Hartman's Appeal , 1884 Pa. LEXIS 296 ( 1884 )

Mr. Justice Clark

delivered the opinion of the court, November 13th, 1884.

The fund for distribution is the proceeds of the individual personal property of William E. Reis, consisting of the furniture and other household goods contained in his dwelling-house.

William E. Reis and George L. Reis were partners under the name and style of Reis Brothers, and were the owners and operators of an extensive sheet-iron mill or manufactory in the city of New Castle; in the carrying on of that business they employed a number of operators and laborers, to whom, at the time of the sale, they were indebted for labor rendered within six months preceding ; the liabilities of Reis Brothers largety exceeded their assets; they were admittedly insolvent. The labor claimants, therefore, gave notice to the sheriff of their respective claims; the notices were in proper form, and the claims were correct in amount. No fact is controverted; the only question is whether or not the labor claimants employed in and about the work of the mills are entitled to a preference under tbe Act of 9th April, 1872, in tbe distribution of tbe proceeds of tbe individual estate of William E. Reis, which was used by him in bis dwelling-house, a mile or more distant from the mill, and was not in any way used in or connected with the mill.

The correct solution of this question involves the construction of the Act of 9th April, 1872, which is entitled “An Act for the better protection of the wages of mechanics, miners, laborers and others.” As the law was, prior to 1872, the owners or lessees of any works or mines, might, and they frequently did, in anticipation of death or insolvency prefer certain of their creditors, to the prejudice of the claims of the mechanics and laborers in their employ; this preference was often effected by direct and absolute sales or transfer of their works or mines, and sometimes by means of execution in the name of those whom they chose to prefer. The persons, thus exposed to loss, in many cases, cannot vigilantly assert their claims without hazarding their means of subsistence, and they are generally of that class of our population least able to bear the hardships which thus, frequently, they were called upon to endure. It was doubtless to prevent the recurrence of this evil that the Act of 1872 was passed.

The first section of the Act provides as follows: “ That all moneys that may be due, or hereafter become due, for labor and services rendered by any miner, mechanic, laborer or clerk, from any person or persons, or chartered company employing clerks, miners, mechanics or laborers, either as owners, lessees, contractors or underowners of any works, mines, manufactory or other business where clerks, miners or mechanics are employed, whether at so much per diem or otherwise for any period not exceeding six months immediately preceding the sale and transfer of such works, mines, manufactories or business, or other property connected therewith, in carrying on said business, by execution or otherwise, preceding the death or insolvency of such employer or employers, shall be a lien upon said mine, manufactory, business or other property in and about, or used in carrying on the said business, or in connection therewith to the extent of the interest of said owners or contractors, as the case may be, in said property, and shall be preferred, and first paid out of the proceeds of the sale of said mine, manufactory, business or other property as aforesaid.” It must be admitted that the language here employed is obscure. It is somewhat difficult to understand when we come to apply the statute, what is meant by a sale or transfer “ preceding death or insolvency of the employer.” When a sale or transfer has been made we know, if we take the words in their widest signification, that it precedes the death of the employer, if it be made in his lifetime, as it hath been appointed unto all-men onee to die; in the same sense, however, if made during solvency it may not precede insolvency, as that condition may never occur. Is the transfer, referred to, one made immediately preceding death or insolvency, if not immediately, then how long preceding the occurrence of these events respectively, and how in each case can the fact be determined in a distribution until one or both do actually intervene? The distribution cannot be delayed pending the event, and proof in many cases is rendered impossible. If we use the words in either of the more restricted senses suggested, the Act certainly fails of its effect; it is rendered incongruous and impracticable. After a careful examination of the provisions of this statute we are of opinion that by “ a sale or transfer ” “ preceding the death or insolvency of the employer,” is meant any sale or transfer during his lifetime and solvency. No other interpretation of this phrase is consistent with its proper application; such a sale may be said to precede death or insolvency when or if they subsequently occur. The lien created by this section attaches because of the transfer; it takes effect at the date of the transfer, no matter in what form it may be effected, whether by execution or otherwise, during the lifetime and solvency of the employer; and it is specific, being “ upon the mine, manufactory, business or other property in and about, or used in carrying on the said business or in connection therewith,” it is .“ preferred, and must be first paid out of the proceeds of the sale.”

The purpose of this section, as we understand it, is to give the laborer a claim under certain limitations and conditions, upon the purchase money arising from the sale of any works, mines, manufactory or other business and property, specified in the Act, no matter by what device that transfer may be effected; and, as the sale and transfer referred to, is of the mine, manufactory, &c., it is against that mine, manufactory, &c., as the specific subject of sale that the lien attaches.

But the third section we think is intended to apply in a different state of affairs.

“ In all cases of the death, insolvency or assignment, of any person or persons or chartered company, engaged in operations as hereinbefore mentioned, or of executions issued against them, the lien of preference mentioned in the first section of this Act, with the like limitations and powers, shall extend to every property of said persons or chartered company.”

The first section, as we have already said, has special reference to sales or transfers of the mines, manufactory, &c., before death or insolvency, but the third section provides for a preference, after death or insolvency, general assignment or where execution is issued directly against the persons or company. The “ execution ” named in the first section is such as may be made the instrument of sale; it may be upon a judgment or lien against a former owner, or as a mere means of transmitting title, or may be in such other form as does not denote the insolvency of the employer ; whilst the execution of the second section is such as is issued “ against them,” that is the employer, for the collection of his own proper debt, such a writ, if executed by levy and sale, may justly be regarded in general as denoting a condition of actual insolvency. In all such cases the lien of preference, mentioned in the first section, is extended “to every property of said persons or chartered company.” The employer may own other property exclusive of the mine, manufactory, &c., and of the property in and about, or used in carrying on the business or in connection therewith. He may own a valuable estate in no way connected with business; if so the lien is extended to sucb property. But in the case of a firm or partnership, the property to which the lien of the first section is thus extended by the third, is the property of the firm, or of the employers jointly, and not of the individuals constituting it. If the legislators had intended otherwise, they would certainly have said so; they have provided that the lien “ shall extend to every property of said persons or chartered company;” the persons are spoken of collectively and jointly, not severally or separately. The lien is not extended to “ every property ” of each and all of said persons, or to the property of said persons, respectively, or in such other form as to indicate an intention to charge the individual estate of the partners. The statute, it is true, is remedial, and although in derogation of the common law, and in some sense against common right, it is entitled to a fair interpretation in advancement of the remedy provided: Dame’s Appeal, 62 Pa. St. 417. We must, however, as far as we can, discover the legislative intention from the light which the statute itself furnishes, and we fail to find in its expression any clear intention to charge the individual estate of each of several partners; nor is there anything in the nature of the evil to be suppressed, or of the remedy provided which demands that any larger effect should be given to the statute than its plain provisions import. It is a familiar and well established rule of equity, in marshalling the assets of insolvents, that when there are partnership property and partnership creditors, and separate property and separate creditors, each class must look to their respective estates for payment, in the first instance. In the absence of a clear expression to that effect we cannot believe that the legislature intended, in the manner and to the extent suggested in the argument of the appellees to abrogate this rule.

The decree is therefore reversed, the report of the Auditor confirmed, and it is ordered that the money be paid out accordingly, and that the costs of this appeal be paid by the ap-pellees.