Graham v. Magann Fawke Lumber Co.

Opinion op the court by CHIEF JUSTICE BURNAM. The Magann, Fawke Lumber Company owned a sawmill plant near Irvine, Ky., and were engaged in the business of manufacturing lumber. On the 20th of April, 1900, they mortgaged their entire plant to George P. Magann to secure Ihe payment to him of a note for $40,000 for borrowed money. George P. Magann transferred this debt to the Bank of Montreal, Canada. The bank on the 14th of March,-1902, filed its petition in the Estill circuit court for an enforcement of their lien and a sale of the property. A judgment was rendered decreeing a foreclosure in accordance with the prayer of [194] the petition. At the sale made thereunder by the master commissioner of the Estill circuit court, the bank became the purchaser of all the mortgaged property at the price of «|37,800. The bank subsequently transferred the benefit of their bid to Angus Kirkland, the president of the bank, and the sale was confirmed. In the meantime appellant, Dayid Graham, who had been in the employ of the sawmill company at a salary of $75 per month up to the 23d of April, 1902,-filed a lien in the county clerk’s office of Estill county far $225, as. required by section 2494 of the Kentucky Statutes of 1903, and on the 10th day of June, 1902, instituted this suit against the lumber company, the bank, and other creditors, asking that his lien be adjudged superior to that of the bank, and thát it should be paid out of the proceeds arising from the sale of the company’s property. The defendants answered, denying the alleged indebtedness, and also that he was entitled to the priority asserted. Section 2487 of the Kentucky Statutes of 1903 provides that when the property or effects of any manufacturing establishment shall in any wise come to be distributed among creditors, whether by operation of law or by the act of the company, owner, or operator, the employes of such company, owner, or operator in such business shall have a lien upon so much of such property and effects as may have been involved in such business, and all the accessories connected therewith, including the interest of such company, owner, or operator in the real estate used in carrying on such business. And section 2488 provides: “The said lien shall be prior to the lien of any mortgage or other incumbrance thereafter created, and shall be for the whole amount due such employes as such, and for wages coming due to the employes within six months before the property or effects shall in any wise come to be distributed among the creditors, as provided [195] in section 248T, the lien of such employes shall be superior to tbe lien of any,mortgage or other incumbrance theretofore or thereafter created.” In Bogard v. Tyler, 55 S. W., 709, 21 Ky. Law Rep., 1452, it was decided that a sawmill at which lumber is sawed for sale on the markets is a manufacturing establishment in the meaning of this statute. And appellant has proven that he was an employe thereof, and' that the claim asserted by him was for wages coming due within six months before the judgment and sale of the sawmill plant at the instance of the bank. The chancellor reduced appellant’s claim to $125, in view of the fact that he had been too unwell during a part of the time for which the lien was claimed to render full services to the company and, we do not feel disposed to disturb his finding on this question of fact, but the chancellor erred in not giving appellant a superior lien over the mortgage creditors to secure the payment of the amount found due to him. While the decisions of the courts of thei country are not entirely harmonious on the question, we think the weight of the authorities upholds the validity of statutes securing to employes of manufacturing establishments liens for wages superior to prior mortgage liens, when such liens are created subsequent to the enactment of the statute. No constitutional provision is infringed by the statute; and as manufacturing plants are only valuable as going concerns, and can not be operated without material and employes, it is therefore the policj of the law to secure to such .employes a prior lien for their wages for a limited period. See Wimberly v. Mayberry (Ala.) 10 South., 157, 14 L. R. A., 305. For reasons indicated, so much of the judgment appealed from as denies to appellant a prior lien for the $125 adjudged to him is reversed, and cause remanded with direction to adjudge this sum payabld to him out of the proceeds of the sawmill property.