Sulmeyer v. State of California Department of Employment Development

The trastee in bankruptcy brought action against the California Department of Employment Development and the State Board of Equalization to recover, for the benefit of certain wage claimants, money paid to the state as a condition of the transfer of four on-sale liquor licenses. The district court denied recovery, and the trustee appeals. We affirm.

The trustee argues that, under both federal and state law, qualified wage claims against a bankrupt estate are entitled to priority over tax claims of the class asserted here. This is true as a general principle.1 In this case, however, the problem…