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UNITED STATES v. MARXEN

decided: May 15, 1939.

UNITED STATES
v.
MARXEN, TRUSTEE



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

McReynolds, Butler, Stone, Roberts, Black, Reed, Frankfurter; Hughes and Douglas took no part in the consideration or decision of this case.

Author: Reed

[ 307 U.S. Page 201]

 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,*fn1 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

[ 307 U.S. Page 202]

     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,*fn2 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

[ 307 U.S. Page 203]

     'person' . . . shall include . . . the United States . . ."*fn3 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,*fn4 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.*fn5 We can deal only with a claim of the Federal Housing Administration assigned to ...


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