Acme Foundry & Machine Co. v. Wampler

260 P. 972, 124 Kan. 486, 1927 Kan. LEXIS 364
CourtSupreme Court of Kansas
DecidedNovember 5, 1927
DocketNo. 27,745
StatusPublished
Cited by2 cases

This text of 260 P. 972 (Acme Foundry & Machine Co. v. Wampler) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Acme Foundry & Machine Co. v. Wampler, 260 P. 972, 124 Kan. 486, 1927 Kan. LEXIS 364 (kan 1927).

Opinion

[487]*487The opinion of the court was delivered by

Burch, J.:

The question presented by the appeal is the proper interpretation of the wages-preference law of this state, which reads as follows:

“That whenever a receiver shall be appointed of the estate of any corporation, copartnership, or individual, under the laws of this state, or whenever any corporation, copartnership or individual shall make a general assignment for the benefit of the creditors of such corporation, copartnership, or individual, the wages due to all laborers or employees other than officers of such corporation, accruing within the six months immediately preceding such appointment of a receiver or such assignment, shall be preferred to every other debt or claim against such corporation, copartnership, or individual, and shall be paid by the receiver or assignee of such corporation, copartnership or individual from the moneys thereof which shall first come into the hands of such receiver or assignee.” (R. S. 44-312.)

The action was one to foreclose a mechanic’s lien on an oil and gas leasehold. Various lien claimants were made parties, and the leaseholder was served by publication. A receiver was appointed for all the property of the leaseholder in the state of Kansas, and the order of appointment conferred on the receiver all the authority usually granted to receivers. Subsequently the .order was modified, and the receiver’s authority was limited to talcing charge of the leasehold on which liens were claimed, consisting of eighty acres of land, and the buildings, wells, pumps, boilers, drilling rigs, pipe line, and other equipment, machinery, supplies and property on the land; to recovery of property belonging to the leasehold but removed from it; to holding the property intact and protecting it; and to execution of such orders respecting the property as the court might make. After the authority of the receiver had thus been restricted, a number of laborers intervened. Each one claimed a sum as wages due him, and claimed a preference under the statute. There were eleven such claimants, and the amounts of their claims ranged from $10.50 to $422.72. The property in the hands of the receiver was sold, and the proceeds were wholly insufficient to pay all claims. The wage claims were allowed, and were preferred for payment before the lienholders were permitted to participate in the meager fund. The lienholders appealed.

It will be observed the statute is a preference statute only, and not a lien statute.. The statute was enacted pursuant to the sound [488]*488public policy of securing to wage earners prompt payment of earned wages, and is to be liberally construed.

The preference claimants contend the word “estate” means simply property, and the statute should apply whenever any portion of a debtor’s property is placed in the hands of a receiver for any purpose. The lien claimants contend the word “estate” ordinarily refers to the collective whole of an owner’s property, and when employed without modification or restriction in connection with the subject of satisfaction of debts, means the corpus of the debtor’s property subject to appropriation for payment of debts. The distinction between the two interpretations is sharply drawn by the proceedings in the district court. The original order extended to all of the debtor’s property within the state, and conferred general authority on the receiver to wind up his affairs. The modified order dealt with a described eighty-acre leasehold and its equipment and appurtenances, and limited the authority of the receiver to functions incident to appropriation of the specific property to satisfaction of claims upon it. It might be said the original order created a receivership for that part of the debter’s estate which was within the jurisdiction; but to say the modified order created a receivership of the debtor’s estate would be to give to words a signification which does not accord with approved usage. (R. S. 77-201, Second.)

Turning to the context, it will be observed the preference arises under two conditions: first, when a receiver is appointed of the estate of a corporation, partnership, or individual; and second, when a corporation, partnership or individual makes a general assignment for the benefit of creditors. What did the legislature have in mind, a debtor’s status, or the occurrence of a procedural event? It seems reasonable to conclude the legislature contemplated a situation calling for suspension of a debtor’s dominion, and the vesting of possession, control and disposition of his assets in another for the benefit of his creditors. The methods of dealing with the situation are, first, the involuntary one of appointing a receiver, and second, the voluntary one of assignment to a trustee. The state of affairs is the substantial thing. The methods are incidental only, and are unimportant except as limitations excluding other methods of sequestration and distribution.

Correctness of the interpretation just proposed is fortified by a consideration of the history of legislation giving special protection [489]*489to wages. In the book, “Principles of Labor Legislation,” by Commons and Andrews (1916), appears the following:

“Mechanics’ lien laws represent a stage in the progress toward wage preference, but they should not be confused with it. . . .
“Mechanics’ lien legislation seeks to give the laborer a claim for the payment of what is due to him, backed by the security of the structure or land •on which he has been employed.....
“The next step was the provision that wages should be considered as preferred claims. Nearly all the states and the federal government have laws providing that in cases of assignments, administrations, and receiverships due to death or bankruptcy, the wages of servants and employees, up to a definite sum and for work done within a limited time, shall be paid next after fees, costs, and taxes.” (pp. 60, 61.)

The movement for legislation of this character was given great impetus by the decision of the supreme court of the United States in the case of Fosdick v. Schall, 99 U. S. 235 (1878), and subsequent decisions, approving the practice of courts of equity in railroad receivership cases of imposing reasonable requirements relating to preferential payment of labor claims. Judicial opinion differed regarding utilization of the practice in other classes of cases, and the result was, numerous statutes were enacted to secure generally to labor the benefits of the equity doctrine. These statutes are dissimilar in form and content (2 Labatt’s Master and Servant, 2d ed., p. 1999; 39 C. J. 215), and it is not practicable to review them here. The Kansas statute was enacted in 1901. The legislature had before it a variety of models, and what it adopted and what it rejected give fair indication of its intention.

If in this instance the debtor had remained with his leasehold, protecting and preserving his property, the liens had been foreclosed, and the property had been sold, all without appointment of a receiver, the statute would have afforded no protection to the preference claimants. It would have been necessary for them to file liens under the statute providing for labor liens on oil and gas leaseholds (R. S. 55-207 to 55-210), or to resort to the ordinary remedy of action, judgment, and execution.

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260 P. 972, 124 Kan. 486, 1927 Kan. LEXIS 364, Counsel Stack Legal Research, https://law.counselstack.com/opinion/acme-foundry-machine-co-v-wampler-kan-1927.