Citations
- 257 F.2d 491
Full opinion text
HARTIGAN, Circuit Judge.
This is an appeal by the United States from an order of the United States District Court for the District of Massachusetts affirming an order of the Referee in Bankruptcy in the matter of Post Publishing Company, Bankrupt. The order in issue decreed that the City of Boston real estate taxes for the year 1957 on certain unimproved real estate located on Pearl Street in the City of Boston were to be paid out of the proceeds from the sale of said property before such proceeds were to be applied in payment of any other lien claims.
The property in question was subject to a first mortgage recorded on April 3, 1956 in the amount of $150,000, a second mortgage recorded on April 18, 1956 for $120,000, a third mortgage for $300,000 recorded on April 18, 1956, and a fourth mortgage recorded on July 11, 1956 for $250,000. There were additional liens of $16,371.16 and $19,415.29 for 1955 and 1956 Boston real estate taxes and a federal tax lien for $223,006.14 recorded on July 9, 1956, and a second federal tax lien for $66,575.76 recorded on August 8, 1956. On August 16, 1956 the Post Publishing Company filed a petition for reorganization under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq. On March 7, 1957, no plan of reorganization having been proposed, the Post Publishing Company was adjudicated a bankrupt, and on April 11, 1957 the present trustees were duly elected and qualified. On April 3, 1957, after due notice and hearing and without objection by the appellant, the Referee in Bankruptcy authorized the sale of the Pearl Street real estate “ * * * free and clear of all liens, mortgages, taxes, * * * and other encumbrances, of any nature, if any there be, said claims to the extent that they may hereafter be determined to be valid to attach to the proceeds of the sale” and it was further provided that “Real estate taxes for the year 1957 are to be apportioned as of the date of the delivery of the deed.”
On August 9, 1957 the property was transferred to a purchaser who paid $475,000 for it plus a pro rata portion of the 1957 real estate taxes. The total 1957 real estate taxes were $21,216.20 and the pro rata portion of them attributable to the period from January 1, 1957 to August 8, 1957 is approximately $12,889.46.
Upon petition by the trustees to make payment out of the proceeds of the sale to the holders of the first and second mortgages in reduced amounts, it was decided by the referee on September 16, 1957 that the Boston real estate taxes for the year 1957 on the Pearl Street prop-
erty be paid out of the proceeds from the sale of said property as an expense of preservation before such proceeds be applied in payment of any lien claims.
The United States has appealed from this order apparently for the reason that if the proceeds from the sale exceed the amount of the mortgage liens prior and superior to its tax lien, then the amount payable to it should not be reduced by the amount claimed by the City of Boston for 1957 taxes. It first contends that the lien of the federal government being first in time is superior to the claim for 1957 taxes made by the City of Boston, but this contention is clearly without merit as the tax imposed by the City of Boston was assessed and became due only after the commencement of bankruptcy proceedings. It is, therefore, as the trustees contend, either payable as an expense of administration or preservation of that part of the bankrupt’s estate upon which the govern-ment’s lien attached or it is not payable at all.
The Supreme Court in Swarts v. Hammer, 1904, 194 U.S. 441, 444, 24 S.Ct. 695, 696, 48 L.Ed. 1060, declared that even though the trustee in bankruptcy is vested with title to all the property of the bankrupt, “By the transfer to the trustee no mysterious or peculiar ownership or qualities are given to the property. It is dedicated, it is true, to the payment of the creditors of the bankrupt, but there is nothing in that to withdraw it from the necessity of pr