In re Greenberger

RAY, District Judge. [1] The bankrupt ran two stores, one at the city of Glens Falls, N. Y., and for about 11 months prior to June 6, 1912, he ran a branch store in the city of Rutland, Vt. The claimant, Samuel Cohen, was manager of this branch store in the city of Rutland, and so testified repeatedly. It appears that lady clerks were employed in this store. Cohen kept the accounts and managed the business, ex [584] cept that he did not .hire or discharge help or pay the bills for goods, as a rule. However, he was the manager, and managed the business. He had a regular salary as such manager, and at the time the petition in bankruptcy was filed there was a balance due him on such salary of $198. It appears from his testimony that, in addition to the performance of his duties as manager, he sold goods and kept the store clean, for the reason he would not turn this duty over to the lady clerks. It appears fairly from the evidence that the clerical work performed by him, as well as the work done in keeping the store clean, was merely incidental to the performance of his duties as general manager of the store. He was not employed as a cleaner or workman or clerk, and so far as appears all that he did in selling goods and cleaning the store was voluntary on his part. This court has recently passed on this question. In re Crown Point Brush Co. (D. C.) 200 Fed. 882. In that case In re Albert O. Brown & Co. (D. C.) 22 Am. Bankr. Rep. 496, 171 Fed. 281 was approved-See, also, In re Gurewitz, 10 Am. Bankr. Rep. 350, 121 Fed. 982, 58 C. C. A. 320. It can make no material difference that Greenberger was carrying on this business as an individual. Cohen was neither a workman, clerk, traveling or city salesman, nor servant. The fact that, as incident to the performance of his duties as general manager of this store, he kept it clean and did some clerical duty does not change the character of his employment. He was not employed to do that work, but to manage the business, and he was paid for managing it, and not for performing such menial service as he did perform as incident to the management. The claim is for salary and for salary as manager, not for services as a clerk ox-' general workman and compensation as such. The referee was right in holding that the claixn of Cohen could not be allowed as one entitled to priority. It would hardly do to hold that the general manager of the busirxess of a corporation or individual, employed and paid as such, becomes entitled to priority, for the reason he incidentally sweeps the floox-, dusts the counters, aixd assists in selling goods. Adopt this rule and general managers of a business woxxld be sxxre to do erxough menial work to bring themselves within the section of the bankruptcy act giving priority to workmen, clerks, salesmen, and servants. [2] I do not think the appeal of the trustee and creditox-s can be sustained. Subdivision “g” of section 57 of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 560 [U. S. Comp. St. 1901, p. 3443]) provides that the claims of creditors who have received preferences voidable under, section 60, subd. “b,” shall not be allowed, xxnless such creditor? shall surrender such preferences. By subdivisions “a” and “b” of section 60, it is provided, in substance, as applied to this case, that a person shall be deemed to have givexi a preference if, being insolvent, he has, within four months before the filing of the petition, made a transfer of any of his property, and the effect of the exiforcement of such transfer will be to enable any one of his creditoi's to obtain a greater percentage of his debt than any other of such creditors of the same class; and if a bankrupt shall have given a preference, and the [585] person receiving it shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee. The preference, if given, to defeat allowance of a claim, must have been a voidable one, and to be voidable the person receiving it must have had reasonable cause to belicze that it was Intended thereby to give a preference. 1 agree with the referee that Cohen is not shown to have had such knowledge of Greenberger’s business — main business, or business as a whole — as to show that he (Cohen) had reasonable cause to believe that a preference was intended, lie did know the business of the branch store at Rutland was running behind, and that Greenberger was at times hard up for ready money; but he knew substantially nothing of the business at Glens Ralls or of Greenberger’s financial condition. A merchant may he hard up for ready money and still solvent. Cohen had at times loaned money to his employer, hut it had been paid. Cohen, it seems to me, was unlettered, but honest. One or two of his answers would indicate, standing alone, that Cohen knew Greenberger was insolvent and about to fail, and demanded and received his money for that reason; but his evidence is to be read all together and effect given accordingly. "Q. AVhen you saw things were going to the had here, you thought you would ask him for it? A. I didn’t see until the last minute; didn’t pay any attention to it. Always had great confidence in Air. Greenberger.” Then later: “Q. But, you thought Ms affairs had gotten to a point: where he couldn't pay, and you thought you would get yours, if possible? A. Yes, sir.” On his whole evidence I concur with the referee in the conclusion that Mr. Cohen did not understand the purport of some of these questions. So far as the evidence discloses, he had no reasonable cause to believe that Greenberger was insolvent, unable to pay his debts, and that in paying his (Cohen’s) lie intended a preference. It has been many times held that mere suspicion of insolvency is not sufficient. And the referee saw and heard Cohen when he gave his evidence, and was better able to arrive at a correct conclusion than is the court. The order of the,referee, disallowing the claim as entitled to priority and allowing same as a general claim, is affirmed.