Opinion
Argued February 17, 1896
Decided February 25, 1896
Lewis E. Carr for appellants. John W. Lyon for respondent.
The question raised upon this appeal calls for a construction of chapter 283 of the Laws of 1886, which is as follows: "In all distributions of assets under all assignments, made in pursuance of this act, the wages or salaries actually owing to the employees of the assignor or assignors, at the time of the execution of the assignment, shall be preferred before any other debt, and should the assets of the assignor or assignors not be sufficient to pay in full all the claims preferred, pursuant to this section, they shall be applied to the payment of the same pro rata to the amount of each such claim."
It is contended on behalf of the appellants that the wages or salaries preferred under the provisions of this act, are those only of employees who are actually in the employ of the assignor at the time of his executing the assignment. We are unable to adopt this view. It would practically nullify the provisions of the act. The assignor by discharging his employees the day before the execution of the assignment could evade its provisions. The language of the act does not require such a construction. It is the " wages or salaries actually owing to the employees of the assignor or assignors, at the time of the execution of the assignment," that are preferred, and the preference is not limited to the wages and salaries of those in the employ of the assignor at the time of the assignment. This, we think, is the fair reading and meaning of the provision. Our views upon this construction are in accord with those of the General Term in the fifth department. ( In the Matter of Heath, 46 Hun, 114.)
The question here presented was not involved in or considered in the case of People v. Remington (45 Hun, 329), affirmed in this court ( 109 N.Y. 631). The principal questions there considered pertained to claims that had been assigned and transferred to third parties, and to the class of employees included in the provisions of the act there under consideration.
There is, however, one question which we think the General Term has overlooked, and that is that the act was not intended to be retroactive, and to create a preference in favor of employees for wages earned prior to its passage. This question was considered in the case of People v. Remington ( supra), with reference to the act creating a preference of the wages of employees, etc., in corporations where a receiver had been appointed. It was held that that act was not retroactive, and as we have seen the views there expressed have been approved by this court. That act and the one we now have under review, so far as this question is concerned, are similar and the same construction should be given to each.
It appears from the moving papers that Laura C. Aber had been in the employ of the assignor for many years as a domestic in his hotel at the town of Deerpark, and on the 27th day of March, 1890, he was indebted to her for such services in the sum of $1,400, for which he gave her his promissory note, payable one year after date. It does not appear how much of this sum was earned by her before the passage of the act. Her reference, however, to "many years" would seem to indicate that some portion thereof had been earned before its passage, which was only about four years before the giving of the note. The note was evidence of the debt owing to her. It did not necessarily operate as a payment or change the character of her claim.
That portion of the General Term order granting the motion of Laura C. Aber should be modified so as to remit the proceedings to the County Court of Orange county, with instructions to allow and prefer so much of her claim as shall be made to appear was for services rendered after the passage of the act in question, and as so modified the order should be affirmed, with costs.
ANDREWS, Ch. J., GRAY and O'BRIEN, JJ., concur; BARTLETT, J., dissents generally, and MARTIN and VANN, JJ., upon the ground that when accumulated sums, due as "wages" are virtually loaned by the employee to the employer and put in a promissory note, bearing interest, they lose their character as "wages," within the true meaning of the statute, and become an investment.
Ordered accordingly.