The issues here arise on a contested claim filed in the bankruptcy proceedings.
An involuntary petition in bankruptcy was filed against Harry Raiken, trading as Raiken Monument Works, on October 25, 1937, and two days later an order of adjudication was entered thereon by consent.
The claimant Oscar Johnson obtained a determination and rule for judgment against Raiken, before the Workmen’s Compensation Bureau of New Jersey, for injuries sustained in the course of his employment, and pursuant to the state statute a judgment was entered thereon in the office of the Clerk of Essex County on September 13, 1937. On November 19, 1937 Johnson filed the claim in question basing it upon the aforesaid judgment.
Question now arises as to whether this claim is to be dealt with pursuant to the provisions of the Bankruptcy Act as it was prior to the amendments of-June 22, 1938, known as the Chandler Act. In this connection, the Chandler Act pro
In United States v. Marxen,
The Bankruptcy Act of 1898, as amended and supplemented, provided that wages due workmen “which have been earned within three months before the date of the commencement of the proceeding,” shall have priority in advance of the payment of dividends to creditors. Sec. 64, sub. b(5), 11 U.S.C.A. § 104, sub. b(5). It was under this provision that the Referee made his findings as to the claim in question and fell into error as hereinafter appears.
The Workmen’s Compensation Act, Revised Statutes of New Jersey, 1937, Vol. II, 34:15-29, N.J.S.A. 34:15-29, provides: “The right of compensation granted by this chapter shall have the same preference against the assets of the employer as is now or may hereafter be allowed by law for a claim for unpaid wages for labor.”
It should be noted that in treating with the subject of wages, the Bankruptcy Act does so strictly in the sense of wages as such and not in the sense that compensation insurance income could be construed as wages. This, I think, must be concluded for many reasons; prominent among them, is a point which the Referee makes in his report. He says: “All laborers are entitled 'to wages. It was undoubtedly the determination of the legislative body that these people who created assets immediately prior to the filing of the petition and had not received payment for such creations, should be set apart in this privileged class.” With this thought I am in full accord. But there is a still more compelling reason. It is found in the use of the word “earned” in Sec. 64^ sub. b(5). That section clearly refers to earned wages only, which is to say, to wages based upon services rendered. Monies to be paid for occupational injuries can not reasonably be so classified. Nor can the language of the state statute result in such a finding, since the state is powerless to amend the federal statute. It follows that Johnson can not recover as a priority claimant under Sec. 64, sub. b(5) of the Bankruptcy Act of 1898 as amended.
Passing now to Sec. 64, sub. b(7) of the aforesaid Act, it is found that “debts owing to any person, * * * who by the laws of the United States, * * * is entitled to priority,” shall have priority in bankruptcy in advance of the payment of dividends to creditors. It is my view that the claimant here is entitled to have his claim allowed under this provision.
The question then is: What does the law of the state allow the claimant ? Again referring to the language of the State Workmen’s Compensation Act, supra, 'it is found that the judgment upon which the claimant relies “shall have the same preference * * * as is * * * allowed by law for * * * unpaid wages for labor.” On this point attention is directed to In re Worcester County, 1 Cir.,
It follows that Johnson, the claimant here, is entitled to the priority which Sec. 64, sub. b(7) of the Bankruptcy Act of 1898 as amended affords him and that the amount thereof is fixed by the state statute at $300. As to the balance of his claim, he is entitled to dividends as a general creditor.
An order will be entered in conformity herewith.