In re Byrne

• Decision Date: 25 November 1899
• Citation: 97 F. 762
• Parties: In re BYRNE et al.
• Court: U.S. District Court — Southern District of Iowa

97 F. 762

In re BYRNE et al.

United States District Court, S.D. Iowa, Eastern Division.

November 25, 1899

Blake &amp Blake, for Byrne.

E. S Huston, for Runyan.

SHIRAS District Judge.

From the record and the certificate of the referee in this case it appears that there is in the hands of the trustee for distribution the sum of $112.77, money realized from the sale of a stock of boots and shoes belonging to the bankrupt firm. There has been proved up and allowed a claim on behalf of L M. Runyan in the sum of $78.33, as rental due from the firm for the use of a storeroom owned by Runyan, but leased to the firm, and in which room were kept the boots and shoes which passed into the possession of the trustee after the adjudication in bankruptcy; and the facts show that Runyan is entitled to a landlord's lien, for the rental due him upon the stock of goods which were taken possession of by the trustee, the lien being created by the provisions of section 2992 of the Code of Iowa. On behalf of W. P. Byrne a claim in the sum of $100 has been filed and allowed for wages due him, as a clerk or employe of the bankrupt firm, for work by him done within 90 days next preceding the initiation of the proceedings in bankruptcy; and on his behalf it is claimed that, under the provisions of section 4019 of the Code of Iowa, Byrne becomes a preferred creditor for this amount, and therefore, under section 64 of the bankrupt act, he is entitled to payment in full out of the funds in the hands of the trustee before any part thereof can be applied to the discharge of the landlord's lien existing in favor of Runyan.

The Code of Iowa (section 4019) provides that:

'When the property of any company, corporation, firm or person shall be seized upon by any process of any court, or placed in the hands of a receiver, trustee or assignee for the purpose of paying or securing the payment of the debts of such company, corporation, firm or person, the debts owing to employes for labor preformed within ninety days next preceding the seizure or transfer of such property, to an amount not exceeding one hundred dollars to each person, shall be a preferred debt and paid in full. * * * '

In the case of Reynolds v. Black, 91 Iowa, 1, 58 N.W. 922, the question was presented to the supreme court of the state whether this section gave the employe a preference in the order of payment out of the proceeds of property upon which an express lien in the form of a mortgage rested when the property was taken under judicial process, and the conclusion reached was that the statutory preference created in favor of the employe gave him priority over the existing mortgage then. It thus appears that, under the laws of this state, when an insolvent estate is being closed up through the medium of a receiver, trustee, or assignee, the wages due employes, up to the amount of $100 to each person, for work done within 90 days next preceding the seizure by judicial process, or the transfer to the receiver, trustee or assignee of the property of the insolvent, will be given preference in order of payment over contract liens existing thereon; and the same preference must be given to wages due employes over liens created by statute, such as the landlord's lien claimed on behalf of Runyan.

On behalf of Runyan it is contended that the trustee takes the property of the bankrupt subject to the liens and equities existing in favor of third parties, and that therefore the landlord's lien created by the statute of Iowa must be held to apply to the proceeds of the property in the hands of the trustee. Marshall v. Knox, 16 Wall. 551; Jerome v. McCarter, 94 U.S. 734. If the present contest...