Baltimore Trust Co. v. Rowe

• Decision Date: 19 April 1922
• Docket Number: Nos. 10, 11, 12.,s. 10, 11, 12.
• Citation: 118 A. 405
• Parties: BALTIMORE TRUST CO. v. ROWE et al. CONSOLIDATED GAS, ELECTRIC LIGHT & POWER CO. OF BALTIMORE v. SAME. BALTIMORE TRUST CO. et al. v. SAME.
• Court: Maryland Court of Appeals

118 A. 405

BALTIMORE TRUST CO.

v. ROWE et al.

CONSOLIDATED GAS, ELECTRIC LIGHT & POWER CO. OF BALTIMORE

v. SAME.

BALTIMORE TRUST CO. et al.

v. SAME.

Nos. 10, 11, 12.

Court of Appeals of Maryland.

April 19, 1922.

Three Appeals from Circuit Court of Baltimore City; Chas. W. Heuisler, Judge.

In the matter of the insolvency of the Hess Steel Corporation. Separate petitions by Chas. O. Rowe and Timothy A. Canty for an order directing the Baltimore Trust Company and another, receivers of the Hess Steel Corporation, to pay certain claims. From the orders entered, the Baltimore Trust Company, the Consolidated Gas, Electric Light & Power Company of Baltimore, and the Baltimore Trust Company and Clarence C. Pusey, receivers, separately appeal. Reversed in part; affirmed in part and remanded.

Argued before BOYD, C. J., and BRISCOE, THOMAS, PATTISON, URNER, STOCKBRIDGE, ADKLNS, and OFFUTT, JJ.

S. Ralph Warnken and Edgar Allan Poe, both of Baltimore, for appellants.

William F. Podlich and Peter Peck, both of Baltimore, for appellees.

BOYD, C. J. The Baltimore Trust Company and Clarence C. Pusey were on the 14th of July, 1920, appointed receivers, by the circuit court of Baltimore city, of the Hess Steel Corporation. A petition was filed by Timothy A. Canty on the 17th of September, 1920, praying that the court pass an order declaring that he is entitled to preferred payment of the sum of $1,464.99 for work done by him and commissions earned as a salesman of that corporation within a period of three months prior to the appointment of receivers, or after said date, and authorizing and directing the receivers to make said payment out of the first money coming into their hands and available for such purpose.

Mr. Canty was employed on November 15, 1919, on a salary of $3,600 per annum, plus a commission, which at first was to be 2 per cent. on tool steel sales, and when other salesmen were engaged the commission was to be graded downward until a minimum of 1 per cent. was reached. He was to devote his time to securing tool steel business, and for the first year or so a considerable percentage of his time was to be spent in the field. His traveling expenses were to be paid by the company, with the understanding that a nominal maximum would be allowed. His salary was paid monthly, $300 on the first of each month, his traveling expenses were paid weekly, on submission of an expense account, and his commissions on sales were to be paid monthly-on the first of the month following the actual receipt of the money by the corporation, or, as he said, the commissions became due to him "on payment of the invoices by the customers." He stopped work for the company on July 23, 1920, that being the date he heard that receivers had been appointed.

Schedule B, filed in the case, shows Mr. Canty's claims to be as follows:

(1) Commissions on orders for goods delivered between April 14 and July 14, 1920, and paid to the company between said dates

$195.63

(2) Commissions on orders for goods delivered between those dates and paid to the receives after July 14, 1920

62.87

(3) Commissions on orders for goods delivered by the receivers after July 14, 1920, and paid for to them after said date

910.78

The lower court passed a decree on the 20th of September, 1921, directing the receivers to pay what we have marked above (1) and (2), with interest from July 14, 1920, as preferred claims under the provisions of article 47, § 15, of the Code, and also what we have marked (3), stating that "said payment to be charged by said receivers as a part of the expense incurred by them in and about their operation and management of said Hess Steel Corporation under the order" previously passed by the court in regard to the operation and management of the company as a going concern. The order of the court also directed the receivers to pay commissions on orders for goods which at the time of the hearing had not been accepted and filled by the receivers, but the court was informed that they would be—they to be allowed on such orders as the receivers accepted and filled, which were estimated in the order to be approximately $225.

Charles O. Rowe, on December 22, 1920, filed a petition similar to the one of Canty, and the lower court on September 20, 1921, passed a decree directing the receivers to pay to him:

(a) Commissions due said Rowe on orders for goods delivered by the Hess Company before April 14, 1920, and paid for between that date and July 14, 1920

$ 99.10

(b) Commissions due Rowe on orders for goods delivered by the company between April 14, 1920, and July 14, 1920, and paid for between said dates

661.61

(c) Commissions due Rowe on orders for goods delivered by the company between those dates and paid for after July 14, 1920

718.24

Those three were allowed as preferred! claims under article 47, § 15, and interest was to be paid.

(d) Commissions due said Rowe on orders for goods delivered by the receivers and paid for to said receivers, said payments to be charged as a part of the expenses Incurred by the receivers in and about their operation and management of said company under the order of court previously passed

$ 919.12

(e) Commissions on certain orders to the company which had not been accepted and filled by the receivers at the time of hearing, but the court is informed that they contemplated rilling said orders

1,017.97

They were to be charged as part of expenses incurred by the receivers, and allowed when paid to the receivers.

Rowe entered the employ of the Hess Company on October 1, 1917, as a salesman to secure orders for steel. His territory covered a part of the state of Pennsylvania, part of New Jersey, and later all of Maryland. He received a salary of $3,000 a year, payable monthly, and his commissions began April 1, 1918. He received no commissions until the company had been paid for the steel sold and shipped. The commissions were from one-half of 1 per cent to 5 per cent., according to the kind of steel sold. We have thus stated the claims of the two, as most of the questions are applicable to both.

The first question we will determine is whether under section 15 of article 47, commissions can be allowed as a preferred claim. That section provides that—

In case of an assignment by any person or body corporate for the benefit of creditors, or an adjudication of insolvency, or the property or estate of such person or body corporate is taken possession of by a receiver under a decree of a court of equity, "in the distribution of the property or estate of such person or body corporate, all the money due and owing from such person or body corporate for wages or salaries to clerks, servants, salesmen or employes contracted not more than three months anterior to the execution of such assignment, adjudication of insolvency, or appointment of receiver, shall first be paid in full out of such property or estate, after payment of the proper and legitimate costs, expenses, taxes and commissions, and shall be preferred to all claims against the property and estate of such insolvent person or body corporate, except the lien claims of such persons as shall hold liens upon such property or estate, recorded at least three months prior to such assignment, adjudication or decree."

That section of the Code is referred to as it now stands, but by Act of 1806, c. 184, the word "salesmen" was added, being in other respects as it was in the Code of 1888. It will be observed that the statute was not changed as to the purposes for which the money was due and owing when the word "salesmen" was inserted, but it continued, and is still "all the money due and owing from such person or body corporate for wages or salaries." It is contended that if it had been intended to give a claim for commissions priority it would have been so stated, but if it was only intended to give salesmen who are employed on salaries without commissions the benefit of the law, is it not as reasonable to suppose that the Legislature would have so said?

In Bankruptcy Act July 1, 1898, § 64b (U. S. Comp. St. § 9648), this provision is made: "Wages due to workmen, clerks, traveling or city salesmen, or servants, which have been earned within three months before the date of the commencement of proceedings," etc., shall be preferred; the words "traveling or city salesmen" having been inserted by amendment in 1906. In Re New England Thread Co. (D. C.) 154 Fed. 742, the District Judge said:

"A right to priority being given to persons performing services of a certain character, the priority depends upon the character of the services, rather than upon the particular mode of payment. As it is a familiar fact that the compensation of traveling or city salesmen is often given in the form of a commission upon the amount of sales, the term 'wages,' upon a proper construction of the amended act, is broad enough to include commissions for services as salesman."

In Re New England Thread Co., 158 Fed. 788, 89 C. C. A. 285, the Circuit Court of Appeals of the First Circuit held that the party before the court named Barden was a traveling salesman, and the wages included compensation for services rendered, for which he was paid a commission. In Re Fink (D. C.) 163 Fed. 135, it was held, quoting from the syllabus for convenience:

"Commissions paid a traveling salesman for his services are 'wages,' within the meaning of Bankr. Act, July 1, 1898, c. 541, § 64b (4), 30 Stat. 563 (U. S. Comp. St. 1901, p. 3447), and a claim for such commissions earned within three months prior to the bankruptcy of the employer is entitled to priority thereunder."

In 4 Words and Phrases, p. 1219, under the word "wages," the same rule is announced, and the above cases are referred to.

In Hamberger v. Marcus, 157 Pa. 133, 27 Atl. 681, 37 Am. St Rep. 719, a statute was being construed which provided "that the wages of any laborer or the salary of any person in public or private employment shall not be liable to...