v. United States, 66 F. 2d 573, 576-577.