In re Unit Lock Co., 1123-B.

• Decision Date: 10 April 1931
• Docket Number: No. 1123-B.,1123-B.
• Citation: 49 F.2d 313
• Court: U.S. District Court — Northern District of Oklahoma
• Parties: In re UNIT LOCK CO.

49 F.2d 313 (1931)

In re UNIT LOCK CO.

No. 1123-B.

District Court, N. D. Oklahoma.

April 10, 1931.

Mauzy & Coppedge, of Tulsa, Okl., for trustee in bankruptcy.

G. Ellis Gable and Kleinschmidt & Johnson, all of Tulsa, Okl., for petitioners.

KENNAMER, District Judge.

A petition for review of an order of the referee in bankruptcy brings this case up for decision. The facts, over which there is no controversy, are that the bankrupt is a corporation, and while operating its business, employed a number of employees. The bankrupt was engaged in the manufacture of locks.

Claimant, the Frates Company, is in the insurance and bonding business, as an agency for various insurance and bonding companies, and, as such, wrote certain policies of compensation, public liability, and fire and tornado insurance for the bankrupt. It has filed its claim for the sum of $90.32 as a general or unsecured claim for unpaid premiums on policies of public liability, and fire and tornado insurance, about which there is nothing for review before the court. It also filed a claim for the sum of $225.58, claiming priority for this sum for unpaid premiums on policies of compensation insurance, which premiums accrued on September 1 and 2, 1929.

Certain laborers are asserting claims for priority on account of services performed by them in the regular course of their employment to the corporation. None of said services, and none of the insurance premiums for compensation insurance accrued or became due because of insurance written or labor performed within four months preceding the filing of the bankruptcy proceedings against the corporation. Claimants ask that their claims be allowed and paid in the order of priority provided for under section 64b (7) of the Bankruptcy Act, as amended by Act May 27, 1926, § 15 (11 USCA § 104 (b) (7). The claims were allowed by the referee as general or unsecured claims, but denied priority. This ruling of the referee constitutes the objection of the claimants for which the petition to review was filed.

On December 23, 1929, in an action pending in the district court of Tulsa county, Okl., a receiver was appointed for the corporation; the business of the corporation was operated by the receiver under the order of the appointing court, until the intervention of the bankruptcy. On April 23, 1930, an involuntary petition in bankruptcy was filed against the corporation in this court, and on April 30, 1930, a receiver was appointed in the bankruptcy proceeding. The bankruptcy receiver superseded the state court receiver and continued to operate the business of the bankrupt. On June 30, 1930, an order was entered in the bankruptcy proceeding adjudging the corporation to be bankrupt, and shortly thereafter its assets were sold and converted into cash under the order of the bankruptcy court.

It was agreed that the premiums for insurance for which priority was claimed, accrued within three months prior to the appointment of the receiver in the state court, but not within three months prior to the filing of the petition in bankruptcy. One of the grounds alleged in the petition for the adjudication of bankruptcy was the appointment of the receiver in the state court. The receiver appointed by the state court was in charge of the assets of the bankrupt from the time of his appointment to the time of the appointment of the receiver in bankruptcy. The facts further disclose that there was no adjudication of insolvency of the corporation in the state court receivership proceedings. The first adjudication of insolvency was the adjudication in bankruptcy. The evidence shows that no statement of a claim of lien upon any of the assets of the corporation was ever filed by the claimants, as provided by the state laborer's lien law, and no attempt was ever made to enforce the claim of the Frates Company, or any of the laborers, during the pendency of the state court receivership, which existed for a period of four months prior to the filing of the petition in bankruptcy.

Section 7307, Compiled Oklahoma Statutes 1921, as amended by section 10, chapter 61, Session Laws of Oklahoma 1923, provides: "The right of compensation granted by this Act, and any claim for unpaid compensation insurance premium, shall have the same preference or lien, without limit of amount against the assets of the employer as is now or hereafter may be allowed by law for a claim for unpaid wages for labor."

By virtue of the above statutory provision, the claim of the Frates Company for unpaid premiums for compensation insurance places it in the same position and gives it the same status as laborers. Its claim can therefore be considered along with the claim of laborers, all of which seek priority. The applicable provisions of the Oklahoma statute should be considered in order to determine the question presented.

Section 1, chapter 106, Session Laws of Oklahoma 1927, is as follows: "Section 1. When any corporation, formed under the provisions of the laws of the State of Oklahoma, or any corporation doing business within this State shall become insolvent, the employees performing labor or services of whatever character in the regular employ of such corporation, shall have a lien upon the assets of such corporation for the amount of salary or wages due them, not exceeding four (4) months' salary or wages which shall have accrued prior to the adjudication of the insolvency of such corporation. Which lien shall be paid prior to any other debts, charges or claims against said corporation, except taxes due the United States Government or the State of Oklahoma. The word `employees' shall not be construed to include any of the officers of such corporation."

Section 7468, Compiled Oklahoma Statutes 1921, affords a lien to laborers for unpaid wages, independent of any contingencies, such as the adjudication of insolvency, as required in the above quoted statute. It is as follows:

"7468. Lien Created. Laborers who perform work and labor for any person under a verbal or written contract, if unpaid for the same, shall have a lien on the production of their labor, for such work and labor; Provided, that such lien shall attach only while the title to the property remains in the original owner.

"7469. How Enforced. The lien provided for in this act may be enforced as in an ordinary action or by attachment proceeding as provided in the Code of Civil Procedure.

"7470. When Lien Attaches. Liens under the provisions of this act are in full force and effect from and after the time the labor is performed.

"7471. Time for Enforcement. The proceedings under this act shall be commenced within eight months after the work is done.

"7472. Priority of Lien. Liens created under this act shall take precedence over all other liens whether created prior or subsequent to the laborer's lien herein created and provided."

Section 64b (5), Bankruptcy Act, as amended by Act May 27, 1926, § 15, 11 USCA § 104 (b) (5), provides that laborers shall be entitled to priority on account of their claim for services performed within three months immediately prior to the adjudication in bankruptcy, but not exceeding $600. Subdivision 7 of the same section and subsection of the Bankruptcy Act requires the payment of "debts owing to any person who by the laws of the States or the United States is entitled to priority." The Oklahoma statute, as set forth above, clearly places a claim for unpaid premiums for compensation insurance on the same basis as a claim of a laborer for unpaid wages. It then becomes necessary to determine whether a laborer...