United States Supreme Court Cases & Opinions

U.S. Supreme Court

United States v. Key, 397 U.S. 322 (1970)

United States v. Key

No. 402

Argued January 21, 1970

Decided March 30, 1970

397 U.S. 322

Syllabus

The United States challenges, as violative of § 3466 of the Revised Statutes, a reorganization plan under Chapter X of the Bankruptcy Act under which claims of junior creditors were to be partially or fully paid before full payment was made of the Government's tax claims. Section 3466 provides that, "[w]henever any person indebted to the United States is insolvent . . . , the debts due to the United States shall be first satisfied." The District Court approved the plan. The Court of Appeals affirmed on the ground that § 3466 was impliedly inapplicable by virtue of the statutory plan of Chapter X proceedings, § 199 of the Act providing that the United States shall have "payment," of its tax claims in such proceedings unless the Secretary of the Treasury accepts "a lesser amount," and §§ 216 and 221 establishing an equitable standard to govern the method of payment.

Held: The United States is entitled to absolute priority of payment under § 3466 of the Revised Statutes over the other claimants in the reorganization here involved, there being no inconsistency between the terms of that section and the provisions of Chapter X. Pp. 397 U. S. 324-333.

407 F.2d 635, reversed and remanded.