Thus, according to the surety, the bankruptcy judge's Order gave the Government a higher priority than that to which it was entitled. Consequently, the surety argues that the Government received more than its due and there is no further liability on the surety. However, the claim of the United States may be brought directly against the employer who in this case is the Receiver. It is not a question of depleting the assets in the hands of the Trustee to prefer tax claims over administrative claims. It is a question of proceeding against the Receiver and his surety for violation of official duties. In other words, under the Randall case, the Government's claim for taxes is subordinate to the costs and expenses of administration. This concept does not preclude the Government from proceeding against the Receiver or his surety on the basis that the Receiver violated his official duties.
Finally, the surety argues that even if it is liable on its bond for unpaid taxes, the claim of the Government does not exceed the face amount of the bond which is $10,000. The surety argues that interest and penalties are not recoverable where there are inadequate funds to pay all administrative expenses. Again, while this may be a correct statement of the law, the claim made by the Government is not against the bankrupt estate but is against the surety of the Receiver. Therefore, the cases of Missouri v. Earhart, 111 F.2d 992 (8th Cir. 1940), cert. denied, 311 U.S. 676, 85 L. Ed. 435, 61 S. Ct. 43 (1940), and Matter of Tom's Villa Rosa, Inc., 198 F. Supp. 137 (D. Conn. 1961), are not applicable because those cases each deal with claims against the assets of a bankrupt's estate. Furthermore, the schedules attached to the Government's motion evidence unpaid tax claims in excess of $10,000 (the face amount of the bond) and the surety has not disputed this calculation with any degree of specificity.
Royal also contends that the concept of laches bars the Government's claim. The rationale of this defense is that if the Government had elected to proceed against the Receiver and the surety before distribution was confirmed, the surety would have been in a position to recoup some of its losses through subrogation. This argument is rejected for two reasons. First, the defense of laches does not run against the federal government. United States v. Summerlin, 310 U.S. 414, 416, 84 L. Ed. 1283, 60 S. Ct. 1019 (1940). Secondly, the distribution ordered by the bankruptcy judge in the present case was favorable to the surety, and therefore, no additional claim against the funds distributed by the Trustee could have been effectuated.
Judgment will be entered in favor of the Government and against Royal in the amount of $10,000.
AND NOW this 14th day of June, 1977, IT IS ORDERED that plaintiff's motion for summary judgment is GRANTED and judgment is entered in favor of United States of America against Royal Globe Indemnity Company in the amount of $10,000.
IT IS FURTHER ORDERED that the motion of Royal Globe Indemnity Company for summary judgment in its favor is DENIED.
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