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MATTER OF U. S. FINANCIAL, INC.

No. 77-2257.

594 F.2d 1275 (1979)

In the Matter of U. S. FINANCIAL, INCORPORATED, a Delaware Corporation, and Affiliates, Debtors. Herbert J. SOLOMON, Reorganization Trustee, Plaintiff-Appellee, v. The PACIFIC TELEPHONE AND TELEGRAPH COMPANY, Defendant-Appellant.

United States Court of Appeals, Ninth Circuit.

April 9, 1979.

Attorney(s) appearing for the Case

Robert L. Bachman, San Diego, Cal., for defendant-appellant.

William G. Wilson, Rifkind, Sterling & Lockwood, Beverly Hills, Cal., for plaintiff-appellee.

Before WRIGHT and WALLACE, Circuit Judges, and TEMPLAR, District Judge.

TEMPLAR, District Judge.

This case raises an important issue concerning the constitutionality of Cal.P.U.C. 36-T, Rule 23(B) which permits a telephone company to obtain as a condition of continued service the payment of a debt incurred prior to the filing of a petition under Chapter XI of the Bankruptcy Act. Both courts below held that the Rule created a state priority which contravened the purpose and operation of the Bankruptcy Act and that the Rule was, therefore...

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