Case Name: In the Matter of the Claim of Louis Strauss, Respondent, v. Isidore D. Morrison, as Assignee for the Benefit of Creditors of Martin Knitting Works, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1914-12-18
Citations: 165 A.D. 163
Docket Number: 
Parties: In the Matter of the Claim of Louis Strauss, Respondent, v. Isidore D. Morrison, as Assignee for the Benefit of Creditors of Martin Knitting Works, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 165
Pages: 163–165

Head Matter:
In the Matter of the Claim of Louis Strauss, Respondent, v. Isidore D. Morrison, as Assignee for the Benefit of Creditors of Martin Knitting Works, Appellant.
First Department,
December 18, 1914.
Assignment for benefit of creditors — right of creditor to preference under section 22 of Debtor and Creditor Daw — claims on notes actually owing but not presently payable, entitled to preference.
Under section 22 of the Debtor and Creditor Law, providing that “ In all distribution of assets under all assignments made in pursuance of this article, the wages or salaries actually owing to the employees of the assignor or assignors at the time of the execution of the assignment for services rendered within three months prior to the execution of the assignment, not exceeding three hundred dollars to each employee, shall be preferred before any other debt; * * *” an employee of an assignor is entitled to be scheduled as a preferred creditor for salary due at the date of the assignment, and also for amounts due on notes executed prior to the assignment in payment of monthly bonuses, but not due until after the date of the assignment. Such notes should be considered as “ actually owing ” within the meaning of the statute, although not presently payable.
Appeal by the defendant, Isidore D. Morrison, as assignee, etc., from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 15th day of October, 1914, requiring him to schedule the petitioner as a preferred creditor in this proceeding.
Jacob R. Schiff, for the appellant.
Abraham Miles, for' the respondent.

Opinion:
Scott, J.:
On July 2, 1914, Harris I. Phillips, doing business under the name of Martin Knitting Works, made an assignment for the benefit of creditors to Isidore D. Morrison, who is the appellant here.
The petitioner had been in the employ of the assignor for some time under a written contract providing that he should be paid a salary of thirty dollars per week and that " As addi tional bonus and compensation for the services of the party of the second part, the party of the first part agrees to execute and deliver to the party of the second part his promissory notes in the sum of $100.00 at the end of each and every month during the term of this agreement herein, which promissory notes shall be due as follows: notes given on April 1st, May 1st, and June 1st shall be due and payable on December 1st, and the notes that will be executed and delivered on the 1st days of July, August and September shall be due and payable on January 1st, 1915, and the notes that will be executed and delivered on the 1st days of October, November and December and the 31st day of December, 1914, shall be' due and payable on the 1st day of February, 1915."
At the date of the assignment the assignor owed the petitioner $65 on account of unpaid weekly salary, and petitioner also held three promissory notes for $100 each, dated on the first days of April, May and June respectively, and all payable on December 1, 1914. Apparently no notes had been executed on July 1, 1914, the day preceding the assignment. If a note had been so executed it would have been made payable, according to the terms of the contract of employment, on January 1, 1915.
The statutory provision for the preference of employees of an assignor which was in force at the time of the making of the assignment involved in this case reads as follows: "In all distribution of assets under all assignments made in pursuance of this article, the wages or salaries actually owing to the employees of the assignor or assignors at the time of the execution of the assignment for services rendered within three months prior to the execution of the assignment, not exceeding three hundred dollars to each employee, shall be preferred before any other debt; ." (Debtor and Creditor Law [Consol. Laws, chap. 12; Laws of 1909, chap. 17], § 22, formerly § 27, as renumb, and amd. by Laws of 1914, chap. 360.)
The statute in force at the time of making the assignment controls the disposition of the assets (Matter of Scott, 148 N. Y. 588), and consequently the petitioner cannot be preferred under any circumstances for more than $300, and then only if that sum was actually owing for services rendered within three months. As to the $65 due on account of weekly salary petitioner is clearly entitled to a preference. Some question has been made as to whether under the terms of the contract the monthly bonuses of $100 each should be considered as "actually owing." We are of opinion that the fair construction of the contract is that the employer agreed to pay a bonus of $100 per month, postponing the date of actual payment to convenient dates. The sums represented by the notes were, therefore, actually owing, although not presently payable. This construction seems to be in accord with the opinion of the Court of Appeals in Matter of Scott (supra).
The order appealed from must, therefore, be modified by hunting the amount for which petitioner is to be scheduled as a preferred creditor to $300, and increasing the amount for which he is to be scheduled as a general creditor to $449, without costs to either party.
Clarke, McLaughlin, La tight,in and Hotchkiss, JJ., concurred.
Order modified as indicated in opinion, and as modified affirmed, without costs. Order to be settled on notice.