236 F. 29 | 6th Cir. | 1916
(after stating the facts as above). The ultimate question concerns the distribution of the fund pointed out in the statement. The appellants contend that the fund should be turned over to the court of primary jurisdiction, the District Court of Rhode Island, sitting in bankruptcy, for purposes of distribution among all the creditors of the bankrupt estate. The appellees, who are the nine labor claimants, insist that tire court below, sitting in bankruptcy and as the ancillary tribunal, is empowered to pass upon the questions of priority and to provide for applying the fund accordingly.
Section 2 of the Bankruptcy Act (subdivision 2¡0), as amended June 25, 1910, vests in the federal District Courts—
“ancillary jurisdiction over persons or property witMn tiieir respective territorial limits in aid of a receiver or trustee appointed in any bankruptcy proceedings pending in any other court of bankruptcy.” 36 Stat. pt. 1, 839.
We cannot think that Emerson’s selection as trustee operated to vacate his ancillary receivership, and to transfer the fund through him as trustee to the sole control of the court of primary jurisdiction. It is, of course, true, as counsel say, that section 70a of the Bankruptcy Act provides that the trustee shall be “vested by operation of law with the title of the bankrupt as of the date he was adjudged a bankrupt”; still reliance on this provision ignores the facts that the property from which the fund was derived was in possession of the state court receiver at the times of both the bankruptcy and the adjudication, and that admittedly the rights of the ancillary receiver and the trustee in bankruptcy in respect of the property could be determined only through the ancillary proceeding in question. 'The object of bestowing ancillary jurisdiction would naturally be to invest the tribunal, whose aid is once invoked, with power itself to control the agencies coming within its territorial jurisdiction, and likewise the property found and sought to be recovered therein on behalf of the bankrupt’s estate. It would be an anomalous proceeding which would suffer an ancillary receiver or a trustee in bankruptcy at his option to withdraw property recovered through the aid of the ancillary tribunal, and regardless 'alike of the tribunal itself and resident suitors there appearing and claiming priorities or liens against the property. This would be to make the ancillary tribunal a mere instrument of the official instituting the action, since it would deny to the tribunal power to pass upon the rights of adverse claimants and even of a person found in possession of the property. Such a proceeding would hardly square with d,ue process of law; it would savor rather of violence.
“Each person who has performed labor as an operative in the service of the assignor, within twelve months preceding the assignment, shall be entitled to receive out of the trust funds, before the paying of other creditors, iho full amount of wager, due for such 'labor, uot exceeding three hundred dollarr.” 5 Page and Adams Ann. O. G. C.
It was held that this provision operated to create a lien upon the fund in dispute, securing each labor claim in a sum not exceeding $300. This was upon the theory that the case is controlled by the ruling of this court in In re Laird, 109 Fed. 550, 48 C. C. A. 538, and the decision of the Supreme Court of Ohio in Machine Co. v. Supply Co., 68 Ohio St. 535, 67 N. E. 1055, 64 L. R. A. 845, 96 Am. St. Rep. 677. The foregoing statutory provision was not involved in the Eaird Case. The provision there relied on in sustaining labor claims was the following portion of the present section 8339, Ohio Gen. Code, which at the time of the decision bore the number 3206a, Ohio Revised Statutes (In re Laird, 109 Fed. 554, 48 C. C. A. 542):
“In all casos when 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 first be paid out of the trust fund, in preference to all other claims against such employer, except claims for taxes and the costs of administering the trust.”
Several observations are to be made upon these two statutory provisions. The one of most obvious pertinence is the difference in time within which the services must have been rendered in order to 'come within the respective limitations there prescribed; the first being “twelve months preceding the assignment,” and the other “three months prior to the time such assignee, receiver or trustee is
In view of these marked differences between the two statutes, it is reasonably to be inferred that they are independent each of the other, and designed for the accomplishment of distinct objects; and such was the conclusion of this court in In re City Trust Co., 121 Fed. 706, 58 C. C. A. 126. That case presented the question whether the claims of “operatives” were, under .either section 3206a (now section 8339) or section 6355 (now section 11138), or both, entitled to priority over certain prior and good-faith chattel mortgage liens. Moreover, a deed of assignment for the benefit of creditors had been made by the assignor previous to the adjudication in bankruptcy; and the court was accordingly called upon to determine whether, under either or both of these statutes, the operatives’ claims were entitled to priority over the claiqis of the chattel mortgagees. This led to the consideration again of the Laird Case and also to its reaffirmance. The result was to deny the application of section 6355 (now section 11138) to estates held by receivers or trustees, and also to deny to laborers, who might fairly be classed as operatives, the benefit of both section 3206a and section 6355; the present Mr. Justice Day saying in the course of the opinion (121 Fed. 708, 58 C. C. A. 128):
“Section 6355 (now section 11138) is a part of tlie chapter regulating the administration of estates of insolvent debtors, and deals with the distribution of the fund in the hands of the assignee. It does not have to do with estates placed in the hands of receivers or trustees. * * * ”
And again (121 Fed. 709, 58 C. C. A. 129):
“While we realize the general principle which gives to this kind of legislation a liberal construction, with a view to carrying out its beneficent purposes, we do not think it was the intention of the Legislature to give to laborers of this class the benefit of both sections 3206a and 6355. As we have said, the broad provisions of 3206a might include all classes of laborers; but in section €355 the Legislature is dealing with a distinct class, fixing the right to preferential claims in cases of assignment.”
The effect of this was to deny to an “operative” under present section 11138 the right to claim any benefit under old section 3206a,
It is, however, urged, and it was in effect so held below, that the decision in Machine Co. v. Supply Co., supra, 68 Ohio St. 535, 67 N. E. 1055, 64 L. R. A. 845, 96 Am. St. Rep. 677, decides that labor claimants like the present are entitled “to invoke the provision most favorable to themselves,'"’ that is, the provision of either of these Ohio laws. We do not so understand that decision. The sole question involved in the case was one of priority as between the claims of certain laborers and chattel mortgagees. The property of the mortgagor had been placed in the hands of receivers in the common pleas court of Allen county, Ohio, and after the property had been converted into money the rights of the parties were transferred to the fund so derived. The circuit court held that the amounts due on the laborers’ claims should first be paid in full, and the remainder applied, in a way pointed out, to the payment of the mortgages. The judgment was reversed and the holders of the chattel mortgages were given priority. Plainly the question involved, and so the judgment,0 had no relation to a right, like that mentioned in the opinion, of labor claimants to select and recover under the statute “most favorable to themselves.” The court was required, and only required to determine which of two classes of claimants — one class claiming for labor performed and the other for loans secured by chattel mortgages — should be subordinated to the other in the distribution of the fund; and nothing more than the determination of that issue is to be found in the syl
“The plant was a very small one, employing at least in its later stages only nine men in all, and the testimony Shows that Emery and Castor, necessarily having little to do in the way of superintendence, and the company being in financial difficulty, devoted themselves, in large part, to manual labor contributing to the manufacture of rubber tires.”
Indeed, we think it is fairly to be inferred that so far as any services were rendered by Emery, Castor, and Bogner in the last three months, their services consisted mainly in the performance of manual labor and negligibly in the discharge of their earlier duties. It is this feature of the evidence which we think warrants the belief that the titles borne by these three appellees signify but little in the last stages of the business, and consequently that their claims, as well as the claim of the watchman, may rightfully be classified and treated as falling within the purview of section 8339 (old section 3206a). The wages of Emery and Castor were, it must be conceded, in excess of what would ordinarily be allowed to persons for such work as
The decree must be reversed, and the cause remanded, with direction to enter a modified decree providing for payment out of the fund here in issue of such portions of the claims of the four appellees, viz. Emery, Castor, Bogner, and Davenport, as represent the services rendered by them within the three months’ period prescribed by section 8339, Ohio Gen. Code, and likewise respecting the claims of Miller, tire builder, and Young, day watchman, appellees, in case they performed services within that period. The parties on neither side will recover costs of this court against the others; but the costs paid by appellants to the clerk of this court, and, since the expense of preparing and printing record and printing briefs would be largely the same if only the four appellees named had recovered, appellants’ expense (of preparing and printing transcript of record and briefs, as well as appellees’ expense of printing brief, shall also be paid out of such fund.