59 Colo. 150 | Colo. | 1915
delivered the opinion of the court.
This controversy arose in an action by The Central Savings Bank, Trustee, one of the plaintiffs in error, as plaintiff, against The Argentine Central Railway Company and certain judgment creditors, defendants, to foreclose a mortgage upon the property of such company, in which case the judgment rendered was finally reviewed by this court, Booth, Trustee, et al. v. Central Savings Bank, Trustee, reported in 146 Pacific Rep. 240. Upon allowing a supersedeas therein, an order was entered, permitting foreclosure sale by virtue of an agreement between the parties, in which it was directed that a certain portion of the purchase price realized be deposited with the clerk of the District Court, pending final adjudication, subject, however, to the payment from the fund of such proportion of preferred labor and salary claims, if any, as the District Court might allow, to be deducted before distribution. The property was accordingly sold to plaintiff in error Rogers for $5,000.00, but upon failure of confirmation thereof, because of objections and protests filed by defendants in error and other claimants, it was offered a second time and purchased by him for $20,002.00, which latter sale was confirmed.
During the progress of, the foreclosure proceedings in
The statute enacted in 1903, entitled “An act to protect employes and laborers in their claims for wages, and to make the claims of employes and laborers preferred claims as against all other creditors,” secs. 6998, 6999 and 7000, B. S. 1908, as applied to the present case, provides that upon the suspension of the business of any person, corporation, company or firm, by putting the same in the hands' of a receiver, the debts owing to laborers, servants or employes, by reason of their labor or employment, shall be considered and treated as preferred claims, and such laborers and employes shall be preferred creditors; that a statement of claim, under oath, showing the amount due, the kind of work and when performed, shall be presented to the officer, person or court charged with such property, within sixty days; and that any person interested may contest any such claim, or part thereof, by filing exceptions thereto, supported by affidavit, with the officer having the custody of the property, whereupon the claim shall be reduced to judgment, in a court having jurisdiction thereof, before any part of it shall be paid. It also contains the following provision:
“That the provisions of the act shall not be construed to extend to creditors who held a duly recorded mortgage upon the property attached,, which was given for a debt*153 actually existing from such mortgage, before the labor was performed.” .
The statements of the claims of the various defendants in error were not filed in court by the receiver until some months after the sixty days required by statute for filing the claims with such officer has elapsed. No facts with reference to such claims appear, as no evidence was introduced at' the hearing. The court below. assumed that, as no contrary showing was made, the respective claims were filed with the receiver .in apt time, and held that the objections put forward to them for the first time upon the hearing of an application for their allowance came top late, and that they were therefore confessed. It was further determined that, independent of statutory provision,, the claims should be allowed under the rule of equity pecitliar to rail,road properties under receivership.
The first question is whether the statute cited gives a preference to claims specified therein over a lien of debts secured by mortgage described in the proviso above quoted, such as the one here involved. Plaintiffs in error contend that-.the most reasonable, interpretation of the proviso is that the claims specifically mentioned in the act shall not take precedence over the debts of creditors secured by a mortgage, given for a debt actually existing before the labor for which the statutory preference is claimed was performed. Defendants in error urge that such construction would render the proviso contradictory and not germane to the title of the act, and that it should therefore be disregarded ; that its language is so ambiguous as to render it .incapable of construction; and that, in any event, its true meaning is that such mortgage creditors as therein described are not to be included among creditors given a right of priority by the statute.
, When a business is suspended-as contemplated by the statute certain claims therein specified -are by its terms preferred for the purpose of payment. It is provided, in the
The statute was adopted in 1903, and is precisely like the one, excepting its proviso, enacted in Illinois in 1895. The statute of the latter state had been twice construed by its two appellate tribunals, Heckman v. Tammen, 84 Ill. App. 537, affirmed in Heckman v. Tammen, 184 Ill. 144, 56 N. E. 361, in 1900, wherein it was held that the preference of claims therein specified was absolute over previously existing mortgage liens. Under these circumstances it is plain that the legislature of our state had a well-defined purpose in adding the proviso, the construction of which should be consistent with such evident purpose. However, in Seymour v. Berg, 227 Ill. 411, 81 N. E. 339, 10 Ann. Cas. 340, decided in 1907, Heckman v. Tammen, supra, was overruled, and it was held, in substance, that the act merely placed the claims of employes for labor in a preferred class, to be paid in preference to other simple contract creditors, and does not create an express statutory lien superior to all other liens, without reference to priority. The court said at page 416 (10 Ann. Cas. 340, 81 N. E. 341) :
*155 “The clear intent of the legislature was to place debts due to employes for labor in a preferred class, and to require that such preferred claims should be paid in preference to other simple contract creditors who held no record liens. The fund out of which these preferred claims were to be paid is whatever interest the failing debtor has in the property or assets that go into the hands of the receiver or trustee. The court below and the Appellate Court have treated this statute the same as if it created an express statutory lien superior to all other liens, without reference to priority, that might exist against the property of the failing debtor. This view is not warranted by the language of the statute under consideration, in its original or amended form. The statute merely gives a preference to claims for labor or services, — which is quite a different matter from creating a statutory lien, — upon all of the debtor’s property.”
And further, at page 420 (81 N. E. 342, 10 Ann. Cas. 340) :
“Statutes intended to secure wage earners against loss of their earnings from insolvency of employers are based upon a sound public policy and should be liberally construed in order to accomplish the purpose of their enactment. But this rule cannot be invoked for the purpose of supporting a decision not based upon the letter or spirit of the legislative enactment. Up to this time the legislature has not created any such lien, but has made debts due for labor preferred claims against the property of the debtor and made claimants for wages preferred creditors and provided that they shall be first paid, which, as we have already seen, is quité a different thing from the creation of a statutory lien.”
So that, even eliminating the proviso from consideration as too ambiguous to admit of reasonable construction, as urged by counsel for defendants in error, in the light of Seymour v. Berg, supra, which in our opinion states the law, the conclusion must be that under the statutory pro vis
“There is a very clear and marked distinction between ■ a preferred debt, and a debt secured by a specific lien. A general debt cannot become superior to another secured by a lien, unless expressly made so by a valid law; and, if a. statutory lien is to be created, the language employed should be specific in declaring the fact, as well as the nature, character and extent of such lien. The construction contended for by appellants would require the court to infer the lien, and that it attached to this particular property, and superseded a pre-existing valid mortgage. If such a result is within the meaning and intent of the statute, then, in case of an employer’s insolvency, labor claims in amount unlimited, and bounded in time only by the statute of limitations, may be enforced against his estate to the displacement and exclusion of debts of unquestioned validity, secured by mortgage liens of many years standing. We are unable to ascribe such an intent to the legislature, or so to interpret this statute. The obvious purpose of the legislature in this enactment was to give laborers of the class named in the statute preference in the payment of their claims from the estate of the insolvent employer, in the same sense and to the same extent that preference is given in the payment of funeral expenses under the statute for the administration of decedents’ estates.”
Upon the proposition that the claims were properly allowed in equity, there can be no doubt that under some conditions claims of a certain kind and character against a going railroad, as a public or gitasi-public corporation, might be thus preferred over prior mortgage liens. First National Bank v. Wyman, 16 Colo. App. 468, 66 Pac. 456. But the very existence of such a rule presupposes an affirmative
It seems that the exceptions to the claims were considered as not having been made within “statutory limitation,” but since the statute upon which the allowance of the claims as preferred was based contains no provision as to the time in which exceptions thereto must be filed, it is apparent that in this respect the court below acted under a plain misconception of the law.
It is contended that the second sale was the result of objections filed to the first by some of the defendants in error; that the first sale was set aside for the express purpose of providing, by re-sale at a guaranteed higher price, a fund for payment of certain wage claimants; and that plaintiffs in error, having participated in the second sale, are for these reasons estopped to question the judgment entered herein. It is sufficient to say upon this score that there is nothing to show that plaintiffs in error in any way consented or acknowledged that the proceeds of either sale should go to pay any particular class of creditors. The purpose of such a sale is to procure funds with which to pay creditors according to their respective adjudged legal or equitable priorities, and cannot be lawfully otherwise applied. ' There was no act on the part of plaintiffs in error which deprived them of their right to question the judgment and decree.
The judgment is accordingly reversed and the cause remanded, with directions to permit the defendants in error,
Judgment reversed and cause remanded with directions.
