B-136421, JAN. 31, 1961

B-136421, JAN. 31, 1961

TO ABRAHAM H. SLES, ESQUIRE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 9, 1960, RELATIVE TO CERTAIN CLAIMS OF THE UNITED STATES AGAINST THE OLD COLONY COAL COMPANY, A NEW JERSEY CORPORATION, AND A GENERAL ASSIGNMENT FOR THE BENEFIT OF THE CREDITORS OF THAT FIRM, WHICH HAS BEEN THE SUBJECT OF PROCEEDINGS IN THE PROBATE DIVISIONS OF THE HUDSON AND ESSEX COUNTY COURTS, NEW JERSEY.

IN A LETTER DATED OCTOBER 24, 1960, TO THE DEPARTMENT OF THE NAVY, YOU STATED THAT THE ACCOUNTING IN THE MATTER OF THE ASSIGNMENT HAD BEEN FILED AND THERE REMAINED $4,751.64 FOR DISTRIBUTION. YOU REFERRED TO A NAVY CLAIM FOR $5,357.92 AND AN INTERNAL REVENUE SERVICE CLAIM FOR $4,330.83. YOU PROPOSED TO HAVE THE ASSIGNEES MAKE DISTRIBUTION ON THE BASIS THAT PAYMENT ON THOSE CLAIMS WOULD REPRESENT PROPORTIONATE SHARES OF THE RESIDUE OF $4,751.64.

YOU WERE ADVISED IN A LETTER DATED DECEMBER 2, 1960, FROM OUR CLAIMS DIVISION, THAT THE NAVY CLAIM HAD BEEN COLLECTED IN FULL. THIS COLLECTION WAS EFFECTED BY SET-OFF FROM AMOUNTS OTHERWISE DUE THE OLD COLONY COAL COMPANY UNDER CONTRACTS WITH THE DEPARTMENT OF THE NAVY. REFERENCE WAS ALSO MADE TO A REPORTED LIQUIDATED DAMAGE CLAIM IN THE AMOUNT OF $48,283.73, WHICH AROSE OUT OF ALLEGED VIOLATIONS OF THE WALSH-HEALEY ACT, AS AMENDED, 41 U.S.C. 35-45. IN YOUR LETTER OF DECEMBER 9, 1960, YOU REQUESTED ADVICE AS TO WHETHER WE WISHED TO FILE A CLAIM FOR THE NEWLY ASSERTED AMOUNT. IN THE MEANTIME, WE RECEIVED ADVICE THAT THE GOVERNMENT HAS CERTAIN OTHER CLAIMS AGAINST THE OLD COLONY COAL COMPANY.

IT APPEARS THAT THE VARIOUS CLAIMS, INCLUDING THE ONE BASED UPON THE ALLEGED VIOLATIONS OF THE WALSH-HEALEY ACT, AROSE OUT OF CONTRACTS ENTERED INTO WITH MR. JOHN M. GARNER, DOING BUSINESS AS THE OLD COLONY COAL COMPANY, SUBSEQUENT TO THE DATE OF THE ASSIGNMENT OF THE ASSETS OF THE OLD COLONY COAL COMPANY FOR THE BENEFIT OF CREDITORS. WE DOUBT THAT THE CORPORATE ESTATE IS LIABLE ON SUCH CLAIMS AND, SINCE THERE WOULD REMAIN ONLY A SMALL BALANCE IN THE HANDS OF THE ASSIGNEES AFTER PAYMENT OF THE CLAIM FILED BY THE INTERNAL REVENUE SERVICE, WE DO NOT PROPOSE TO FILE ADDITIONAL CLAIMS ON BEHALF OF THE GOVERNMENT IN THE ASSIGNMENT MATTER. IN REGARD TO SUCH POSSIBLE ADDITIONAL CLAIMS, WE DO NOT UNDERTAKE TO STATE WHETHER, UNDER THE LAWS OF NEW JERSEY, THERE IS ANY ORDER OF PRECEDENCE IN THE PAYMENT OF CLAIMS OF THE FEDERAL GOVERNMENT AGAINST AN INSOLVENT ESTATE BUT IT APPEARS THAT THERE COULD BE NO REASONABLE OBJECTION TO THE GRANTING OF PRIORITY TO A CLAIM OF THE INTERNAL REVENUE SERVICE INASMUCH AS SUCH A CLAIM WOULD HAVE PRIORITY OVER OTHER GOVERNMENT CLAIMS IN A BANKRUPTCY PROCEEDING. SEE SECTION 104 OF TITLE 11, UNITED STATES CODE.

WE HAVE BEFORE US THE ADDITIONAL QUESTION AS TO THE STATUS OF ANOTHER GARNER FIRM KNOWN AS THE OLD COLONY COAL CORPORATION, WHICH HAS BEEN ALLEGED TO BE ENTIRELY SEPARATE FROM THE BUSINESS OPERATED BY MR. JOHN M. GARNER AS A PROPRIETORSHIP UNDER THE NAME OF THE OLD COLONY COAL COMPANY. IT WILL BE APPRECIATED IF YOU WILL FURNISH OUR OFFICE A COPY OF THE ASSIGNMENT FOR THE BENEFIT OF CREDITORS AND, IF NOT SHOWN THEREIN, A LISTING OF THE ASSETS WHICH WERE ASSIGNED AND LATER PURCHASED FROM THE ASSIGNEES BY MR. GARNER.