Imágenes de páginas
PDF
EPUB

entitled to priority by reason of a Kentucky statute, which provided that, in the distribution of an insolvent's estate, debts due as guardian should be preferred. Judge Evans very tersely sustained the right of priority, saying that:

"The bankrupt law does not in such cases supersede or mean to supersede the operation of the state law. On the contrary, the bankrupt act expressly recognizes the existence of the state statute, and makes that statute the basis for allowing priority of payment to certain classes of claims agains the debtor. Its effect is, in the most manifest way, to keep alive such provisions of the state law as give priority of payment, and while the bankrupt law, speaking generally, does by its operations supersede the force of any state laws which conflict with it the case before us presents an exception to the general rule, whereby the applicable provisions of the state law are expressly enforced through the bankruptcy act itself."

In Re Falls City Shirt Manufacturing Co. (D. C.) 98 Fed. 592, Judge Evans gave priority for a claim for rent because, under section 17, Ky. St., such a claim was a lien upon the property of the renter upon the premises. He also sustained a claim under 2487, the provisions here involved.

In Re Daniels (D. C.) 110 Fed. 745, costs, incurred in an action against the bankrupt prior to the adjudication, which would constitute a preferred claim under the insolvency statutes of Rhode Island, were heid entitled to priority under section 64b(5).

In Re Byrne (D. C.) 97 Fed. 762, a preference given by a statute of Iowa to labor claims was given a priority over a landlord's lien, because that was held to be the order of priority under the Iowa statute preserved by section 64b(5).

In Re Goldberg Bros. (D. C.) 144 Fed. 566, priority was given to costs incurred by an attaching creditor, because under the insolvent statutes of Maine priority was given to such costs "if the suit was commenced in good faith for the benefit of all the creditors."

In the case styled In re Laird, 109 Fed. 550, 554, 48 C. C. A. 538, the question was whether certain claims for labor were a prior charge upon the funds in a bankrupt trustee's hands. The result depended upon the construction of section 3206a, Rev. St. Ohio 1906. The applicable part was in these words:

"And in all cases where property of an employer is placed in the hands of an assignee, receiver or trustee, claims due for labor performed within the period of three months prior to the time such assignee, receiver or trustee, is appointed shall be first paid out of the trust fund in preference to all other claims against such employer, except claims for taxes and costs of administer

ing the trust."

Judge Day, now Justice Day, for this court, said:

"It is not specifically stated in this connection that the claim in favor of the aborer thus to be preferred shall be a lien upon the debtor's property, but is provided that, in the event property of an employer is placed in the hands of an assignee, receiver, or trustee, such claim shall be first paid out of the trast funds in preference to all other claims, excepting only taxes and costs of administering the trust. As the statute reads claims of all classes are to be stponed to the labor claims accruing within the period mentioned whether the same have theretofore constituted liens upon the property or not. It is the manifest purpose of this statute to give this class of claims a preference all other demands whatsoever, with the exception of taxes and costs of dainistration."

The decision was, however, rested upon the proposition that the property came into the trustee's possession charged with the prior payment of the labor claims which was held to be, in legal effect and force, a lien created by the statute of the state, and thus not avoided by the bankrupt law. The learned and industrious counsel for the appellant have with modest earnestness contended that the cases cited, which sustain preferences given by state statutes, are not sound. They cite to support their view Randolph v. Scruggs, 190 U. S. 533, 23 Sup. Ct. 710, 47 L. Ed. 1165, In re Allen (D. C.) 96 Fed. 512, In re Young (D. C.) 96 Fed. 606, and In re Beaver Coal Co. (D. C.) 107 Fed. 98. The claim for a lien for professional services denied in Randolph v. Scruggs was for services in preparing a deed of general assignment, which, having been made within four months of bankruptcy, was avoided as a consequence of the adjudication of bankruptcy. This deed of assignment provided that the fees of Randolph et al. should be first paid by the trustee thereunder; but the court said that the effect of avoiding the deed of assignment was to avoid it as a whole, and that the "appellants can assert no preference by way of lien under the deed." There was no claim of any preference under any state statute given to counsel preparing such an assignment. The assignment was valid under the law of that state, but when it was avoided the security provided by the deed for the professional services stood upon no better footing than the security provided by the same instrument for every other debt of the assignor. The case is not in point at all. In Re Allen the claim to a preference was for the costs of an attachment proceeding against the bankrupt, before bankruptcy, which was avoided as a consequence of an adjudication in bankruptcy. The only claim to a right to a preference grew out of the lien secured for the debt and costs by the attachment proceeding;, but, as that lien was avoided by the bankruptcy, the lien for the costs of the action went the same way. There was no statute of the state of California making the costs in such a proceeding a preferential claim in the distribution of the insolvent's estate, as was the fact under the law of Rhode Island and the law of Maine as applied in the cases touching costs, cited above, of In re Daniel and In re Goldberg Bros. The same criticism applies to In re Young. In re Beaver Coal Company is in conflict with the cases giving priorities to costs of proceedings against an insolvent set aside as an effect of a state insolvent law. Judge Bellinger does not seem to deny that a debt entitled to priority under a state law is preserved by section 64b(5) of the bankrupt law, but rather to hold that costs under the proceedings avoided by the bankrupt adjudication do not constitute a debt preferred under section 64b(5), although such costs would have been a preferred debt under the insolvent statute of Oregon.

That the unmistakable purpose of the Kentucky statute was to secure a priority to material and supply claims furnished to such a company, as described in the section heretofore set out, under almost every imaginable situation, we have no doubt. Thus a "lien" was declared to exist whenever the property of any such manufacturing company "shall come into the hands of any executor, administrator, commissioner, receiver of a court, trustee or assignee for benefit of creditors

or shall in any wise come to be distributed among creditors, whether by operation of law or by the act of such company, owner or operator." By section 2490, the lien arises whenever "the debtor shall suspend. sell or transfer such business or when the property or effects engaged in such business shall be taken in attachment or execution, so that the business shall be stopped or suspended." By section 2491, this inchoate right to the appropriation of the property of such a debtor is declared to be "superior to the lien of any mortgage or other encumbrance thereafter created." That the technical "lien" of this article does not arise until the occurrence of one of the conditions mentioned may be true, and such is the intimation of the Kentucky Court of Appeals in Winter v. Howell's Assignee, 109 Ky. 163, 58 S. W. 591, and of this court in Ohio Falls, etc., Co. v. Central Trust Co., 71 Fed. 916, 18 C. C. A. 386.

But when, before the happening of one of the conditions which precede the technical "lien" of the statute, there exists from the origin of the debt a right to the ultimate application of the debtor's property to its payment, a right so tangible and specific as that it cannot be defeated by alienation, mortgage, or other incumbrance, nor by any process of law, receivership, assignment, or insolvency proceedings, a right which fastens itself so strongly that it adheres even after the death of the personal debtor, it is impossible to draw any very solid distinction between the equitable consequences of such a right and those of a full technical lien. The purpose of the postponement of the creation of the ripened lien until the happening of the events named would seem to be to give an equality of lien to all claims of like character then existing, rather than to each a "lien" from the date of the furnishing of materials and supplies. This purpose is not inconsistent with the acknowledgment of an inchoate right or incipient lien from the time of the furnishing of the materials, which becomes a ripened lien and fixed charge when the event happens which is named in the statute. Ohio Falls, etc., Co. v. Central Trust Co., cited above.

In Central Trust Company v. Richmond, etc., Ry. Co., 68 Fed. 90, 15 C. C. A. 273, 41 L. R. A. 458, we held that under section 2494, providing that no lien should attach unless the claim should be filed within the time there stated, that an inchoate or incipient lien originated with the beginning of the work or the delivery of the materials and continued as such incipient lien until perfected by the filing of the requisite notice or lost by failing to do so, as required. From the happening of one of the events named, the equitable or inchoate charge becomes a fixed lien and cannot be displaced by later debts. It may be that, if no "lien" in the technical sense of the statute existed when the bankruptcy occurred, no lien in the same sense could arise after bankruptcy. For the purposes of this case, we need go no further than hold, as we do, that this unfixed or incipient charge, a charge so effectual as to be incapable of defeat by any act of the debtor or of ther creditors, or any proceeding by which the property shall "come to be distributed among creditors by operation of law or act of the debtor," manifests so plain a purpose that such debt shall be given priority as to come clearly within the spirit and purpose of section

64b(5) of the bankrupt act. Indeed, the decided cases go so far in preserving such an inchoate charge or incipient lien as to give to it all the effect of a lien. This is the plain teaching of our own case of In re Laird, heretofore cited, followed in Re City Trust Co., 121 Fed. 206, 58 C. C. A. 126.

A statute of New Jersey, giving to mechanics and materialmen a lien, provided "that no debt should be a lien, by virtue of this act, unless a claim is filed," etc., within a time named. Before this was done, bankruptcy of the debtor ensued, and it was claimed there, as here, that, as there was no technical lien when adjudication occurred, none could arise thereafter. Judge Blatchford, district judge, so ruled; but Judge Woodruff, on appeal, held that the lien attached as of the time of furnishing the materials, and reversed the ruling of the lower court. In re Dey, 9 Blatchf. 285, Fed. Cas. No. 3,871.

A statute of Pennsylvania provided that, when property upon rented premises and liable to distraint should be seized on execution, the officer making the sale should pay the rent due in preference to the execution creditor. The question was whether such rent due to a landlord should be first paid by the bankrupt estate which was liable to distraint. Justice Swayne, for the court, said:

"Before the commencement of the proceedings in bankruptcy, the defendants in error might have distrained, and it is agreed that the property upon the premises was more than sufficient to satisfy the demand. The statute of Pennsylvania of June 16, 1836, provides that, where property under such circumstances is seized and sold under execution, the rent due for a period not exceeding one year should be paid first out of the proceeds of the sale. This case is within the equity of that statute."

To the same effect are the cases of In re Hoover (D. C.) 113 Fed. 136, In re Duble (D. C.) 117 Fed. 794, and Wilson v. Penn. Trust Co. (3d Circuit) 114 Fed. 742, 52 C. C. A. 374, all under the Pennsylvania statute requiring priority of payment against an execution upon goods liable to distraint; In re Mitchell (D. C.) 116 Fed. 87, a case under a statute of Delaware which gave a preference to the landlord out of property upon the rented premises. See, also, In re Wynne, Fed. Cas. No. 18,117, In re Bowne, Fed. Cas. No. 1,741, and Kane Co. v. Kinney, 174 N. Y. 69, 66 N. E. 619.

We therefore conclude that the learned bankrupt judge did not err when he held that the claims of the appellees were debts entitled to priority under section 2487, Ky. St. 1903, although a technical lien had not ripened at date of adjudication, and that, under section 64b(5) of the bankrupt act, this right of prior payment would be enforced.

It is next objected that, under section 2494, Ky. St. 1903, appellees were required to file and record their claims in the county clerk's office within 60 days after the last day of the last month in which the materials were furnished, and that they did not do this, and that that section provided that no lien shall attach unless this filing is done Judge Cochran, after an elaborate consideration of the question reached the conclusion that section 2494 did not apply to the lien pro vided by section 2487. In this we concur upon the grounds stated in his opinion.

For a part of one of the claims here involved, the Hume Cooperage Company executed a note, and this note was assigned to one of the appellees. Proof of debt has been made by assignor as well as by assignee. The contention is that the statutory preference is given to him who actually furnishes the materials, and that an assignee cannot enforce the lien or priority conferred by the statute. Inasmuch as no statutory filing applies to liens claimed under section 2487, which comes from the act of 1876, the case of Frailey v. Winchester, 96 Ky. 570, 29 S. W. 446, which was based upon sections 2492 to 2495 and a part of the act of 1888, has no application, as neither the assignee nor assignor of a claim under 2487 is required to make the statement required to be made under the provisions which relate to liens under the other sections referred to. Neither does the case of Hutsell v. Banks, 102 Ky. 410, 43 S. W. 469, 39 L. R. A. 403, apply. In that case it was, held that the assignees of a rent note could not collect it by the "extraordinary remedy" of distress. Inasmuch as the contingent right of lien under section 2487 does not depend upon the doing of anything by the creditor, there is no reason why a priority or lien, which attaches to the claim rather than to the claimant, shall not be assignable. The case falls under the earlier Kentucky decision of Graham v. Holt, 4 B. Mon. (Ky.) 61. That case accords with the general rule in respect of the assignability of preferential claims. Thus section 64b(4) of the bankrupt act gives a preference to "wages due to workmen, clerks, or servants which have been earned within three months before the date of the commencement of proceedings in bankruptcy. * In Shropshire-Woodliff Co. v. Bush (decided January 7, 1907) 27 Sup. Ct. 178, 204 U. S. 186, 51 L. Ed., the Supreme Court held that "the priority is attached to the debt, and not to the person of the creditor; to the claim, and not to the claimant," and that an assignee before bankruptcy might assert the claim and its priority. In Columbus, etc., R. R. Appeals, 109 Fed. 177, 48 C. C. A. 275, we held that a preferential claim, under the equity rule applied in the administration of an insolvent railroad, might be assigned, saying: "The preference attaching to a labor claim is to the claim, and not to the claimant, and passes with the claim to an assignee." See, also, Trust Co. v. Walker, 107 U. S. 596, 2 Sup. Ct. 299, 27 L. Ed. 490, and Burnham v. Bowen, 111 U. S. 776, 4 Sup. Ct. 675, 28

L. Ed. 596.

[ocr errors]

That personal security was taken by a note made by the debtor corporation did not operate to release the security afforded by the statute; there being nothing inconsistent with an intention to retain. and rely upon the lien. Smith v. Wells, 4 Bush (Ky.) 92. Andrews v. Kentucky Citizens' B. & L. Ass'n, 67 S. W. 826, 23 Ky. Law Rep. 2418, is not in conflict, for the note there in suit was made in 1892, and the statute giving the lien claimed provided that the lien authorized by the chapter should have no effect "if security shall have been taken for labor performed or materials furnished." provision was repealed by Acts 1896, p. 49. In Central Trust Co. v. Richmond Railroad Co., 68 Fed. 90, 15 C. C. A. 273, 41 L. R. A. 458, we held with reference to the lien given under sections 2192-2494,

This

« AnteriorContinuar »