Shropshire, Woodlife v. Bush

• Decision Date: 07 January 1907
• Docket Number: No. 416,416
• Citation: 51 L.Ed. 436,204 U.S. 186,27 S.Ct. 178
• Parties: SHROPSHIRE, WOODLIFE, & Co., v. BUSH et al., Trustees, etc
• Court: U.S. Supreme Court

204 U.S. 186

27 S.Ct. 178

51 L.Ed. 436

SHROPSHIRE, WOODLIFE, & Co.,

v BUSH et al., Trustees, etc.

No. 416.

Submitted December 20, 1906.

Decided January 7, 1907.

Messrs. Charles F. Benjamin and Rutherford Lapsley for Shropshire, Woodliff, & Co.

Messrs. George D. Lancaster, John P. Tillman, J. H. Beal, and Williams & Lancaster for Bush et al.

Mr. Justice Moody delivered the opinion of the court:

The appellees are trustees of the bankrupt estate of the Southern Car & Foundry Company. The appellants, before the commencement of the proceedings in bankruptcy, acquired by purchase and assignment a large number of claims for wages of workmen and servants, none exceeding $300 in amount, and all earned within three months before the date of the commencement of the proceedings in bankruptcy. The district court for the eastern district of Tennessee rendered a judgment disallowing priority to these claims, because, when filed, they were not 'due to workmen, clerks, or servants.'

On appeal to the circuit court of appeals for the sixth circuit that court duly certified here for instructions the following question:

'Is an assignee of a claim for wages earned within three months before the commencement of proceedings in bankruptcy against the bankrupt debtor entitled to priority of payment, under § 64 (4) of the bankrupt act [30 Stat. at L. 563, chap. 541, U. S. Comp. Stat. 1901, p. 3447], when the assignment occurred prior to the commencement of such bankruptcy proceedings?'

The question certified has never been passed upon by any circuit court of appeals, and in the district courts the decisions upon it are conflicting. Re Westlund, 99 Fed. 399; Re St. Louis Ice Mfg. & Storage Co. 147 Fed. 752; Re North Carolina Car Co. [semble], 127 Fed. 178, where the right of the assignee to priority was denied; Re Brown, 4 Ben. 142, Fed. Cas. No. 1,974 [act of 1867, 14 Stat. at L. 517, chap. 176]; Re Harmon, 128 Fed. 170, where, on facts slightly but not essentially different, the right of the assignee to priority was affirmed.

The bankruptcy law (act July 1, 1898, 30 Stat. at L. pp. 544, 563, chap. 541, U. S. Comp. Stat. 1901, p. 3447), in § 1, defines 'debt' as including 'any debt, demand, or claim, provable in bankruptcy.' Section 64, under which priority is claimed in this case, is, in the parts material to the determination of the question, as follows:

'Sec. 64. Debts which have priority.—. . . b. The debts to have priority, except as herein provided, and to be paid in full, out of bankrupt estates and the order of payment, shall be . . . (4) wages due to workmen, clerks, or servants which have been earned within three months before the date of the commencement of proceedings, not to exceed three hundred dollars to each claimant; . . .'

The precise inquiry is whether the right of prior payment thus conferred is attached to the person or to the claim of the wage-earner; if to the person, it is available only to him; if to the claim, it passes with the transfer to the assignee. In support of the proposition that the right...