James Rees & Sons Co. v. Hulings

Opinion by William W. Portee, J., We have in this case to determine whether in the distribution of a fund raised by a sheriff’s sale of personal property, the execution creditors or the labor claimants shall have priority. Hulings Brothers were engaged for some fifteen years in a general contracting business, including the towing of barges, the lajdng of pipe lines and of water lines, the building of waterworks, dredging, steamboating and a general marine business. They failed in November, 1897. The fund upon which this controversy arises, was produced by a sale under executions levied upon their plant, consisting of steamboats, flatboats, dredge boat, engines, scows, etc. The parties agreed before the auditor that the money in the hands of the sheriff for distribution arose from the sale of the above and other property used by the Hulings Brothers in the erection and construction of dam No. 6, at Merrill, Pa., under their contract with the United States government; and “ that they were used generally in their business as contractors.” The auditor further finds, “ It is conceded that the labor claims, as scheduled, are correct, and that the labor was performed for Hulings Brothers in and about the work by them to be performed under their contract with the government as to dam No. 6,” etc. On these facts, the court below approved the report of the auditor awarding the fund to the execution creditors. Prima facie, the execution creditors are first entitled (Gibbs & Sterrett’s Appeal, 100 Pa. 528) ; but a preference is here claimed, based on the Act of April 9, 1872, P. L. 47, and its supplements, of which act it may be said at the outset, that any person, who claims its benefits, must bring himself clearly within the description of persons who are entitled to its peculiar and special advantages : Ely v. Stanton, 120 Pa. 532. The act of April 9, 1872, is entitled an act “for the better protection of the wages of mechanics, miners, laborers and others.” The first section designates the persons intended to be benefited by its provisions. This section has been amended [269] by enlargement by the Acts of June 18, 1883, P. L. 116, and of May 12, 1891, P. L. 54. The act of April 9, 1872, gave the right of lien and priority in distribution to but four classes of employees, namely, miners, mechanics, laborers or clerks, who should be employed by certain employers, namely, owners, lessees, contractors or under owners of “ any works, mines, manufactories or other business where clerks, miners or mechanics are employed.” The classes of employees were thus specifically defined, not only by name, but limited also by the character of the business of the employer. It was thus construed by the Supreme Court, which held that wages of clerks or servants employed in a hotel do not come within the provisions of the act, and that the words “ other business” refer to some business ejusdem generis, or works, mines, manufactories, where clerks, miners, mechanics or laborers are employed : Allen’s Appeal, 81* Pa. 302; Sullivan’s Appeal, 77 Pa. 107. The amendment of June 13, 1883, largely increased the number of classes of persons who should enjoy the benefit of lien and priority, but unfortunately retained the language of the act of 1872, in respect to the character of the business of the employers. The difficult task of interpreting this piece of legislation was accomplished by Mr. Justice Mitchell in Sproul v. Murray, 156 Pa. 293, who reached the conclusion thus expressed: “ Plaving thus, however, enlarged the class of employees, the act fails to enlarge the class of employers in express terms, and describes them in the same words as the previous act. But unless the class of employers is also enlarged, we not only defeat the plain general intent of the act, but are driven to the absurdity that servant girls in private families, milliners, seamstresses employed by merchant tailors, etc., are only entitled to preference for their wages when they are employed by the owners of works, mines or manufactories. To avoid this result we must hold that the class of employers is enlarged by necessary implication to correspond with the classes of employees named, and that the words ‘ other business ’ in the act include all kinds of business in which any of the classes of employees named in the act are engaged.” To the amendment of 1883 was added the amendment of 1891, [270] which again increases the number of classes of employees to be preferred, but has the further effect of eliminating the character of the employer’s business from the test when determining the right of any class of employees to the benefits of the act,— a result, however, which was already accomplished in effect by the interpretation placed on the act of 1883 by the Supreme Court in Sproul v. Murray, supra. While the act of 1891 is not skilfully drawn, yet the legislative intent is discernible. The act of 1891 follows closely that of 1883. There are, however, substantial differences. Thus, not to make an extended comparison of the two acts, attention may be called to the fact that the words “ any works, mines, manufactories or other business where clerks, miners or mechanics are employed,” contained in the act of 1883, are omitted from the act of 1891 in the connection in which they were found by the Supreme Court to embarrass the interpretation of the act. Furthermore, the words “real or personal property” are inserted in the act of 1891 in connection -with the words sale or transfer of “works, mines,” etc., as used in the act of 1883. The right of lien is by the act of 1891 upon “real or personal property,” as well as upon “mines, manufactories,” etc., and the same words are used in respect to the proceeds of the sale. The act is thus a general act, and gives right of lien and priority in distribution to all the classes of employees named in it, without restriction based upon the character of the business of the employer. To this conclusion, we are aided by the views expressed by Mr. Justice Fell, in Mulholland v. Wood, 166 Pa. 486. In that case, while holding that a traveling salesman is not a “ clerk ” within the contemplation of the act, he says: “The act of May 12, 1891, is an amendment of the act of June 13, 1883, which was an amendment of the act of April 9, 1872. Each successive act enlarges the number of persons intended to be benefited. The first act included but four classes, the second twenty-three, and the third twenty-five. Each act included clerks, and in the third all limitations as to the business of the employer and places of employment are removed as to them.” If these limitations are swept away as to clerks, the same must be said of all classes of employees enumerated in the amended act. The lien, as given by the act of 1891, is for moneys due for [271] labor and services “ for any period not exceeding six months preceding the sale or transfer of the real or personal property, works, mines, mannfactories or other business, or other property connected therewith in carrying on the same, of said person,” etc.; and again it shall be “ a lien upon said real or personal property, mines, manufactories, other business or other properly in and about, or used in- carrying on said business, or in connection therewith,” etc. The property, subject to the lien, must be used in connection with or in carrying on the business or purpose to which the property is devoted: Gibbs & Sterrett’s Appeal, 100 Pa. 528. Whether the work for which wages are claimed was done in the prosecution of. some business or continuing purpose or enterprise, is an important test of the right to lien and preference. Labor or services rendered in original equipment or construction are not within the provision of the act: Maurer’s Appeal, 3 Pa. Superior Ct. 601; Llewellyn’s Appeal, 103 Pa. 458. This is an important distinction. It still obtains. In the present case, however, it does not deprive the labor claimants of their right, inasmuch as the Hulings Brothers were using the property sold “ generally in their business as contractors,” and the work, for which lien for wages is asserted, was performed in connection with their general business. Having ascertained that the employees claiming the fund now in court, are such as are entitled to the benefits of priority, it remains only to determine whether the right rises higher than that of the execution creditors, whose writs have produced the fund. The amendment of 1891 clearly contemplates such a priority, in that it treats of the sale of property sold “ by execution or otherwise,” and explicitly provides that the claims for wages for labor “ shall be preferred and first paid out of the proceeds of the sale of such real and personal property.” The only lien, which is preserved as a preference, is that of mortgages or judgments entered before the labor is performed. This is done by section 4 of the original act of 1872. The assignments of error must, therefore, be sustained. The decree is reversed and the record remitted that distribution may be made in accordance with the views herein expressed.