In re McGowin Lumber Co.

• Decision Date: 01 April 1915
• Docket Number: 1436.
• Citation: 223 F. 553
• Parties: In re McGOWIN LUMBER CO.
• Court: U.S. District Court — Southern District of Alabama

223 F. 553

In re McGOWIN LUMBER CO.

No. 1436.

United States District Court, S.D. Alabama.

April 1, 1915

Gregory L. & H. T. Smith, of Mobile, Ala., for claimants.

Stevens McCorvey & McLeod, of Mobile, Ala., for trustee.

TOULMIN District Judge.

The claim of J. C. Stewart & Co., filed against the bankrupt estate, is on labor checks issued by the bankrupt to its workmen. J. C. stewart & Co. got possession of these checks when the workmen came to their store to trade for merchandise, and would give to Stewart & Co. the checks in exchange for and in payment of the merchandise received by the workmen. The checks were counted each day by the said company and carried to the bankrupt and left there because it had a good safe to keep them in. The bankrupt issued a time check every day to its laborers. They could either trade in the entire check and turn it in, or could trade a part of it and turn in the rest to the bankrupt. Sometimes the laborer would trade in a smaller amount than his check called for and the merchant took off a coupon for the amount traded. Stewart & Co. kept a list of the checks daily that were traded in to them. After they had been paid, they were destroyed. If the amount traded in for merchandise purchased was less than the amount of the check used in the purchase, a coupon for the proper amount was torn off the check. No memorandum was made on the check or coupon to show who traded it. Frequently a man would bring in a check which was not issued to him. J. C. Stewart, Jr., who it appeared from the evidence knew more about the course of business between J. C. Stewart & Co. and McGowin Lumber Company than any other witness, testified that their books showed how they charged up the McGowin Lumber Company money. It appeared that they kept a 'kitchen account' separate from what the witness called the McGowin Lumber Company money. He further testified that the entries on the books of the McGowin Lumber Company, showing a credit to J C. Stewart & Co. of $6,183.91 is not their whole claim against them, but is their whole claim for labor within three months from the bankruptcy proceedings. The sample check attached to the opinion of the referee does not correspond with the checks presented by the claimant, which checks were in evidence as the basis of his claim for priority of payment, and presumed to have been filed in support of such claim. Said sample has the word 'date' on it. On the checks and coupons filed as evidence even the word 'date' is not found. The checks filed do not show any date on which they were issued, and the coupons in evidence are without date and without names of the persons to whom issued. There is a large number of these coupons detached from checks. If the claimant cannot show to whom and on what date they were issued, and from whom he received them, how can he establish the fact that they were given to a laborer for work done within three months from the bankruptcy proceedings?

The bankruptcy proceedings were begun on September 28, 1914. Three months prior to that date was June 28th. As the date of the issue of the labor checks and coupons turned in to Stewart & Co. are not shown by said checks and coupons, it is not clear from the evidence how J. C. Stewart & Co. know or could know that said checks and coupons were for labor within the three-month period named. The evidence further was that when the laborers came in the store of said J. C. Stewart & Co. and traded their checks, there was no conversation with them about an assignment of any claim they had against McGowin Lumber Company, or anything like it. The party with the check handed it in, and if the amount traded for took up the full amount of the check it was retained by the merchant, and, if less, coupons were torn off and the balance of the check returned to the laborer. Nothing was said about an assignment. J. C. Stewart, Jr., testified that they took in the checks in the month in which they were earned, yet he stated that it was frequently the case that the checks earned during one month were given to Stewart & Co. the next month. Said witness further stated that 'the way that he could tell whether a check was issued one month or another month is that the checks are supposed to be dated. ' It is true that the sample check attached to the referee's opinion had the word 'date' on it, but no date affixed.

Moreover, it appears that the checks and coupons filed in evidence before the court are without date. The witness was doubtless correct in saying that they were supposed to be dated, while the fact is those submitted in evidence as a basis for the claimant's claim for priority of payment of the sum due on said checks and coupons were not dated. They, therefore, could not have served the purpose of informing the witness in what month the checks were issued.

The witness also said that 'these new tickets have been used since about April 1, 1914,' and that (he) 'I don't think that there are any of those checks or coupons that came in for months prior to June. ' If they were issued for labor or work done prior to June 28th, they would not be a basis for the claim of priority of payment, being without the three-month period, from the bankruptcy proceedings, September 28th.

J. C. Stewart, a member of the firm of J. C. Stewart & Co., testified that he arranged with McGowin Lumber Company for the handling of these labor checks; that the agreement was that said Lumber Company would issue labor checks, for which Stewart & Co. would let the men have merchandise from his store, they giving Stewart & Co. the checks in payment for the merchandise traded for. And Stewart & Co. agreed to give the McGowin Lumber Company 10 per cent. discount on all checks which Stewart & Co. took in. McGowin Lumber Company, in settling with Stewart & Co. for the amount due the latter on said checks, deducted therefrom the 10 per cent., according to their agreement. J. C. Stewart further stated that McGowin Lumber Company kept books at its office, and that he would go there when he wished to see how the account stood. He also stated the only agreement he had about the checks was the one with McGowin Lumber Company, and in that agreement the labor checks were to be counted at the end of each month taken up and account turned in, and on the first Saturday after the fifteenth of the next month Stewart & Co. were to be paid. His evidence also was that they had no agreement with the laborers relative to the checks.

The evidence is that the total labor claims against the bankrupt are...