In The Matter Of U. S. Financial, Incorporated, Debtors

594 F.2d 1275 5 Bankr.Ct.Dec. 147 , Bankr. L. Rep. P 67,158 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. No. 77-2257. United States Court of Appeals, Ninth Circuit. April 9, 1979. 1 Robert L. Bachman, San Diego, Cal., for defendant-appellant. 2 William G. Wilson, Rifkind, Sterling & Lockwood, Beverly Hills, Cal., for plaintiff-appellee. 3 Appeal from the United States District Court for the Southern District of California. 4 Before WRIGHT and WALLACE, Circuit Judges, and TEMPLAR, District Judge. * 5 TEMPLAR, District Judge. 6 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, invalid under the Supremacy…