The opinion of the court was delivered by: BYERS
There are two matters before the court in this proceeding:
A. Motion for a stay of distribution by the clerk of the funds now on deposit to effectuate the terms of an arrangement, arising upon order to show cause dated February 20, 1940.
B. Hearing on petition for review of referee's determination filed February 20th, the certificate of the referee being dated February 17th.
The petitioner's status is that of a former employee of the debtor under a contract of hiring dated November 16, 1939, the term of which began November 1, 1939, and continued until December 31, 1940.
The debtor's petition for an arrangement under Chapter XI of the Chandler Act, 11 U.S.C.A. § 701 et seq., was filed on December 13, 1939, and was not accompanied by a statement of this executory contract; nor were there any other executory contracts called to the attention of the court by the debtor in accord with Section 324 of the Act.
The stay of distribution is sought in aid of the second motion, in connection with the certificate of review, and, while the two matters are interwoven, it is necessary to consider them separately, to the end that each may result in an appropriate order.
A. In connection, with the application for a stay, it has been necessary to have recourse to the record made before the referee, in order to appraise the equities of the petitioner's position, for it appears that the referee has considered somewhat at length the general status of the petitioner in the proceeding, notwithstanding his failure to file a proof of claim within the time fixed, namely, January 4, 1940.
His neglect to identify himself as a creditor in the proceeding has been held to effectually bar his rights, whatever they may be, and in considering this motion it is necessary to inquire concerning his diligence in the assertion of what he conceives to be his rights.
In brief, the record shows that he was sufficiently apprised that his employment under the contract was deemed by the debtor to have been brought to an end as early as December 13, 1939 (the date of filing the petition) to have taught him the plain necessity for putting himself on record promptly before the referee, as one who deemed himself to be a creditor whose interest would be materially and adversely affected by any arrangement which might result from the filing of the debtor's petition.
An apparent purpose underlying Section 308 of the Act was to afford opportunity to one whose status in the proceeding might be debatable, and the petitioner's alleged misgivings as to whether he was a creditor or not are entirely dissipated by an impartial examination of his own testimony before the referee. Thus on page 16 the following appears:
"Q. Was any talk had by you (the petitioner and one Frank, the president of the debtor) between the period of December 13th and January 3rd with respect to your salary? A. I was told there was no provision made for my salary when they submitted schedules to the referee for salaries.
"Q. Did you receive any salary? A. I did not.
"Q. Did you have any talk with Mr. Frank about your salary? A. I ...