The opinion of the court was delivered by: BARD
This case is before the Court on a petition to review an order of a Referee in Bankruptcy denying priority of payment of a claim of $140.64.
This amount is due and payable by the bankrupt to the Unemployment Compensation Fund of the Commonwealth of Pennsylvania for employer's contributions under the Pennsylvania Unemployment Compensation Law, 43 P.S. § 751 et seq.
The priority of claims in a bankrupt estate is determined by the Bankruptcy Act. In re Inland Dredging Corporation, 2 Cir., 61 F.2d 765, 767, 88 A.L.R. 254.
Section 64, sub. b(7), of the Bankruptcy Act provided: "The debts to have priority, in advance of the payment of dividends to creditors, and to be paid in full out of bankrupt estates, and the order of payment shall be * * * (7) debts owing to any person who by the laws of the States or the United States is entitled to priority; Provided, That the term 'person' as used in this section shall include corporations, the United States and the several States and Territories of the United States." 11 U.S.C.A. § 104, sub. b(7).
The pertinent law of the State, section 310 of the Pennsylvania Act, 43 P.A. § 790, provides: "In the event of any distribution of an employer's assets pursuant to an order of any court under the laws of this Commonwealth, * * * contributions or installments thereof, or interest thereon, then or thereafter due shall be paid in full prior to all other claims except taxes, claims arising under The Workmen's Compensation Act * * * and claims for wages * * *. In the event of an employer's adjudication in bankruptcy, judicially confirmed extension, proposal, or composition under the Federal Bankruptcy Act of one thousand eight hundred ninetyeight, as amended, contributions and interest then or thereafter due shall be entitled to such priority as is provided in section sixty-four (b) of that act (United States Code Annotated Title XI, Section one hundred four (b) as amended). (1936, Second Ex.Sess., Dec. 5, P.L.  2897, art. III, § 310.)"
It is apparent that on May 2, 1938, the date of filing the petition in bankruptcy, a claim for employer's contributions was entitled to the priority accorded it by Section 64, sub. b(7), of the Bankruptcy Act which incorporated the state law pro tanto.
Since that date Section 64, sub. b(7), of the Bankruptcy Act (with one exception not relevant here), has been deleted and superseded by Section 64, sub. a(5), of the Amendatory Chandler Act, c. 575, 52 Stat. 840, 874, 11 U.S.C.A. § 104, sub. a(5).
This new section provides: "(5) debts owing to any person, including the United States, who by the laws of the United States is entitled to priority * * *."
The Chandler Act became effective September 22, 1938.The proof of claim was filed by the Commonwealth of Pennsylvania October 7, 1938.
Chapter XIV, Section 6, sub. b, of the Chandler Act, 11 U.S.C.A. § 1 note, declares: "Except as otherwise provided in this amendatory Act, the provisions of this amendatory Act shall govern proceedings so far as practicable in cases pending when it takes effect."
The rights of creditors of a bankrupt become fixed as of the date of the filing of the bankruptcy petition, Sexton v. Dreyfuss, 219 U.S. 339, 345, 31 S. Ct. 256, 55 L. Ed. 244; White v. Stump, 266 U.S. 310, 312, 45 S. Ct. 103, 69 L. Ed. 301; and may not thereafter be disturbed by laws thereafter enacted unless legislative intent clearly manifests otherwise. In re Hansen Bakeries, Inc., 3 Cir., 103 F.2d 665, 666.
In the latter case the Circuit Court of Appeals for this Circuit in an opinion by Judge Maris said (103 F.2d at page 667): "* * * The bankrupt's assets at that time become a trust fund in custodia legis for his creditors whose rights then vest and may not thereafter be disturbed by priorities created by laws thereafter enacted unless the legislative intent to do so is clearly manifested. In re Inland Dredging Corporation, 2 Cir., 61 F.2d 765, 88 A.L.R. 254; In re C.H. Earle, Inc., D.C., 2 F.Supp. 15, affirmed, 2 ...