In re St. Louis Ice Mfg. & Storage Co.

147 F. 752, 1906 U.S. Dist. LEXIS 130

• Court: District Court, E.D. Missouri
• Decided: July 5, 1906
• Docket: No. 899
• Status: Published

Opinion

FINKELNBURG, District Judge

(after stating the facts). Referring to the statement of facts contained in the referee’s report and the question therein certified for review to this court, I desire to say that, in my opinion, the claim of priority here made does not come within either the letter or the spirit of the bankrupt law. Section 64b, subd. 4, Act July 1, 1898, c. 541, 30 Stat. 563 [U. S. Comp. St. 1901, p. 3447], requires two conditions in order to make it operative, viz.: first, the wages for which priority is claimed must be due to workmen, clerks or servants; and, second, such wages must have been earned by them within three mouths before proceedings in bankruptcy.

In the case here under consideration the wages for which a priority is claimed are not due to any workman, clerk, or servant of the bankrupt; they are claimed as due to third persons who advanced money to pay' certain workmen about two months prior to the institution of the proceedings in bankruptcy, and while the defendant corporation was a going concern, and 'those third persons now claim a priority' accorded to the workmen under assignments from the latter made at the time the money was advanced. Clearly the claimant is not within the letter of the law, nor do I think he comes within the spirit of the law. It was not the intention of the bankrupt law, and I think it is not within the policy of the bankrupt law that this privilege and advantage accorded to a workman should become the subject of trade and barter, or that it should become a quasi negotiable security to be used as collateral. It was intended to give a preference to a certain class of creditors favored by the law, provided such a class be in existence when the bankruptcy occurs. The privilege has a personal character, and cannot be transferred to others not belonging to that favored class. It was intended to ameliorate to a certain extent the hardship which might otherwise be inflicted on a class suddenly-thrown out of employment and with wages in arrears. If earned within three months the law has humanely provided for this class of creditors in such an emergency- to the exclusion o f all others.

The creditor who now comes does not fall within the class which the law intended thus to favor, and no such emergency has in fact arisen. The workmen were paid several months before the bankruptcy occurred. Besides, I think if these privileges or priorities could be assigned and traded in, it might lead to abuses and complications in various ways not intended by" the law, and some of which have been pointed out by Loehren, J., in Re Westlund (D. C.) 99 Fed. 399. I have concluded to follow that decision, and the decision of the referee will therefore be confirmed.