Appeal from the District Court of the United States for the Middle District of Pennsylvania; Albert W. Johnson, Judge.
Before BIGGS, JONES, and GOODRICH, Circuit Judges.
The appellants in the prior appeals, at Nos. 7329 and 7373 respectively, are again the appellants in the case at bar except for the fact that Luzerne County Institution district has succeeded to the rights of Central Poor District.*fn1 A brief recapitulation of the facts out of which all these appeals grow must be made in this opinion. See, also the previous opinion of this court in 114 F.2d at page 1010.
On December 18, 1934 a petition for reorganization of Pennsylvania Central Brewing Company was filed in the court below pursuant to the provisions of Section 77B of the Bankruptcy Act, 48 Stat. 911, 11 U.S.C.A. § 207. An attempt was made to operate the business of the debtor, but no reorganization being possible, on July 16, 1936 pursuant to a rule to show cause issued on January 6, 1936, an order dated July 11, 1936 was entered directing liquidation of the estate pursuant to the provisions of Section 77B of the Bankruptcy Act. The matter was referred to David Rosenthal, Esquire, now deceased, one of the referes in bankruptcy of the Middle District of Pennsylvania, as a special master.
The debtor and bankrupt owned real estate in three counties in Pennsylvania. It possessed a brewery property known as the Reichard and Weaver Brewery and a small lot adjacent to it in Wilkes-Barre in Luzerne County. It had also property in Scranton, in Lackawanna County, known as the E. Robinson plant. It also possessed a small parcel of real estate at Honesdale in Wayne County. It possessed personal property at the Reichard and Weaver Brewery and it also had personal property at the E. Robinson plant. Pursuant to the order of July 16, 1936 the property of the debtor was sold free and clear of all liens and encumbrances, liens and encumbrances to attach to the proceeds of the sale in their profper order of priority .*fn2
The appellants in the former appeals, the Luzerne County taxing authorities and the City of Wilkes-Barre had perfected liens for taxes against the profperties in Luzerne County prior to July 16, 1936. The city of Scranton and Lackawanna County taxing authorities also had perfected liens for taxes against the real estate in Lackawanna County also before the sale. The record before us in this appeal, as was the case with the record in the last appeals, is chaotic and disordered and we cannot tell whether or not the taxing authorities of Wayne County had likewise perfected tax liens against the debtor's property in Wayne County, but the briefs in the case at bar seem to indicate that the Wayne County taxing authorities had done so. It appears from the record that the United States had filed liens for taxes in accordance with the terms of the Revenue Act, 53 Stat. 449 as amended 53 Stat. 882, 26 U.S.C.A. Int. Rev. Code, § 3672, and the laws of Pennsylvania, Act of May 1, 1929, P.L. 1215, 74 P.S. Pa. § 141 et seq., prior in time to those filed by the Luzerne County and the Lackawanna County taxing authorities respectively in Luzerne and Lackawanna Counties. The United States had also perfected its liens for taxes in Wayne County.
The record likewise shows that the Commonwealth of Pennsylvania had "settled" in accordance with the Pennsylvania statute, Act of June 15, 1911, P.L. 955 § 1, as amended Act of April 12, 1923, P.L. 63 § 1, 72 P.S. Pa. § 3342, certain of its claims for taxes prior to the effecting of the liens for taxes by the United States and the respective county and local authorities.
The real estate at Wilkes-Barre in Luzerne County when sold brought $18,481.50.*fn3
the real estate consisting of the E. Robinson plant and the personal profperty Scranton, Lackawanna County, and the personal profperty of the Reichard and Weaver Brewery at Wilkes-Barre, were sold under one bulk bid in a sale conducted at Scranton. The bulk bid which was accepted amounted to $39,610. As we have indicated there was no segregation of personal profperty from real property and no segregation of the personal property at Wilkes-Barre from the personal property at Scranton at the sale. It has busbequently been stipulated that the personal profperty at the Reichard and Weaver Brewery brought $5,000 and it has likewise been agreed that the personal property of the E. Robinson plant in Scranton brought $14,500. It has also been stipulated that the cost of preservation and sale of the Reichard and Weaver Brewery, apparently with the adjacent lot which constituted the second piece of real estate in Wilkes-Barre, was $2,500. The sum of $15,471.58 was received by the trustees by way of rent and the sale of miscellaneous items including beer brought $14,456.14. It is not stipulated and the record does not show where these miscellaneous items were situated.
There were and are also expenses of administration consiting largely of fees of the trustees and th eir counsel and of the fees of the special masters. There were also wage claims.
The late special master filed a report which contained a proposed distribution wh ich was approved by the court below on June 22, 1940. The court's order directed the trustees to distribute the assets in accordance with the master's report. The master's report gave priority of payment to the expenses of administration and to the wage claimants before the tax liens of the Luzerne County taxing authorities and of the City of Wilkes-Barre. These parties as we have stated were the appellants in the prior appeals.
We reversed the order of the District Court of January 22, 1940, directed that the tax liens of the Luzerne County taxing authorities and of the City of Wilkes-Barre be given priority of payment over expenses of administration and wage claims insofar as the proceeds of the sale of the Luzerne County real estate was concerned and stated that the Reichard and Weaver Brewery property should bear as its portion of the expenses only the necessary costs of preservation of the profperty and of its sale Our order stated "that the order of January 22, 1940 of the said District Court in this cause be, and the same is hereby re versed, and the cause is remanded to the said District Court with directions to proceed in conformity with the opinion of this court." Our mandate to the District Court followed th is order exactly.
Following the remand of the cases, the District Court appointed the present special master with direction to him to proceed to determine the rights of the ...