254 F. 742 | E.D. Mich. | 1918
This is a petition to review an order of the referee disallowing certain claims against the estate and denying priority to certain other claims.
The Caledonia Coal Company, the bankrupt, was a Michigan partnership association, organized under the statute governing such associations, being Act 191 of the Public Acts of 1877, as amended by Pub. Acts 1881, No. 216. It was engaged in the mining of coa.1 on a co-operative plan. Under this plan each stockholder worked as a miner in the mines owned by the company, for which he received wages
In July, 1917, the trustee filed a petition asking that the claims of these stockholders be re-examined and expunged. He alleged two grounds for the rejection of such claims: First, that the amounts claimed to be due as wages had been advanced by the claimants to the company out of their unpaid wages, for the purpose of furthering the common enterprise in which they were engaged and from which they expected to reap a profit; and, second, that the claimants were indebted to the company, on account of unpaid subscriptions for their stock, for sums at least equal to- the amounts claimed to be due them. A time was fixed for the hearing on this petition, and notice thereof was duly given to the claimants. Testimony was taken before the referee. The-latter then entered an order disallowing a number of the claims, and holding that the balance of such claims should be allowed merely as general unsecured claims, without any priority. This petition is filed to review such order.
“Petition tor re-examination of claims sliall be filed witbin sixty days after tbe filing thereof, unless the time therefor shall be extended by the court upon cause shown and after such notice to the claimant of the hearing of the said application as the court may direct.”
As already stated, the petition of the trustee was filed about a year after the filing of the claims in question, and it does not appear that there has been any formal compliance with the rule just quoted. In view, however, of the fact that due notice was sent to all of the claimants of the hearing on such petition, and as one of the questions raised by claimants and argued by both parties here is whether the petition of the trustee can be filed after the lapse of the time mentioned, I am disposed to consider this petition as if it included an application for the extension of time contemplated by the rule referred to. No motion to dismiss the petition as improperly filed was made, and the merits of the case have been fully argued. Reasons for the delay have been explained by the attorney for the trustee and are now before
“Claims which have been allowed, may he reconsidered tor cause and re-allowed or rejected in whole or in part, according to the equities of the case, before, but not after, the estate has been closed.”
Under the circumstances it cannot be held that the trustee has been guilty of laches. In re Globe Laundry (D. C.) 198 Fed. 365.
“When the trustee or any creditor shall desire the re-examination of any claim hied against the bankrupt’s (state, he may ajjply by petition to me referee to whom the case is. referred for an order fixing a time for hearing the petition, of which due notice shall he given by mail addressed to the creditor. At the time appointed the referee shall take the examination of the creditor, and of any witness that may be called by cither party, and if it shall appear from such examination that the claim ought to he expunged or diminished, the referee may order accordingly.”
It will be noted that there is nothing in this rule requiring the service of a copy of the petition upon the claimant or requiring a separate petition containing the necessary allegations, and due notice of the hearing thereon was sent to each of the claimants. I am satisfied that the proper practice has been followed, and the contention to the contrary must be overruled.
Coming, then, to the merits of the case, did the referee err in the disallowance of these claims ? The referee found, as a matter of fact, that the stock owned by a number of the claimants, a list of whose names is given in his findings, was not paid in full, and, furthermore, that such claimants were not bona fide purchasers of such stock.
In so far as they consented, or failed to object, to the action of the company in deducting these sums from their pay and crediting them with the amounts on the books of the company as loans made by them, they cannot now be heard to deny that they in reality made such loans. While the record before me is not very definite or positive as to the course of dealing in regard to this matter, it does appear from the pay roll book of the company that transfers were regularly made from the labor accounts to special loan accounts with the miners. Of course, the mere arbitrary withholding of money due the men as wages, if done without their consent, express or implied, would not be sufficient to change the character of these claims from unpaid wages to unpaid loans. Where, however, it appears that an amount was so withheld and so charged upon the books, and that the claimant accepted the balance of his wages without objection, I am satisfied that the proper inference to be drawn is that the claimant understood and consented that the sum not paid to him was retained by the company as a loan. As to such loans, claimants are not entitled to priority, as for labor claims.
The actual claims as filed have not been shown to me, and 1 am unable to determine whether the claimants are seeking to recover only the amounts retained from their wages as loans, or whether they are claiming that, not only such loans, but also wages earned in addition thereto, are due and unpaid. Nor am I certain, from the record before me, whether, when the wages earned became due and payable, all of such wages were withheld or only a portion thereof. The referee, however, will doubtless have no difficulty in properly applying the principles which I have stated to the facts in each particular case.
This contention cannot be sustained. The clause of the Bankruptcy Act just quoted, relating to debts entitled to priority hy the state laws, must be read in connection with the preceding clause, which indicates the intention of Congress to provide a fixed and certain preference for
The cause will be remanded to the referee for proceedings not inconsistent with the terms of this opinion.