Annotations- Surety

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6332 Annotations: Surety's Right of Subrogation- Levy

 

Penalty for Failure to Surrender Property: Surety's Right of Subrogation

 

 

Revenue Ruling 72-68, 1972-1 CB 407
Section 7805.--Rules and Regulations

26 CFR 301.7805-1: Rules and regulations.
Additional obsolete rulings relating primarily to the administrative provisions of the Internal Revenue Code are listed.

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Revenue Procedure 67-6, C.B. 1967-1, 576, announced a program for the review of rulings published in the Internal Revenue Bulletin before 1953 for the primary purpose of identifying and declaring obsolete those rulings which, although not specifically revoked or superseded, are not considered determinative with respect to future transactions.

In accordance with that program and based on a review of certain rulings relating primarily to the administrative provisions of the Internal Revenue Code of 1954, the rulings listed below are hereby declared obsolete.

OFFICE DECISIONS (O.D.) RULING SERIES

                            C.B.

O.D. No.:                Citation

114 ---              1, 235

557 ---              2, 226

672 ---              3, 284

769 ---              4, 324

1056 ---             5, 239

1144 ---             5, 239

SOLICITOR'S MEMORANDUM (S.M. OR S.) RULING SERIES

                                    C.B.

S.M. (or S.) No.:                Citation

1992 ---                     III-2, 327

3136 ---                     IV-1, 205

4870 ---                     V-1, 124

4947 ---                     V-1, 98

4947A ---                    V-2, 120

5032 ---                     V-1, 109

TREASURY DECISION (T.D.) SERIES

                            C.B.

T.D. No.:                Citation

2874 ---             1, 255

3512 ---             II-2, 282

MIMEOGRAPHS (MIM.) RULING SERIES

                            C.B.

Mim. No.:                Citation

4338 ---             XIV-1, 379

4479 ---             XV-2, 539

4826 ---             1938-2, 496

6157 ---             1947-2, 64

MIMEOGRAPHS (MIM.) RULING SERIES

                            C.B.

Mim. No.:                Citation

6310 ---             1948-2, 149

6737 ---             1952-1, 193

6742 ---             1952-1, 44

GENERAL (OR CHIEF) COUNSEL'S MEMORANDUM (G.C.M.) RULING SERIES

                              C.B.

G.C.M. No.:                Citation

659 ---                V-2, 79

2022A ---              VI-2, 103

2668 ---               VI-2, 105

3697 ---               VII-1, 133

3876 ---               VII-1, 127

4217 ---               VII-2, 162

4421 ---               VII-2, 144

4892 ---               VII-2, 195

6801 ---               VIII-2, 125

6872 ---               VIII-2, 216

8980 ---               X-1, 256

11,000 ---             XI-1, 298

24,423 ---             1945, 145

27,080 ---             1952-1, 41

INCOME TAX (I.T.) RULING SERIES

I.T. No.:

1185 ---             I-1, 242

1515 ---             I-2, 177

1557 ---             II-1, 172

1663 ---             II-1, 172

1682 ---             II-1, 172

1756 ---             II-2, 211

1814 ---             II-2, 210

1817 ---             II-2, 256

1859 ---             II-2, 228

2078 ---             III-2, 351

2092 ---             III-2, 253

2193 ---             IV-2, 85

2264 ---             V-1, 100

2265 ---             V-1, 105

2344 ---             VI-1, 104

2430 ---             VII-2, 72

2514 ---             VIII-2, 217

2518 ---             IX-1, 158

2560 ---             X-1, 173

2563 ---             X-1, 299

2577 ---             X-1, 300

2594 ---             X-2, 207

2626 ---             XI-1, 55

2712 ---             XII-2, 138

2856 ---             XIV-1, 84

3173 ---             1938-1, 160

3347 ---             1940-1, 69

3354 ---             1940-1, 59

3677 ---             1944, 174

3871 ---             1947-2, 62

 

The purpose of this declaration of obsoleteness is to make clear to all concerned that the above-listed rulings are not determinative with respect to future transactions. It is not the purpose of this Revenue Ruling to determine the applicability of any of the listed rulings to past transactions.

Other rulings relating to administrative provisions published before 1953 are currently being reviewed. Therefore, failure to include any particular ruling in this or previous lists should not be construed as indicating that the ruling necessarily has continuing application to future transactions.

 

[35-1 USTC ¶9168]In the Matter of Robert T. Neely, Bankrupt

United States District Court, Southern District of New York, In Bankruptcy. No. 59,774, 10 FSupp 654, Decided February 26, 1935Taxpayer defaulted on bond given to secure payment of income tax deficiency and surety company was compelled to pay the tax. It brought suit against the taxpayer in the State court for recovery of the amount paid and the taxpayer filed a petition in bankruptcy. On motion by the creditor to vacate a stay of the suit in the State court, such stay, issued by the referee in bankruptcy, was vacated immediately upon discharge of the bankrupt, although by its terms it was without limit as to time. The dischargeability of the claim must be determined in the suit under the bond.

Fertig, Walter & Gottesman, (Alfred A. Walter, of Counsel) for petitioner. Austrian & Lance (Saul J. Lance and Samuel Rudner, of Counsel) for bankrupt.

PATTERSON, D. J.:

The motion is by a creditor of the bankrupt to vacate a stay issued by a referee in bankruptcy.

Neely was assessed $13,264.67 as additional income tax. He gave a bond to the United States to cover payment. The Great American Indemnity Company was surety on the bond. On Neely's failure to pay, the surety company was compelled to make payment to the United States . It then brought suit against Neely for reimbursement and recovered judgment. Neely filed a voluntary petition in bankruptcy, listing the surety company as a creditor, and obtained from the referee in bankruptcy an ex parte order restraining the surety company from taking any steps in the state court to collect on the judgment. The order was not in the usual form, staying the creditor for twelve months after adjudication or until the question of discharge should be determined. On its face it was without limit as to time. Neely later procured his discharge. The surety company then brought this application to vacate the injunction.

The point argued by the parties was whether the claim was dischargeable. The surety company pointed out that a claim by the United States for tax is not affected by discharge in bankruptcy, and contended that on payment of the tax for the bankrupt it became subrogated to all the rights of the United States . The bankrupt argued that subrogation did not go so far. But the question of dischargeability is not properly before the court. The stay went too far and should be vacated as matter of course.

The authority for the stay is section 11 of the Bankruptcy Act, providing for stay of suits against the bankrupt on claims which would be barred by discharge, but only "until after an adjudication or the dismissal of the petition; if such person is adjudged a bankrupt, such action may be further stayed until twelve months after the date of such adjudication, or, if within that time such person applied for a discharge, then until the question of such discharge is determined." As the language used indicates, the purpose of Congress was to delay prosecution of the suit on a dischargeable claim only until determination of the matter of discharge, so that the bankrupt may be in a position to plead his discharge in the suit brought against him. After discharge it is ordinarily not for the bankruptcy court to decide whether a particular claim is barred by the discharge. That question is for determination by the court in which the creditor later presses for payment of his claim.

In conformity to these views, a stay obtained by a bankrupt on a claim said to be dischargeable, if not by its terms limited to the time when the matter of discharge will be determined, will be vacated as matter of course on application of the creditor, as soon as the bankrupt has been discharged. In re Rosenthal, 108 Fed. 368 (D. C. N. Y.); In re Flanders , 121 Fed. 936 (D. C. Vt.); In re Lockwood, 240 Fed. 161 (D. C. N. Y.); In re Weisberg, 253 Fed. 833 (D. C. Mich.); In re Byrne, 296 Fed. 98 (C. C. A. 2); Remington on Bankruptcy, section 3492.

The stay was excessive as to time and should be vacated forthwith. I say nothing as to the dischargeability of the surety company's claim. That point will be decided by the state courts, if and when the surety company takes proceedings there to collect on its judgment. The stay will be vacated.