Appeal from the District Court of the United States for the Eastern District of Pennsylvania; George A. Welsch, Judge.
Before WOOLLEY, DAVIS, and THOMPSON, Circuit Judges.
This is an appeal from a decree of the District Court for the Eastern District of Pennsylvania. The pertinent facts are as follows:
On February 6, 1933, a petition in bankruptcy was filed in the District Court of Delaware against National Department Stores, Inc., a Delaware corporation. On February 7 ancillary receivers were appointed for the bankrupt by the District Court for the Eastern District of Pennsylvania. According to the petition of the ancillary receivers, they took possession of two department stores, which, although operated under the name of Frank & Seder, were claimed by the trustees as property of the bankrupt; the appellants alleging, however, that these stores were at the time of the bankruptcy operated by Frank & Seder Company, a Pennsylvania corporation, and not by the bankrupt. On February 10 an involuntary petition in bankruptcy was filed in the Eastern District of Pennsylvania against Frank & Seder Company. The answer filed by that company denied that the petitioners were its creditors. The issue thus raised was undetermined at the time of this appeal. On February 20 a bill in equity was filed in the District Court for the Eastern District of Pennsylvania praying for the appointment of a receiver for Frank & Seder Company. The answer denied that the complainant was a creditor of that company. This issue was referred to a special master and was likewise undetermined at the time of this appeal. On September 6 the trustees of National Department Stores, Inc., petitioned the District Court for the Eastern District of Pennsylvania for an order on the ancillary receivers to turn over the assets of the bankrupt and to file their account. The Harrison Leather Goods Company, in an answer to this petition, alleged that it was a creditor of Frank & Seder Company, and asked that the prayer of the trustees be denied on the ground that the assets in the hands of the ancillary receivers were the property of Frank & Seder Company and not of the bankrupt. On October 2 the District Court for the Eastern District of Pennsylvania entered a decree in which it directed the ancillary receivers to deliver the assets in their possession to the trustees of National Department Stores, Inc., and to file their account. The decree reads as follows:
"And now, to wit, this 2nd day of October, A.D. 1933, upon consideration of the petition of Joseph Bancroft, Samuel C. Lamport and Harry H. Schwartz, Trustees in bankruptcy of National Department Stores, Inc., and the Answer of the Ancillary Receivers filed thereto, after oral hearing, and on motion of Reuben Satterthwaite, Jr., Esq., and Jacob S. Demov, Esq., counsel for the said Trustees, it is hereby Ordered, Adjudged and Decreed:
"1. That James C. Crumlish, William White and Harry Bernbaum, Ancillary Receivers of National Department Stores, Inc., for the Eastern District of Pennsylvania, are hereby directed to turn over and deliver to Joseph Bancroft, Samuel C. Lamport and Harry H. Schwartz, Trustees of National Department Stores, Inc., all of the assets of said bankrupt estate now in their possession or under their control, (including all rents collected by said Ancillary Receivers from subtenants of portions of premises 1023-25 Market Street, Philadelphia), excepting therefrom United States Government Treasury Certificates in the principal sum of $250,000 subject to the conditions hereinafter set forth.
"2. The assets so turned over to the said Trustees, (except the rentals so collected from subtenants), are impressed with a lien in favor of all creditors, whether merchandise, use and occupation, administration expenses including allowances to Ancillary Receivers, and Ancillary Receivers' Counsel, or otherwise incurred by the said Ancillary Receivers, and the Trustees prior to the delivery of the same to them by the said Ancillary Receivers, shall execute a stipulation to be filed of record, agreeing thereto, and further that none of the said assets will be removed from the jurisdiction of this Court until the said obligations are fully paid and satisfied. The said rentals so collected from subtenants of portions of premises 1023-25 Market Street, Philadelphia, shall be held by the Trustees, subject to the determination of the right, if any, thereto by the R-W Realty Company or the claim, if any, of the R-W Realty Company.
"3. Of the United States Government Treasury Certificates retained by the Ancillary Receivers, the principal sum of $90,000.00 shall be segregated in an earmarked fund and held for the following purposes, to wit: -- If any Creditors of Frank & Seder units of the National Department Stores, Inc., shall within the time prescribed in the notice to be given by the Ancillary Receivers under Paragraph '9' of this decree, file objections with said Ancillary Receivers or this Court to the turning over of the remaining assets then held by the Ancillary Receivers to the Trustees herein, upon the ground that said objectors are Creditors of Frank & Seder Company of Philadelphia, a Pennsylvania corporation, and that the assets in the aforesaid units are the assets of the said Frank & Seder Company of Philadelphia, and that by reason thereof they are entitled to be paid the amount of their respective claims out of said assets, the said fund so held, or so much thereof as may be required, shall be used to discharge or comply with any judgment or decree that may be entered into herein upon an adjudication of the rights of said Creditors with respect to the assets of the said Frank & Seder units. Upon the expiration of the time for the filing of the said objections or claims, the Court may upon application of the Trustees herein require such portion of said certificates as in its opinion shall exceed the amount of said claims to be turned over to the Trustees. Upon final adjudication of the said claims, any balance in the hands of the said Receivers shall be turned over to Trustees.
"4. The Ancillary Receivers shall forthwith, out of the surplus in their hands, after setting aside and earmarking the said certificates, set aside additional certificates in the principal sum of $160,000.00 subject to a decree of this Court upon the final accounting, for the purpose of paying the Receivers' fees, fees of counsel to the Receivers and any other Ancillary Receivership administration expenses, special master's fees and other disbursements incident thereto, and any claim of the Commonwealth of Pennsylvania for taxes, any surplus remaining after the payment of such items to be, as soon as all payments are made, paid over and delivered to the Trustees, with leave to the Trustees at any time to present a petition to this Court for the withdrawal and paying over to them of such portion of said fund as, in the opinion of this court, may not be required for this purpose.
"5. The Ancillary Receivers shall, on or before the 20th day of October, 1933, file an account as such Receivers and the question of administration expenses, including compensation to Ancillary Receivers, their counsel, appraisers, etc., shall be determined at the audit of said account by this Court.
"6. This Court retains jurisdiction to determine all questions relating to title of the assets in this District, special rights claimed by the creditors who allege that they did not sell merchandise to National Department Stores, Inc., the bankrupt, but that they sold merchandise, instead, to Frank & Seder Company of Philadelphia, a Pennsylvania corporation; the rights of landlords as lien claimants, if any, and also landlords of any store for use and occupancy by the Ancillary Receivers located in the Eastern District of Pennsylvania, and on the determination of any amount found to be due any of the aforesaid creditors who establish their rights in this jurisdiction, the same shall be paid by James C. Crumlish, William White and Harry Bernbaum, Ancillary Receivers, out of the funds so retained in their possession, and if such funds be insufficient, Trustees agree to pay any deficiency from funds coming into their possession, through the sale of assets turned over by the Ancillary Receivers, as set forth in Paragraph '2' hereof.
"7. The rights, duties and powers of the said Ancillary Receivers shall forthwith terminate, excepting for the purposes hereinbefore set forth, to wit, to hold the aforesaid sum or any other sums directed by the Court for the purposes set out in this decree, pending the determination of the issues set forth herein.
"8. Joseph Bancroft, Samuel C. Lamport and Harry H. Schwartz, Trustees, may at any time present to this Court a petition for the fixing of a definite time within which any lien claimant, if any, or landlord, of any store for use and occupancy by the Ancillary Receivers, or any party making a claim to the assets by reason of the alleged ownership thereof by Frank & Seder Company of Philadelphia, must present his claim to this ...