Costello Bros. v. Pawtucket Institution for Savings (In re Melino Cigar & Candy Co.)

ARTHUR N. VOTOLATO, Jr., Bankruptcy Judge.

The question for determination is whether a guarantor’s payment on a surety bond for cigarette tax stamp liability constitutes a priority administrative expense pursuant to 11 U.S.C. § 503(b)l(B) and § 507(a)(1).

A brief recital of the facts is helpful. On April 6,1981 Melino Cigar & Candy Company, Inc. sold cigarettes, cigars, candy, etc. to the Plaintiff, Costello Bros., Inc. Costello took partial delivery on April 18, 1981 and transferred the merchandise to its’ warehouse, where it was co-mingled with Costello’s inventory. Thereafter, Costello…