
    Adair, Assignee, etc., v. Blackburn, Treasurer, etc.
    
      Asstgmnent of personal property for benefit of creditors — Taxes on property at time of assignment take priority over mortgage given two months previous to assignment.
    
    Where personal property included in an assignment for the benefit of creditors is incumbered by a mortgage made by the assignor within two months next prior to the assignment, to create a preference, or secure a pre-existing debt, taxes on the property, charged against the assignor at the time of the assignment, are entitled to priority, on the distribution of the proceeds of the property by the assignee, over the claim o f such mortgage.
    (Decided June 20, 1899.)
    Error to the Circuit Court of Wayne county.
    On the fifth day of December, 1894, J. H. Bush made an assignment for the benefit of his creditors to Robert L. Adair, who duly filed the assignment, qualified, and entered upon the execution of his trust. On the same day the assignment was made, but prior thereto, Bush made three mortgages on the property assigned, to certain of his creditors, to give them preference and secure to each of them a pre-existing debt. These mortgages were given in good faith to secure bona fide indebtedness, and were filed before the execution and filing of the assignment. The property was sold by the assignee, and the proceeds being in his hands for distribution, he made application to the probate court for an order determining the priority of liens, and direction as to distribution of the fund. The treasurer of Wayne county was made a party to that proceeding, and set up a claim for taxes charged against the assignor at the time of the assignment upon the property assigned, to the amount of $108.40. The mortgagees, who were also made parties, set up their claims, and the question between them and the treasurer was whether the taxes had priority over their claims. The probate court directed that the taxes be first paid ; and the fund being insufficient to pay the taxes and the mortgages, the mortgagees prosecuted error in the court of common pleas, where the order of the probate court was reversed ; then the treasurer prosecuted error to.the circuit court where the judgment of the common pleas was reversed, and that of the probate court affirmed. The question here is whether the taxes have preference over the claims of the mortgagees.
    
      Adair & Adair, for plaintiff in error.
    
      Boss W. Bunch, for defendant in error.
   By the Court:

The controversy between the parties is determined by section 6355, of the Revised Statutes, which reads as follows :

‘ ‘All taxes of every description assessed against the assignor upon any personal property held by him before his assignment, shall be paid by the assignee or trustee out of the proceeds of the property assigned, in preference to any other claims against the assignor; and every person who shall have performed any labor as an operative in the service of the assignor shall be entitled to receive out of the trust funds, before the payment of the other creditors, the full amount of the wages due to such person for such labor performed within twelve months preceding the assignment, not exceeding three hundred dollars. But the foregoing provisions shall not prejudice, or in any way affect, securities given, or liens obtained, in good faith, for value; but judgments by confession on warrants of attorney rendered within two months prior to such assignment, or securities given within such time to create a preference among creditors, or to secure a pre-existing debt, other than upon real estate for the purchase money thereof, shall be of no force or validity as against such clai ms for labor to the extent above provided, in case of assignment.”

In view of all of the provisions of 'this statute, its effect, we think, is to give preference over the mortgages set up in this case, to claims for labor performed for the assignor within the twelve months preceding the assignment, not exceeding three hundred dollars, and to give the taxes priority over the claims for labor. So that, where, as in this case, the mortgages were given within two months prior to the assignment to create a preference or secure a pre-existing debt, the taxes are entitled to priority over the claims of the mortgagees, and should first be paid as ordered by the probate court, although no claims for labor were presented.

Judgment affirmed.  