Court Opinion

ID: 6745766
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:50:41.868018+00
Date Added: 2024-06-11T16:02:04.319609
License: Public Domain

DISSENTING OPINION
By KLINGER, PJ.
There is no conflict as to the facts. Florence Wincfiiursf owned all but three shares of the stock that had been issued by the corporation; her husband owned two shares, and one other share was issued. Her husband was elected president and she was elected secretary-treasurer. Ninety two percent of ,-he stock of the company v-as owned by plaintiff. The record shows that this plaintiff was employed as assistant manager at a salary of seven Hundred and eighty dollars a year. She was not employed as a laborer and there is no evidence to show what the services she claims che performed as a laborer were worth.
Secs 8339 and 11138, GC, referred to by the court in its opinion in this case, provide that in case of insolvency of a corporation the laborers in the employ thereof shall have a lien upon the assets for the amount of wages due them which shall be paid prior to any other debf of the company. And the word “laborers” should be construed to include all persons doing labor or service of whatever character for or as workmen or employees in the regular employ of such corporation.
The question is, is the owner of ninety-eight per cent of the stock, and the secretary-treasurer of the company, when engaged in and about the business of the company, whatever Us character may be, a laborer within the contemplation of the act? Can the members of a corporation, especially the member who owns practically all the stock of the company, employ themselves and in the case of failure, stand upon the statute allowing preference over other creditors? Does the statute mean to go so far as to empower the director’s of a corporation to employ themselves as workmen and laborers to do all the work and labor necessary to be done, and then in case of insolvency give themselves the statutory lien prerogatives and prefer themselves to general creditors? I do not believe that this was the intention of the legislation.
Authorities directly in point are not numerous. The only case that I have been able to find that- in my opinion is identical with the case at bar, is the case of England’s Executors v Daniel F. Beatty Organ & Piano Company, 41 New Jersey Equity 470, and found also in 4 Atlantic Reporter page 307. See also Trust Company v Casey, 115 SW page 780; In re Peninsula Cut Stone Company, 82 Atlantic 689. Alexander v Farrow, 66 SE 209. In re Crown Point Brush Company, 200 Federal 882. Arnold v Knapp, 84 SE 895.
In the case at bar the plaintiff Florence Windhurst really owned the company and she and her husband operated and man*77aged the company. In other words, this plaintiff made the company insolvent. I am not saying that she was guilty of intentional wrong-doing but it was under her management that the insolvency occurred, and it certainly was not the intention of either or both of the Sections relied upon in this case, to give preference under those circumstances.
As cited in one of the briefs, “To be an operative and entitled to the protection of §11138 GC the claimant must be a person employed in' such a capacity that he need such protection and is without authority to draw money from the employer’s funds but is wholly dependent upon the security given him by the law.” 6 C.C. page 351. Davis v Greenleaf, 13 C.C. 229.