Claim of Spencer v. Hodgman — 33 N.Y. St. Rep. 33

Majority

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In the Matter of the Claim of Byron O. Spencer v. Alfred C. Hodgman, Assignee.

(Supreme Court, General Term,, Third Department,

Filed September 25, 1890.)

Headnote

1. Assignment fob cbeditobs—Pbefebence to employees.

S. was an employee of II. from April 1, 18S7, to August 37, 1888, and had been paid in part by H. for his services. In April and May, 1888, II. gave to S. certain notes. These, with the cash payments, considerably exceeded what was due S., and they were in fact accommodation notes given to S. by H. that the former might raise money, and he negotiated them. In July, 1888, H. made an assignment for benefit of creditors. In January, 1889, S. repurchased the notes and now claims under them, against the assignee, a preference as for wages, under chapter 383, Laws of 1886. Held, that there was in July, 1888, “no wages or salary actually owing” to S. as an employee of H.

3. Same.

Where a preference is claimed the court is simply to construe the exact language of the statute.

Appeal from an order of the county court of Washington -county, allowing a preference to a claim against an assignee. The assignee appeals.

L. H. Northwp, for app’lt; 0. L. Jones, for resp’t.

Alfred C. Hodgman is the general assignee of Charles Hooper for the benefit of creditors. Byron 0. Spencer made a claim that, as an employee of the assignor, he was entitled to a preference on a debt of $234.77 and interest. It was agreed between the parties that the matter should be heard béfore the county judge and should be deemed a part of the final accounting of the assignee. The county judge on a hearing decided that Spencer was entitled to a preference as such employee and the .assignee appeals.

The claimant was employed by the assignor and worked for him from April 1, 1887, to August 27, 1888, the date of the assignment. The services at the rate agreed on amounted in value to $779.82, on which the claimant had received $506.37 in cash. At least these are the amounts stated by the county judge, and they are sufficiently accurate for the present purpose.

The assignment was made July 27, 1888. Previously to that time Hooper had given to Spencer three notes made by Hooper, , dated respectively April 9, 1888, May 1, 1888, and May 1, 1888, amounting in all to $432.46. These were not given for indebtedness then owing, but, as Spencer says, were accommodation notes; that is to be earned by future services. Thus it is that the aggregate of the notes and of the cash paid exceeds the amount earned by Spencer.

These notes Spencer endorsed and transferred a few days after he received them; and at the time of the assignment and for several months thereafter, the notes belonged to other persons. In

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January, 1889, or thereabouts, the claimant paid for the notes, and took them into his possession. How much he paid does not appear.

The claimant relies on chapter 283, Laws 1886, providing as follows: “In all distributions of assets under all assignments made in pursuance of this act, the wages or salaries actually owing to the employees of the assignor or assignors at the time of the assignment shall be preferred before any other debt.”

Now the obvious answer is, that at the time of the assignment there were no wages or salaries actually owing to the claimant. Whatever was owing for his salary or wages had been transferred by him and was owing to other parties. It is true, as he claims, that the notes did not pay the original indebtedness. But plainly the transfer of the notes either transferred the original indebtedness, or took away from the claimant for the time all right of action thereon. At the time when Hooper made his assignment the right of action on these notes was in the endorsees thereof. They, and not Spencer, were creditors of Hooper.

Now it is trué that, after January, 1889, when Spencer had paid the endorsees and obtained the rightful possession of the notes, he could have sued Hooper thereon, or he could have sued Hooper on the original indebtedness, surrendering the notes. This is the familiar doctrine laid down in Jagger Iron Co. v. Walker, 76 N. Y., 521 , cited by the learned county judge.

But that does not apply to this case. Here the question is, was Hooper, at the time of the assignment, actually owing to Spencer the amount claimed. We are simply to construe the exact language of the statute. For unless the statute gives a preference, none exists. And the statute does not give a preference for wages or salaries which have been transferred and are therefore no longer owing to the employees. If the statute had simply said that wages and salaries shall be preferred, there would be more ground for Spencer’s claim. But the statute goes farther and says that these wages and salaries, in order to be preferred, must be actually owing to the employees at the time of the assignment. Spencer's claim does not conform to this requirement.

Some other questions are raised on the appeal. It is said that Spencer did not perform his contract and that there is no proof of the quantum meruit; also that the notes were accommodation notes and he was to work them out. But it is not necessary to consider these questions. Taking them in the view most favorable to Spencer, we think for the reasons stated above that he is not entitled to a preference.

Order reversed, with ten dollars costs and printing disbursements.

Landon and Mayham, JJ., concur.