Campfield v. Lang

• Decision Date: 01 August 1885
• Court: U.S. District Court — Eastern District of Wisconsin
• Parties: CAMPFIELD and another v. LANG and others.

25 F. 128

CAMPFIELD and another v. LANG and others.

United States Circuit Court, E.D. Wisconsin.

August, 1885

Shepard & Shepard, for plaintiffs.

E Coleman, for the garnishee.

DYER J.

On the fourteenth day of April, 1884, D. C. & J. H. Lang, a firm engaged in the business of manufacturing trunks, at Fond du Lac, made an assignment to the garnishee, Simmons, pursuant to the statute of this state authorizing voluntary assignments by insolvent debtors, and therein directed that the debts, demands, and liabilities due to certain creditors, including Bates &amp Barrett, a firm of manufacturers at Fond du Lac, be paid to them as wages earned within six months prior to the date of such assignment, in preference to other creditors of said assignors. The plaintiffs in this action were creditors of D C. & J. H. Lang, and brought suit against them in this court to recover the amount of their demand, in which suit they recovered judgment on the fifteenth day of July, 1885, for the sum of $822.72. Concurrently with the institution of that suit, garnishee proceedings were commenced against Simmons, the assignee of D. C. & J. H. Lang; and upon issue duly joined, pursuant to the forms of statutory procedure existing in the state, the plaintiffs now seek to compel the assignee to pay the amount of their judgment from assets of the insolvent firm alleged to be in his hands. The contention of the plaintiffs is that, as to them, the assignment is void, for the reason that it provides for an unlawful preference in favor of Bates & Barrett.

The issue between the plaintiffs and the garnishee was tried before the court, and upon the trial the following facts were elicited: Bates & Barrett were a firm engaged in the manufacture of various kinds of wood-work in Fond du Lac. They had shops with machinery therein, which were operated by steam-power. They employed a limited number of men in their business. The firm of D. C. & J. H. Lang were manufacturers of trunks, and an arrangement was made between the two firms by which D. C. and J. H. Lang were to furnish Bates & Barrett with a cargo of lumber, which, for certain specified compensation, was to be sawed up into slats at the shops of the latter firm, for use by the assignors in the manufacture of trunks. The contract between the parties was verbal, and by virtue thereof Bates & Barrett were to be paid for the work of sawing up the lumber at the rate of $15 per thousand feet. It seems to have been contemplated by the parties that the work would continue through a considerable period, as the sawing was to be done only so fast as D. C. & J. H. Lang should require the manufactured material for use in their business. As the sawing progressed, Bates & Barrett were to be paid $50 per month, and at the close of the service a settlement was to be had, and whatever balance should then be found to be due to them was to be paid by D. C. & J. H. Lang, on the basis of $15 for every thousand feet of lumber sawed.

In pursuance of this contract, D. C. & J. H. Lang caused to be delivered at the shops of Bates & Barrett a cargo of lumber which was sawed up by them, and as fast as sawed the material was delivered to the assignors. Payments at the rate of $50 per month were made to Bates & Barrett as the sawing progressed, and when the work was fully completed, upon a settlement between the parties it was ascertained that D. C. & J. H. Lang were indebted to Bates & Barrett in the sum of $150. This balance was not paid, and in the assignment the assignors declared a preference in favor of Bates & Barrett for such indebtedness, scheduling them as preferred creditors, and listing such indebtedness as wages due to them as their laborers, servants, and employes. The shops of Bates & Barrett were entirely distinct from those of D. C. & J. H. Lang. The lumber sawed was furnished exclusively by D. C. & J. H. Lang, and the work done by Bates & Barrett involved the use of the steam power and machinery in their shops, and the manual labor of their employes.

On the fourth day of April, 1883, the legislature of this state passed an act, by the first section of which it was provided that 'any and all assignments hereafter made for the benefit of creditors which shall contain or give any preference to one creditor over another creditor, except for the wages of laborers, servants, and employes earned within six months prior thereto, shall be void.' 1 Laws Wis. 1883, c. 349. Before the passage of this act, assignments of insolvent debtors containing preferences in favor of any creditors or class of creditors were lawful. The question here in controversy is whether the relation of Bates & Barrett to D. C. & J. H. Lang, in the transaction before stated, was that of laborers, servants, or employes within the meaning of the statute. The question is one of importance, since it involves the interpretation of a new enactment not yet passed upon by the supreme court of the state, and which is declaratory of a radical change, in one respect, of the law of assignments in this state.

As before observed, preferences without restriction as to individual creditors, or classes of creditors, in voluntary assignments, were lawful before the passage of this statute. A debtor might select any favored creditor, or body of creditors, and provide for their payment in full, leaving perhaps; an inconsiderable percentage of his assets-- perhaps nothing-- for distribution among other creditors equally meritorious, thus making an assignment in many cases an injury to some creditors rather than a benefit to all. The exercise of this privilege...