The opinion of the court was delivered by: CONGER
The following is the opinion of Loewenthal, Referee.
The Cofax Corporation on September 11th, 1947, filed an Arrangement Proceeding pursuant to Chapter XI of the Bankruptcy Act, 11 U.S.C.A. § 701 et seq. It was adjudicated a bankrupt on May 28th, 1948, and Randall H. Decker qualified as trustee on the same date.
On December 11th, 1949, the Monsanto Chemical Company filed a proof of claim with this Bankruptcy Court, founded upon a judgment obtained in the City Court of the City of New York, on April 4th, 1947, in the sum of $ 1169.78. A transcript of the judgment filed April 8th, 1947, in the office of the County Clerk of New York County, is attached to the proof of claim. Jacob F. Gottesman has power of attorney to act for Monsanto.
By petition of John J. Dwyer verified April 6th, 1950, which supplements a petition of Jacob F. Gottesman verified March 15th, 1950 (both of which are merged herein), the following relief is sought: That this Court order that the claim of Monsanto Chemical for $ 1169.78 be paid in full as a priority with preferred status over Federal, State and City tax claims.
Monsanto bases its priority on an alleged lien said to be effected by service of a subpoena in proceedings supplementary to execution on Cofax. That on said date none of the taxing authorities, Federal, State or Municipal, had obtained a lien by virtue of any execution or warrant.
The following answers were filed denying generally the material allegations in the petitions: By the trustee of The Cofax Corporation, the bankrupt; by the New York State Industrial Commissioner; by the State Tax Commission of the State of New York, by the Corporation Counsel of the City of New York, and by the Treasury Department of the United States.
The trustee answered by way of defense that Monsanto was not the real party in interest, since a receiver had been appointed under the aforementioned judgment. It was then and there decided at the hearing that the petition of Monsanto be merged in the new petition which was filed by John J. Dwyer as Receiver of Cofax Corporation. All other separate defenses were to the general effect that the lien of a judgment creditor could not be superior to the lien of a Sovereign (City, State and Nation) for unpaid taxes which accrued prior to the creation of the alleged lien of a judgment creditor. After many sessions of argument on the motion, it was suggested by the Referee that this motion could not be decided without formal proof being adduced, substantiating the allegations in the petitions and answers.
The proof of debt of Monsanto Chemical Company, with transcript of judgment in the sum of $ 1169.78, is an original document on file in this Court and is deemed marked in evidence.
The petitioner offered the following in evidence:
Exhibit 1- Third party subpoena dated April 9th, 1947, and affidavit of service dated April 30, 1947.
Exhibit 2- Examination in Supplementary Proceedings of the Mataplast International Corporation.
Exhibit 3- Notice of motion dated May 15th, 1947, affidavit of Jacob F. Gottesman verified May 15, 1947, examination of Metaplast Tape Corporation, verified May 9, 1947, copy of subpoena attached thereto, answering affidavit verified May 27, 1947, and reply affidavit of Jacob F. Gottesman, verified May 29, 1947, and the order entered thereon by ...