Franklin Trust Co. v. Northern Adirondack Railroad

LANDON, J.

(dissenting). Chapter 376, Laws 1885, provides:

“Where a receiver of a corporation created or organized under the laws of this state and doing business therein, other than insurance and moneyed corporations, shall be appointed, the wages of the employees, operatives and laborers thereof shall be preferred to every other debt or claim against such corporation, and shall be paid by the receiver from the moneys of such corporation which shall first come to his hands.”

The statute was in force when the mortgage was given, and therefore the mortgage was subject to the rule therein expressed, unless the receiver, in the case of a mortgage foreclosure of a corporation’s property, is not the receiver of a corporation. Metropolitan Trust Co. v. Tonawanda Valley & C. R. Co., 103 N. Y. 245, 8 N. E. 488. The case of United States Trust Co. v. New York, W. S. & B. R. Co., 101 N. Y. 478, 5 N. E. 316, is cited as holding that the receiver in mortgage foreclosure is not the receiver of a corporation. What was there held was that the receiver in a mortgage foreclosure was-not the receiver of a corporation, within chapter 378, Laws 1883. The court said that that was an act to prevent abuses in winding up insolvent corporations. Chapter 376, Laws 1885, was passed to. prevent the abuse of leaving the wages of the employes, operatives, and laborers unpaid,—an abuse more easily practiced in a mortgage-foreclosure than in winding up the corporate business. The courts of this state were not inclined to follow in this respect the more liberal practice of the federal courts. See Raht v. Attrill, 106 N. Y. 423, 436, 13 N. E. 282. We should give effect to the plain mandate of the legislature. It was the duty of the receiver, therefore, to pay these laborers “from the moneys of such corporation which first came to his hands.”

We think the order appealed from, so far as it refuses payment of the wages due the employés, operatives, or laborers, should be reversed, with costs, and that the receiver be directed to pay such claims, and that to that end he be at liberty to apply to the court for such orders, and to take such further proceedings as will enable him to do so, as he may be advised. The order to be settled by a justice of this court.

HERRICK, J., concurs.