In re Taylor Oak Flooring Co.

• Decision Date: 29 November 1949
• Docket Number: No. 523.,523.
• Citation: 87 F. Supp. 6
• Parties: In re TAYLOR OAK FLOORING CO.
• Court: U.S. District Court — Western District of Arkansas

87 F. Supp. 6

In re TAYLOR OAK FLOORING CO.

No. 523.

United States District Court W. D. Arkansas, El Dorado Division.

November 29, 1949.

J. Wirth Sargent of Jochems, Sargent & Blaes, Wichita, Kan., Maurice D. Bedwell(of Wilder, Bedwell & Morgan) Fort Smith, Ark., on brief, for creditors.

Aubert Martin, Warren, Ark., for claimants.

JOHN E. MILLER, District Judge.

The Taylor Oak Flooring Company, a corporation, was adjudged a bankrupt on September 30, 1948, but the petition, which was filed by creditors other than the claimants, upon which the adjudication was made was filed August 30, 1948, and the questions before the Court are on petitions for review of the action of the Referee in disallowing the claims of the Hurley Hardware & Furniture Company in the amount of $923.00, of Farmers Supply Company in the amount of $2,690.60 and of Dick Hedrick in the sum of $689.69 as secured claims.

The Referee made and filed his findings of fact and conclusions of law, separately stated, and are included in the certificate filed by the Referee and now before the Court.

It will not be necessary to set forth in extenso the findings of fact and only brief reference thereto is necessary to determine the questions presented by the petitions for review.The Hurley Hardware & Furniture Company is a corporation operating a store in the City of Warren, the county site of Bradley County, Arkansas.Warren is a small city having a population of approximately 2750.The Taylor Oak Flooring Company, the bankrupt, was in possession of a tract of land lying in the city limits and about four blocks east of court square, and consisting of eight acres, under a lease and option to purchase.Located on the tract of land was one mill building about thirty-five feet wide and three-hundred feet long, one small office building and storage room, a storage shed, a lumber stacking shed and one dry kiln located approximately four-hundred feet from the mill building.These are all of the structures that belonged to the bankrupt and situated on the land as aforesaid, or elsewhere in Bradley County, Arkansas.The location of its place of business was well known and could have been located by inquiry addressed to any inhabitant of the City of Warren.

On January 5, 1948, the bankrupt began certain improvements on its buildings.On that date it made its first purchase of materials from the Hurley Hardware & Furniture Company, which purchases continued until July 27, 1948.The total amount of the purchases was $1,919.16, upon which the sum of $996.16 was paid, leaving due a balance of $923.00.

On September 10, 1948, within ninety days after the last item was furnished by this claimant, it filed with the Circuit Clerk of Bradley County, Arkansas, an itemized statement of the material furnished to the bankrupt.The affidavit attached to the statement of the account is as follows:

"Comes Bates Wheeler, bookkeeper for Hurley Hardware & Furniture Company, Warren, Arkansas, and says on oath:

"That Hurley Hardware & Furniture Company sold and delivered on behalf of the Hurley Hardware & Furniture Company to Taylor Oak Flooring Company certain materials between the dates of January 5, 1948, and July 27, 1948, itemized statement of which is hereto attached and made a part hereof.

"That the above statement of account is true and correct and that there is now due $923.00; that the said materials were furnished for and used in the construction and repair of certain buildings or building; that the Hurley Hardware & Furniture Company claims a lien on the property aforesaid to secure said sum of $923.00."

The itemized account attached to the affidavit of the bookkeeper recites in detail the material that was furnished.A casual glance at it discloses that all the material was such as would be used ordinarily in repairing the mill building, office building and dry kiln owned by the bankrupt.

The claimant, Farmers Supply Company of Warren, Arkansas, furnished certain material and performed certain labor for the bankrupt between the dates of March 2, 1948, and July 18, 1948, in the total sum of $2,690.16.Nothing was paid by the bankrupt on the account and on August 19, 1948, within ninety days after the last material and labor was furnished, it filed with the Circuit Clerk of Bradley County, Arkansas, an itemized statement of the materials and labor furnished the bankrupt.The affidavit attached to the statement of the account is as follows:

"Comes John Lipton, Office Manager of the Farmers Supply Company, Warren, Arkansas, and says on oath:

"That Farmers Supply Company sold and delivered on behalf of Farmers Supply Company to Taylor Oak Flooring Company certain materials and performed certain labor between the dates of March 2, 1948, and July 18, 1948, itemized statement of which is hereto attached and made a part hereof.

"That the above statement of account is true and correct and that there is now due $2,690.16; that said materials and labor were furnished for and used in the repair of certain motors and certain machinery; that the Farmers Supply Company claims a lien on the property aforesaid to secure said sum of $2,690.16."

A reference to the itemized account discloses that the material furnished and work done was for repair of the mill building and the machinery therein, including motors.

The claimant, Dick Hedrick, furnished materials to and performed certain labor for the bankrupt between the dates of May 25, 1948, and July 2, 1948, and on August 14, 1948, within ninety days from the date the last materials and labor were furnished, the said claimant filed with the Circuit Clerk of Bradley County, Arkansas, an itemized statement of the materials furnished and work done for the bankrupt.The affidavit attached to the account is as follows:

"Comes Dick Hedrick and says on oath:

That he sold and delivered on behalf of Dick Hedrick to Taylor Oak Flooring Company certain material and performed certain labor between the dates of May 25, 1948, and July 2, 1948, itemized statement of which is attached hereto and made a part hereof.

"That the above statement of account is true and correct and that there is now due $689.69; that said materials and labor were furnished for and used in the repair of certain motors, for replacing starter and line to conveyor on rip saw and replacing starter to rough knot saw, for installing lighting fixtures in office and dry kiln, for running blow pipe to new burner, and for miscellaneous other uses.That Dick Hedrick claims a lien on the property aforesaid to secure said sum of $689.69."

An examination of the account attached to the affidavit discloses that all of the material furnished was installed in the buildings mentioned in the affidavit.

All of the claimants filed with the referee proof of their claims on December 14, 1948.

The Trustee filed objections to the allowance of the claims as secured claims and the Referee held as follows:

"The affidavit for a lien filed by each of the respective claimants herein did not contain a correct and sufficient description of the property to be charged with the lien, and therefore failed to comply with the requirements of Arkansas Statutes 1947, Sections 51-601and51-613.Arkmo Lumber Company v. Cantrell, 159 Ark. 445, 252 S.W. 901.

"Hurley Hardware & Furniture Company, Farmers Supply Company and Dick Hedrick are not entitled to participate in the assets of this estate as secured creditors, but their claims should be allowed as common claims."

Section 51-601,Arkansas Statutes 1947, provides: "Every mechanic, builder, artisan, workman, laborer or other person who shall do or perform any work upon, or furnish any material, fixtures, engine, boiler or machinery for any building, erection, improvement upon land, or upon any boat or vessel of any kind, or for repairing same, under or by virtue of any contract with the owner or proprietor thereof, or his agent, trustee, contractor or subcontractor, upon complying with the provisions of this act(§§ 51-601,51-604 — 51-626), shall have for his work or labor done, or materials, fixtures, engine, boiler or machinery furnished a lien upon such building, erection or improvement, and upon the land belonging to such owner or proprietor on which the same are situated, to the extent of one acre; or if such building, erection or improvement be upon any lot of land in any town, city or village then such lien shall be upon such building, erection or improvements, and the lots or land upon which the same are situated".

Section 51-613, supra, is as follows: "It shall be the duty of every person who wishes to avail himself of this act(§§ 51-601,51-604 — 51-626) to file with the clerk of the circuit court of the county in which the building, erection or other improvement to be charged with the lien is situated, and within ninety (90) days after the things aforesaid shall have been furnished or the work or labor done or performed, a just and true account of the demand due or owing to him, after allowing all credits, and containing a correct description of the property to be charged with said lien, verified by affidavit."

Section 67, sub. b, of the Bankruptcy Act of 1938, as amended, 11 U.S.C.A. § 107, sub. b, reads as follows: "The provisions of section 60 of this Act to the contrary notwithstanding, statutory liens in favor of employees, contractors mechanics, land-lords, or other classes of persons, and statutory liens for taxes and debts owing to the United States or any State or subdivision thereof, created or recognized by the laws of the United States or of any State, may be valid against a trustee, even though arising or perfected while the debtor is insolvent and within four months prior to the filing of the petition in bankruptcy or of the original petition under chapter 10, 11, 12, or 13 of this Act, by or against him.Where by such laws such liens are required to be perfected and arise but are not perfected before...