McDonell

This is an appeal from an order of the district court affirming the order of a referee in bankruptcy that the claim of appellant for a total of $16,664 in unpaid salary be wholly subordinated to the claims of other general creditors.

The appellant McDonell was employed by the bankrupt, Hacker-Byrnes Corporation, in September 1947 as manager of the carpet department at a salary of $15,000 per annum plus 50% of the net profits of that department. On December 1, 1947, the sole shareholder of the bankrupt made appellant a director and the general manager of the corporation at an annual salary of $20,000 plus 15% of the net profits of the company. He was never given any share of ownership in the business. In the middle of 1948 new parties came into partial ownership of the bankrupt; appellant resigned as director although remaining as general manager. In September 1948 appellant sought to resign this last post, but remained on at the insistence of the new owners who promised to put new capital into the business. He did resign in February 1949 and the corporation went into bankruptcy on the following April 27th.

The claim is for the difference between his base salary during the total…