122 F. 630 | 2d Cir. | 1903
The order under review allowed priority of payment out of the assets of the bankrupt to debts owing to employés of the bankrupt for wages, notwithstanding the wages were not earned within three months before the commencement of the proceedings in bankruptcy. These wages had been earned prior to April 14, 1900. On that day the bankrupt made a general assignment for the benefit of his creditors. The petition in bankruptcy was filed July 16, 1900. The court below ordered priority in view of the state statute, which provides that in all distributions of assets under general assignments for the benefit of creditors the wages or salaries actually owing to the employés of the assignor for services rendered within one year prior to the execution of the assignment shall be preferred before any other debts. Laws N. Y. 1897, p. 772, c. 624, § 29.
The state statute does not purport to give employés a lien upon the property of the employer for wages, nor to give them priority over other creditors of the debtor, except when the debtor’s estate is distributed by an assignee under a general assignment. In that event it impresses the fund in the hands of the assignee with a trust. Richardson v. Thurber, 104 N. Y. 606, 11 N. E. 133. If the estate is not distributed under the assignment—as, for instance, if the assignment should be set aside for fraud, or for invalidity otherwise—the provision is nugatory. There was no priority here, because the conditions essential to its recognition did not exist. The assets were not in course of administration under a general assignment. Moreover, by the bankrupt law the assignment was void, having been executed within four months, prior to the filing of the petition in bankruptcy. Such a transfer by an insolvent debtor is made with intent to hinder, delay, and defraud creditors within the meaning of section 67, 30 Stat. 564 [U. S. Comp. St. 1901, p. 3449], because its necessary effect is to defeat the operation of the bankrupt act and the rights of creditors to such an administration of the assets of the debtor as that act is intended to secure. In re Gutwillig, 34 C. C. A. 377, 92 Fed. 337; West Co. v. Lea, 174 U. S. 590, 19 Sup. Ct. 836, 43 L. Ed. 1098. The assignment being void, it is as though it had never been made, and the property of the debtor passed to the trustee in bankruptcy free from all liens or trusts created by or resulting from it. ' '
If by the state law the debts were within the general description of clause 5, § 64, 30 Stat. 563 [U. S. Comp. St. 1901, p. 3448], we are of opinion that the clause would not apply, and that the terms of clause 4 supply the exclusive rule for determining what debts for wages are entitled to priority. No principle of statutory construction is better settled than that which displaces the application of general provisions to a particular subject when there are specific provisions applicable to it in the same act. The subject of claims for wages is specifically regulated by clause 4, and its provisions express the particular intent of Congress regarding priority for such claims. As these confine the priority to wages earned within three months before the commencement of the bankruptcy proceeding, debts like the present are not included. We agree upon this question with the
The order is reversed, with costs, and directions to the court below to enter an order disallowing priority to the claimants.
2. See Bankruptcy, vol. 6, Cent. Dig. § 283.