McCloskey v. Division of Labor Law Enforcement, Department of Industrial Relations, California

HEALY, Circuit Judge.

The primary question in this case is whether severance or dismissal pay, in lieu of notice, constitutes wages entitled to priority under § 64(a) (2) of the Bankruptcy Act, or to lien status under § 1204 of the California Code of Civil Procedure. A secondary question is whether, if considered wages, the pay was earned within three months of the date of the commencement of the bankruptcy proceeding. 1

The bankrupt, a wholesale grocery company, on June 2, 1950 made a general assignment for the benefit of its creditors. Thereafter, on July 21, 1950, an involuntary petition was…