In re Ashland Steel Co.
| Decision Date | 16 March 1909 |
| Docket Number | 1,862. |
| Citation | 168 F. 679 |
| Parties | In re ASHLAND STEEL CO. et al. |
| Court | U.S. Court of Appeals — Sixth Circuit |
S. S Willis, for petitioners.
Before LURTON and SEVERENS, Circuit Judges, and KNAPPEN, District judge.
This is a petition for the review of an order of the District Court made in a bankruptcy proceeding in the matter of E. M Roberts Company, which was adjudicated bankrupt December 6 1906. The petition is by six of the creditors of the bankrupt, who within six months after the adjudication established claims giving them a preference in the distribution of the assets by virtue of a statute of Kentucky giving priority to those who shall have furnished materials or supplies to manufacturing companies doing business in the state. Section 2487, Ky. St. 1903. The E. M. Roberts Company was such a company. These creditors did not vote at the election of the trustee. Other creditors having similar claims proved them before the referee and voted at the election without objection. The trustee was elected by the unanimous vote of all the creditors voting, and the election was approved. But these other creditors did not make any special claim of priority until after the expiration of one year from the date of the adjudication of bankruptcy. Shortly thereafter they severally filed amended petitions praying for the establishment of their claims to priority in the distribution of the assets, which had not yet taken place. The six creditors, who are the petitioners here, and who had, as above stated, established priority for their claims within the year allowed for proving claims, objected to the allowance of the claims of priority made by the other creditors after the expiration of the year, upon grounds presently to be stated. The referee overruled the objections and admitted the claims of the other creditors to priority, in common with the objecting creditors. Upon a petition for review, the District Judge confirmed the order of the referee. The grounds of the objection taken by the present petitioners against the allowance of priority to the other creditors before the referee, and renewed here, are these:
1. It is to be observed that the claims of the other creditors (as we are calling them) carried with them an inherent privilege of priority. The privilege was not a detached right, which could only be fastened by special proceedings taken to enforce it, as by an attachment or an execution or the enforcement of a mechanic's lien. It needed only to be proved, when the time should arrive for distributing the assets. According to the report of the referee to the District Judge, nearly all of these claims showed on their face that they were claims to which the Kentucky statute gave priority. A few of them did not; but the referee reported that these latter were proven to be claims of that character. We think that, the substantive claims having been proven within the time allowed by the act, it was within the power of the court to allow the claims priority, and give them the preference to which by law they were entitled notwithstanding no definite claim of the kind had been made during the year. It was not the allowance of a new claim, as counsel for petitioners insist, but the giving full scope to one already proved. ...
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