Opinion
No. 33299.
September 26, 1938.
1. MORTGAGES.
An insolvent incorporated cemetery's superintendent, who had the right to employ and discharge help, was not a "wage laborer," notwithstanding he did some manual labor incident to burials, and his claim against cemetery for back salary had no right of preference over lien creditors.
2. MORTGAGES.
Records of insolvent incorporated cemetery, which included plats and maps and lot numbers, which records were not expressly covered by mortgage of cemetery, were in the nature of muniments of title and went with the land upon foreclosure of mortgage as against contention that they should have been subjected to payment of claim of superintendent of cemetery for back salary.
APPEAL from the chancery court of Hinds county; HON. V.J. STRICKER, Chancellor.
W. Harold Cox, of Jackson, for appellant.
The lower court should have allowed appellant reasonable compensation for his services while the project was operated by or under the supervision of the court. Inasmuch as the appellant served this project as superintendent, and continued to conduct it as in the past under the supervision and direction of the Chancery Court, it is our contention that he was entitled to a reasonable compensation for his services under such circumstances, and that his claim therefor was superior to that of the bondholders.
23 R.C.L. 109, 115; Florida Construction Co. v. Pournell, 80 So. 54.
Appellant was entitled to a reasonable allowance for his services rendered this park for at least a period of six months prior to the filing of appellee's bill in September, 1937. The appellant further contends that this record shows, without dispute, that appellant kept body and soul of this project together and held it intact as an operating enterprise, and that his services in such connection inured to the direct benefit of the bondholders.
Appellant was a laborer, superintendent, executive and a general utility man on this job.
It is our contention that appellant's claim is superior to that of the appellee under the bond mortgage, and that a lien should have been impressed by the lower court on said property for the payment of such claim as a condition precedent to the confirmation of the sale of the property to the appellee.
53 C.J., pages 253, 256, 257, 265, 272, 273, and 280, and 270, sec. 449.
This case is in every aspect like that of L'Hote v. Boyet, 38 So. 1, 85 Miss. 686. In that case a receiver was appointed for a sawmill by the Chancery Court of Hancock County at the request of its creditors, some of whom held mortgages on the corporation property. Boyet and a number of others filed petitions in the receivership proceeding in which they alleged that the lumber company was due them $2,049.50 for labor performed for said corporation for a period of some two to three months prior to the appointment of the receiver. It was charged that the labor was necessary to continue the business of the corporation, and that it was to the advantage of the mortgagees and mortgaged property, and necessary in part to preserve the property covered by the mortgage as well as the property of said corporation. The petitioners claimed priority over all other creditors for their labor performed for six months prior to the appointment of the receiver. It was sought to have the receiver pay said amounts from proceeds of the operations, collections of debts, or the sale of property. The claims were allowed as preferences.
After the announcement of the court in the L'Hote case, it has become recognized as the announced policy in this state to respect claims for wages and services rendered of this character for as much as six months prior to the appointment of a receiver. That the legislature of this state took notice of and approved such policy is further demonstrated by the fact that in annotating the Mississippi Code of 1930, under Section 4146 of said code there appears this annotation: "A receiver of an insolvent corporation, whether public or private, in possession of its entire property, will be required to pay the wages of laborers who rendered services shortly before his appointment which were necessary to continue the business of the corporation and preserve its property in preference to both ordinary and mortgage creditors. L'Hote v. Boyet, 85 Miss. 636, 38 So. 1."
It is most earnestly urged and submitted that the lower court erred, first, in denying this appellant a reasonable award for his services rendered as superintendent in charge of all of the operations of this project from September 1937 to January 19, 1938, including the time while appellant operated such project under the direct supervision, direction and control of the lower court; next, the lower court erred in awarding the appellee the cemetery records, plats, etc., which were of undoubted value to these operations, but which appellant was entitled to subject to the full extent of their value to the payment of the decree awarded him against the Jackson Memorial Park, which owned this personal property. This personal property belonged to the Jackson Memorial Park and was not included in the foreclosed mortgage, nor was said property ever sold, nor was one cent ever paid by the appellee therefor; and finally, appellant respectfully urges that he was and is entitled to a reasonable allowance for his services rendered on this project for a period of as much as six months prior to September, 1937, in accordance with the holding of this court in the L'Hote case.
F.W. Bradshaw, Robert Burns, Jr., and Flowers, Brown Hester, all of Jackson, for appellee.
We respectfully submit that there is absolutely no foundation in fact or in law, as disclosed by this record, to support appellant's claim on the basis of having been employed by the receiver, or that he was in charge of the property of the corporation.
Counsel cites much textbook law that the expenses incurred during a receivership in the operation and preservation of the receivership property are a prior charge on the assets of the receivership. We find no fault with this line of authorities, but we cannot see how they have any application in this case. This is not a receivership. Even in general receiverships the courts are not prone to allow compensation to receivers out of the funds of lienholders where the property sold for less than the lien debt.
Clark on Receivers (2 Ed.), sec. 641 (d).
Appellant contends that if he is not entitled to compensation for the six month period prior to the filing of the bill by virtue of having been employed by the receiver he is entitled to compensation because "he kept body and soul of this project together and held it in tact as an operating enterprise, and that his services in such connection inured to the direct benefit of the bondholders." Again counsel delves into the text book authorities on receiverships. Let it be noted that in every case where there has been an allowance for operation expenses there has been present, first, a receivership, and, second, something that had to be operated to keep it together, such as a railroad, sawmill, telephone company or the like. So far as we have been able to ascertain this doctrine has never been extended to a private corporation engaged in a business of the kind presented by the case at bar.
The Chancellor held that this case is in no aspect like the L'Hote case. We say it is in no aspect like the L'Hote case. Certainly there is nothing similar in the two proceedings. A receivership brings into play all of the principles of equity whereas a foreclosure involves the single question of the right of a lienholder to resort to his security.
In the case at bar there is an attempt on the part of appellant to fix his claim for salary not on the gross earnings, but upon the property itself; to establish a lien on the property covered by the bondmortgage, prior and superior to the mortgage itself. In addition thereto, his services certainly were not those of a laborer expended in the "improvement and betterment of the mortgaged property." Jackson Memorial Park was engaged in the business of selling cemetery lots. As an inducement to purchasers it agreed to care for the lots. After a lot was sold it belonged not to the company but to the individual owner. The lot was released from the mortgage. These facts are set up in the pleadings and not denied. When it became necessary to utilize a lot for burial purposes the interment was made not on the property of the corporation, but upon a lot of an individual owner. Any services rendered in the interment of deceased persons and the care of lots was not an improvement or betterment of the mortgaged property. A large portion of appellant's duties was in connection with these lots. The thought of improvement and betterment contemplates something added to or enhancing the value of the property. Nothing appellant did during this time added to the property or enhanced its value.
If there was any doubt left after the L'Hote decision as to whom it applied, such doubt was in no uncertain terms set to rest by this court in the case of A.H. George v. Pigford, 52 So. 796.
Appellant was not a laborer of the wage class. He was a director of the company. He was a stockholder. He was treasurer. He was secretary. He was superintendent-manager. He was lot salesman. He handled the Clinton cemetery and the Jewish cemetery. He hired and fired the laborers. He had the cemetery in complete charge and was authorized to employ as much labor as was necessary. He had charge of paying the labor. He paid his own salary. He paid all expenses (and handled the money). He made the purchases. If there ever was an executive of unlimited powers this appellant certainly ranks first place. We submit that he certainly does not qualify as a member of the wage class. We hesitate to lengthen this brief with additional authorities, but there is such a wealth of cases covering every status of appellant's employment, we take the liberty of presenting the holdings of the courts in the following cases:
England v. Beatty Organ Piano Co., 41 N.J. Eq. 470, 4 A. 307; Weatherby v. Saxony Woolen Co., 29 A. 326; Keyes v. Davie, 145 C.C.A. 574, 231 Fed. 688; Green v. Weller, 6 Ohio C.C. 351, 3 Ohio C.D. 488; Fidelity Ins. Trust S.D. Co. v. Roanoke Iron Co., 81 Fed. 439; In re American Lace Fancy Paper Works, 51 N Y Supp. 818; Lindale Brick Co. v. Smith, 118 S.W. 568; Cole v. McNeill, 99 Ga. 250, 25 S.E. 402; Re Stryker, 158 N.Y. 526, 76 Am. St. Rep. 489, 53 N.E. 525; Re Caroline Cooperage Co., 96 Fed. 950, 2 N.B.N. Rep. 23, 3 Am. Bankr. Rep. 154; Re Eagle Ice Coal Co., 241 Fed. 393; Re L.W. Birmingham Son Co., 1 F.2d 511; Blessing v. Blanchard, 138 C.C.A. 399, 223 Fed. 35, Ann. Cas. 1916B 341; Re Crown Point Brush Co., 200 Fed. 882; Re Grubbs-Wiley Grocery Co., 96 Fed. 183; Re Bonk, 270 Fed. 657; Re Ye Ladies Shoppe, 283 Fed. 693; Re Snow Wire Works, 34 Am. Bankr. Rep. 152; Arnold v. Knapp, 75 W. Va. 804, 84 S.E. 895, 34 Am. Bankr. Rep. 432; Wintermote v. MacLafferty, 147 C.C.A. 165, 233 Fed. 95, 37 Am. Bankr. Rep. 425; Re Continental Paint Co., 220 Fed. 189.
These sacred records do not belong to appellant or appellee. Neither do they belong to any other living man as a personal possession. They belong always in trust in the hands of whoever is looking after Lakewood Memorial Park for the benefit and use of all mankind. These records show the owner of each lot, the name and history of each person buried therein and the exact location of each body. Without them a departed spirit returning earthward to watch over the spot of his earthly remains would find it lost under a solid blanket of grass and flowers and shrubs unless he could quietly slip into the vault of the chapel building in the park and locate from these records the spot from whence he departed. These records belong to those who have gone before us; to the loved ones left behind; and to generations yet unborn. They have become as much a part and parcel of the land as the dust of the bodies buried therein.
The question involved in this case is whether appellant's unsecured claim against the Jackson Memorial Park, an insolvent corporation, is entitled, under the facts to be stated, to preference payment over the mortgage creditor of the property of the park. The Jackson Memorial Park is an incorporated modern cemetery a few miles out of the city of Jackson. It was organized in 1927. Soon after its organization, it issued and sold $35,000 of first mortgage bonds. The property of the cemetery consists of thirty-five acres of land, a residence thereon for the person in charge, and the other necessary equipment for the proper conduct of such an enterprise. Default in interest payments on the bonds began in 1932, and continued until September, 1937, when appellee, who was the holder of nearly all of the bonds, filed the bill in this case against the cemetery company and appellant, the superintendent in charge, for a foreclosure of the mortgage. There was no issue between the cemetery company and appellee. Appellant answered the bill, making his answer a cross bill in which he set up that the cemetery company was indebted to him for salary in the sum of $3,301.68, and, in addition, seeking to have the mortgage lien subordinated to his claim for salary for a period of six months prior to the filing of the bill and from that time until the foreclosure, upon the ground that his services were necessary to preserve the value of mortgage property, and were beneficial to the mortgagee instead of prejudicial.
Appellant owned fifteen shares of stock in the corporation, and his wife owned a like amount. Beginning about 1930, he was employed as superintendent and general manager of the cemetery, and continued in that capacity up to the time of the foreclosure. His compensation was a salary of $200 a month, and the right to occupy the residence on the grounds. He was a member of the board of directors of the corporation and was secretary. He had the right to and did hire and discharge the employees. He paid them their salaries with checks signed by him and countersigned by the president, Bufkin. He was principally manager, but did some manual labor incident to burials. Appellee applied for the appointment of a receiver to take charge of the property pending the litigation. The application was resisted by the cemetery company. No receiver was ever appointed. To sustain his contention, appellant relies on the principles laid down in LeHote, Receiver, v. Boyet, 85 Miss. 636, 38 So. 1, 3 Ann. Cas. 705. In that case the court held that where a receiver is appointed for an insolvent corporation, whether public or private, and its entire property is placed in his hands, he will be required to pay the wages of laborers who rendered services shortly before his appointment, and whose labor was necessary to continue the business of the corporation and preserve its property in preference to both ordinary and mortgage creditors. The property involved in that case was a sawmill and a railroad. In George v. Pigford, 97 Miss. 332, 52 So. 796, the LeHote Case and other authorities referred to in the opinion in that case were reviewed with the result that the court declined to extend the doctrine "beyond the claims of laborers, the wage class" The court used this language in that case:
"We decline to extend the doctrine beyond the claims of laborers, the wage class, who are favored by law, and justly so, as illustrated by our statutes giving the laborer a lien on crops produced by him, and providing there shall be no exemption from liability to judgment for labor performed, and also by the common law, which gives laborers who receive chattels for repair, at the request of the owner, the right to retain same as security for their debt. 19 Am. Eng. Ency. of Law (2 Ed.) 8. There is no difficulty in applying the doctrine in question to the claims of laborers; while, on the other hand, great injustice and inequality would result in its application to any other class of claims. To illustrate: In the instant case, the appellants are merchants seeking a preference for feed stuff furnished this sawmill corporation with which to feed its oxen, to enable them to haul logs to the mill to be sawed into lumber, which lumber was on hand at the time of the appointment of the receiver. Why should such a claim be preferred over that of any other unsecured creditor? Why over the claim of another merchant, who furnished the company clothing and food for the laborers in its employ, who cut the trees and drove the oxen back and forth in hauling logs to the mill? Why over the claim of a bank which loaned the concern money with which to buy materials to go into the betterment of the plant, or with which to buy timber to be sawed into lumber? Or any other indebtedness incurred, which directly or indirectly contributed to keeping the plant a going concern, and to continue or increase the income therefrom? We can conceive of no indebtedness necessarily incurred about the business which would not contribute to that end."
Appellant was not a wage laborer; he was an officer of the corporation, and an important one — superintendent and treasurer, with the right to employ and discharge help. On the principles laid down in those two cases, appellant was only a common creditor of the corporation, and had no right of preference over lien creditors.
Appellant makes the further contention that the records of the company, including plats and maps and lot numbers, which records were not expressly covered by the mortgage, should have been subjected to the payment of his claim. Manifestly these records would be without any legitimate value to anyone except the owner of the cemetery property. Alone they have no intrinsic value. They are in the nature of muniments of title. They go with the land.
Affirmed.