U.S. Supreme Court U.S. v. KNOTT, 298 U.S. 544 (1936)

[Page 298 U.S. 544, 552]

claims of the local creditors must be transmitted to New Jersey; and that the Florida courts are without jurisdiction to award priority to the United States. It is true that the priority statute is not applicable unless insolvency has been manifested by some proceeding equivalent to an assignment of all of the debtor's property, United States v. Oklahoma, 261 U.S. 253, 262, 43 S.Ct. 295; United States v. Hooe, 3 Cranch, 73, 91. The priority could not have been asserted in Florida or elsewhere, if there had been no such assignment. But this requirement of the statute was satisfied by the liquidation suit in New Jersey. United States v. Butterworth-Judson Corporation, , 46 S.Ct. 179. The United States properly intervened in Florida in order to prevent the assets there from being applied in payment of local claims believed to be subordinate to its own. No rule of law precludes it from asserting its priority by an appropriate proceeding in any jurisdiction in which property of the insolvent is being administered. The Florida court did not lack power to entertain its application; and the fact that the claim originated in Florida and was reduced to judgment there, made it appropriate that the United States should seek there satisfaction from funds deposited to assure payment of judgments entered on surety bonds given there by the company. No good reason has been suggested why the United States should be denied the right to secure in this proceeding payment of its debt.

Reversed. Footnotes

[Footnote *] Mandate of Supreme Court conformed to in Withers v. Knott (Fla.) 168 So. 416.