The opinion of the court was delivered by: BYERS
The trustee seeks to review three orders of the Referee, dated March 16, 1933, allowing the claims of Schneider, Sokol, and Heiss, in the sums of $100.00 each as priority claims.
The testimony of Sokol alone was taken before the referee, and was stipulated to be typical of all three claims. It is meager, but discloses the following:
Prior to 1930, these three men were employed by one Kimler, who operated a shoe factory. In November of that year, he induced them to invest $4,000.00, $3,500.00, and $4,000.00, respectively, with him, and apparently the bankrupt corporation was organized, each of these men understanding that he was to receive one-quarter of the capital stock. In fact, none was issued to any of them.
There never was any meeting, but Kimler made known that Heiss was treasurer, Schneider secretary, and Sokol vice-president.
During the entire operations of the company, Heiss and Schneider were "lasters" and Sokol was foreman and "fitter."
The wages of all three were paid at the rate of $60.00 per week until September, 1931; from then until February, 1932, these wages were apparently diverted to the creditors, by what process is not clear. A creditors' meeting was had, and Kimler seems to have made a settlement which involved the application of these men's salaries to the creditors by the endorsement of salary checks.
Then in February, 1932, and for the succeeding four months, these claimants were paid $50.00 a week, salary or wages, stipulated to be the prevailing rate for lasters and fitters in shoe factories. In June, 1932, these payments stopped, and pay checks were again endorsed, and Kimler got the money. He promised Sokol to pay him "next week" but failed to do so.
The petition was filed in July of 1932, and each claim is for two weeks' salary prior thereto.
The claimants never participated in any corporate action, such as an election, meeting, or adoption of resolutions. At least, the trustee never undertook to prove any, and the corporate records are presumably in his custody.
These men apparently were not shrewd enough to lend their money to Kimler, and take his notes, but were willing to cast their lot with him as his associates in a corporate enterprise.
The distinctions between this and In re Progressive Luggage Corp. (C.C.A.) 34 F.2d 138, seem to be the following:
(a) The relation between these claimants and the corporation was essentially that of employer and employee.
(b) These claimants never voted themselves salaries in any capacity, nor did they vote ...