Emory v. St. James Distillery

• Citation: 143 S.W.2d 318
• Decision Date: 22 August 1940
• Docket Number: No. 6171.,6171.
• Parties: EMORY v. ST. JAMES DISTILLERY, Inc., et al. (UNITED STATES, Intervenor).
• Court: Missouri Court of Appeals

143 S.W.2d 318

EMORY v. ST. JAMES DISTILLERY, Inc., et al. (UNITED STATES, Intervenor).

No. 6171.

Springfield Court of Appeals. Missouri.

August 22, 1940.

Rehearing Denied September 18, 1940.

Appeal from Circuit Court, Phelps County; William E. Barton, Judge.

Action by Harry S. Emory against the St. James Distillery, Inc., and another, wherein the United States of America `intervened, involving the priority of claims in a receivership proceeding. From a judgment in favor of plaintiff, the intervenor appealed to the Supreme Court which transferred the case to the Court of Appeals.

Affirmed.

Harry C. Blanton, U. S. Atty., of Sikeston, Marshall Craig, of Charleston, former Asst. U. S. Atty., and Russell Vandivort, Asst. U. S. Atty., of St. Louis, for appellant.

Breuer & Northern, of Rolla, for respondent.

TATLOW, Presiding Judge.

This case was appealed to the Supreme Court of the State, and by that court transferred here on the motion of appellant without an opinion.

I. There is no point made on the pleadings. The case was tried on an agreed statement of facts, which is in words and figures as follows:

"It is hereby stipulated and agreed by and between the United States of America, by and through its duly appointed and authorized attorneys, and W. D. Jones, Receiver for the St. James Distillery, Inc., a Corporation, and the St. James Distillery, a Corporation, that this cause shall be presented to the Court, a jury being hereby waived, and that the matters here involved be presented to the Court by a Stipulation of Facts; and it is hereby stipulated and agreed that the facts concerning this case are as follows:

"That the St. James Distillery is a Corporation, and is located at St. James, Phelps County, Missouri.

"That the St. James Distillery was hopelessly insolvent on or before August, 1936, and was unable to pay its debts; that the said Distillery has been insolvent since that date, and is still insolvent; that a petition was filed on August 27, 1936, under Section 4960, Revised Statutes of Missouri, 1929, Mo.St.Ann. § 4960, p. 2271, asking that a Receiver be appointed to liquidate the assets of the insolvent Corporation.

"That, in accordance with that petition, the Judge of the Circuit Court of Phelps County did, on the 9th day of September, 1936, appoint W. D. Jones of Rolla, Phelps County, Missouri, as Receiver of the St. James Distillery; that the said W. D. Jones, after furnishing bond and fulfilling all requirements and qualifications, entered upon his duties as said Receiver, and has so acted since that day, and is still so acting.

"That the Receiver sold the property, which comprised the Distillery proper, and received from that sale the sum of One Thousand and No-100 Dollars ($1,000.00) which, it is submitted, represented the entire assets of the insolvent Corporation.

"That claims were duly filed against the insolvent Corporation, and are before this Court for its consideration.

"That among the claims were certain labor claims totaling about Nine Hundred and No-100 Dollars ($900.00), and representing the claims of about twelve individuals who had done common labor for the St. James Distillery. These individuals claim a preference by reason of Section 1168, Revised Statutes of Missouri, 1929, Mo.St.Ann. § 1168, p. 1429.

"That there was also duly filed by the United States of America on behalf of the Federal Housing Administration, a claim in which a priority was claimed by the United States under and by virtue of Section 3466, Revised Statutes of the United States (Title 31 U.S.C.A. § 191). This claim was based on a note duly executed by the insolvent debtor Corporation, and made payable to the Industrial Bank and Trust Company of St. Louis. It was dated September 23, 1935, and was in the amount of Seven Thousand Four Hundred Eighty One and 78-100 Dollars ($7,481.78). The said note was on July 14, 1936, endorsed and delivered to the Federal Housing Administration, acting for and on behalf of the United States of America, and the United States of America, through the Federal Housing Administration, on that date reimbursed the Industrial Bank and Trust Company in the amount of Five Thousand Nine Hundred Eighty Eight and 88-100 Dollars ($5,988.88), the balance due on the said note, and the United States of America, through the Federal Housing Administration, is the present holder of the said note. The claim of the United States on this note was for Five Thousand Nine Hundred Eighty Eight and 88-100 Dollars ($5,988.88), with interest from and after the 14th day of July, 1936, and it is on this indebtedness that a priority is claimed on behalf of the United States, over and above all other creditors.

"The Circuit Court permitted the Receiver to make disbursements totaling about Three Hundred Twenty Two and 00-100 Dollars ($322.00), being used entirely to pay the costs of the receivership. The total assets before the Court for distribution are about Six Hundred Seventy Eight and No-100 Dollars ($678.00)."

The judgment of the court allowed the claim of the Government only as a general claim against the assets of the said estate, and subject to the claims of the laborers.

The assignments of error are, in substance, that the court erred in not granting priority to the United States for the debt due it over the claims of laborers in the distribution of the assets of the estate.

From the agreed statement, it appears that the insolvency occurred on or before August, 1936; that the receivership petition was filed on August 27th, 1936, praying for the appointment of a receiver to liquidate the assets of the corporation; and that the receiver was appointed on the 9th day of September, 1936, and duly qualified and took possession of the property of the insolvent corporation.

The United States acquired the note on which it asserts priority, on July 14th, 1936, before the appointment of the receiver, and the balance due thereon is largely in excess of the entire assets of the insolvent corporation. The claims due the laborers aggregate about $900 and are also in excess of the assets of the insolvent corporation, which amount to only about $678.

II. The respondent insists that a Federal question is involved and the case should be sent back to the Supreme Court.

Even if we agreed with this contention (which we do not), we would be concluded by the order of the Supreme Court transferring the case here.

It is perfectly plain that there is nothing in the contention. The Missouri Constitution confers upon the Supreme Court jurisdiction "in cases where the validity of a * * * statute of * * * the United States is drawn in question". Mo.St.Ann. Const. Art. 6, § 12. Under this provision the validity of the statute must be drawn in question and it is not sufficient to confer jurisdiction on that court that the construction of a Federal statute is required. White Livestock Commission Co. v. C., M. & St. Paul Ry., 157 Mo. 518, 57 S. W. 1070; Hohlstein v. Roofing Co., 328 Mo. 899, loc.cit. 908, 42 S.W.2d 573.

III. The Supreme Court of the United States in several recent cases has held that the note acquired by the United States by assignment to the Federal Housing Administrator as its instrumentality or agent, before the appointment of the receiver, is a debt due it which is preferred under Section 3466, Revised Statutes of the United States. Section 191, 31 U.S.C.A.; Graves v. New York, 306 U.S. 466, 477, 59 S.Ct. 595, 83 L.Ed. 927, 120 A.L.R. 1466; Pittman v. Home Owners' Loan Corp. 308 U.S. 21, 32, 33, 60 S.Ct. 15, 84 L.Ed. 11, 124 A.L.R. 1263; United States v. Summerlin, 60 S.Ct. 1019, 84 L.Ed. 1283, decided May 27, 1940.

The power of the Congress of the United States to give preference to the debts of the Government of the United States even over those of the several states, and of all other persons, is very clearly stated in numerous cases by the Supreme Court of the United States. It is equally true that the acts of Congress prevail over the state statutes. These rules have been announced in numerous cases. Lane County v. Oregon, 7 Wall. 71, 19 L. Ed. 101; County of Spokane v. United States, 279 U.S. 80, 95, 49 S.Ct. 321, 73 L. Ed. 621; People of the State of New York v. Maclay et al., 288 U.S. 290, 294, 53 S.Ct. 323, 77 L.Ed. 754; United States v. Knott, State Treasurer, 298 U.S. 544, 552, 56 S.Ct. 902, 80 L.Ed. 1321, 104 A.L.R. 741.

It is also well settled that a mere inchoate lien is not enough to defeat the priority granted the United States by the statute supra. United States v. Knott, 298 U.S. 544, 56 S.Ct. 902, 80 L.Ed. 1321; New York v. Maclay, 288 U.S. 290, 53 S. Ct. 323, 77 L.Ed. 754; Spokane County v. United States, 279 U.S. 80, 49 S.Ct. 321, 73 L.Ed. 621.

Under these authorities it is perfectly plain beyond any possible doubt that the United States is given priority over any and all debts or other claims whose priority is based solely on a state statute that does not create a completed and perfected lien before insolvency intervenes.

In the instant case the priority of the laborers' claims must be and is based on the state statute as to all debts except those due the United States. The priority, if any, that such labor claims may have over the debt due the United States, must be determined by the state statute and by whether it is in conflict with the statutes of the United States, as construed by the Supreme Court of the United States. In order for such claims to have priority over the debt due the United States they must come within both statutes.

There are two cases decided by the Supreme Court of the United States in which, while the facts are entirely different, the line of reasoning employed in arriving at the conclusion would seem to be decisive of the instant case. The first case is Bramwell v. United States F. & G. Co., 269 U.S. 483, 492, 46 S.Ct. 176, 70 L.Ed. 368, where, among other things, it is said:

"The specified ways in which insolvency may be manifested...