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IN RE VICTOR BREWING CO.

DISTRICT COURT, W.D. PENNSYLVANIA


February 1, 1944

In re VICTOR BREWING CO.

The opinion of the court was delivered by: SCHOONMAKER

SCHOONMAKER, District Judge.

This case is now before this court on certificate to review an order of J. Raymond Sowash, Referee in Bankruptcy, made on April 9, 1943. This order directed payment out of the funds of the bankrupt estate in the sum of $3,228.53 awarded to one Frank A. Maddas, as Receiver in the State Courts of Pennsylvania of said Victor Brewing Company: (1) To the First National Bank of Greensburg, Pennsylvania, to satisfy a note in the sum of $800 given by Maddas to that bank on April 1, 1941, and secured by an assignment from said Maddas to said bank of his fees as such receiver to the extent of $2,530.08; and (2) the balance of said fund of $3,228.53 remaining after the payment of said note o First National Bank of Greensburg, to the Collector of Internal Revenue to apply on account of the lien of the United States for 1936 Federal income taxes assessed against said Maddas.

The United States has filed a petition to review this order, claiming that the entire sum of $3,228.53 awarded to Maddas as receiver should be paid to the Collector of Internal Revenue to apply on Federal income-tax liens against Maddas.

 The Glass City Bank, a claimant of said fund by reason of an attachment-execution issued February 19, 1941, out of the Court of Common Pleas of Allegheny County, Pennsylvania, on a judgment entered in said court against said Maddas in the sum of $19,041.75, by which said bank sought to attach said fund due Maddas as receiver -- also seeks a review of said order, claiming the entire fund should be awarded to that bank.

 The facts involved are not in dispute, and may be briefly stated as follows:

 "Maddas was appointed equity-receiver of the Victor Brewing Company in proceedings in the Court of Common Pleas of Westmoreland County, Pennsylvania, and served in that capacity from December 28, 1938, to October 22, 1940.

 On October 4, 1940, a petition was filed in this court against the Victor Brewing Company for a reorganization under Chapter X of the Bankruptcy Act, as amended, 11 U.S.C.A. ยง 501 et seq. On January 31, 1941, the debtor was adjudicated a bankrupt.

 On June 13, 1941, Maddas filed an application in this court for an allowance of receiver's fees. The Referee allowed him a total of $15,000 for his services, of which $11,771.47 had been previously paid him through order of the Common Pleas Court, leaving a balance due of $3,228.53, which is now held by the Trustees in Bankruptcy.

 The Glass City Bank of Jeannette, Pennsylvania, obtained a judgment against Maddas on February 15, 1941, in the Court of Common Pleas of Allegheny County for $19,041.75. On February 21, 1941, this bank issued an attachment-execution out of said court summoning the Trustees of the Victor Brewing Company as garnishees. This attachment-execution issued without leave of this court. The Trustee in Bankruptcy opposed the garnishment proceedings and filed an application in this court to enjoin the proceedings. Prior thereto, on October 23, 1940, this court had entered an order, reading in part as follows:

 "All suits pending against the debtor and its property are hereby stayed until such final decree in these proceedings and the commencement of any suit against the debtor or the Trustee or any suit or proceedings to enforce a lien upon the property of the debtor, is hereby enjoined. All creditors and stockholders of the debtor and all persons whomsoever are hereby enjoined and restrained in any manner whatsoever from interfering with money, property or assets of which the trustees shall be entitled to take possession, and from interfering in any manner with the discharge by the trustees of their duties and the management of the business and property of the debtor, and from interfering in any manner during the pendency of this proceeding with the exclusive jurisdiction of this Court over the debtor and such property and assets."

 On April 2, 1942, this court enjoined the Glass City Bank from proceeding with its attachment proceedings. Later, the Glass City Bank again sought leave to proceed with its attachment proceedings, but on April 29, 1942, this application was denied.

 On April 3, 1941, Maddas executed a note to the First National Bank of Greensburg for $800; and as collateral security, he gave the bank a written assignment of even date covering the receiver's fees due him to the extent of $2,530.08. The Government has Federal income-tax claims against Maddas as follows: Years Amounts Dates Assessed Balance Due 1920 $908,490.37 August 10, 1935 $671,987.07 1921 476,050.51 August 10, 1935 108,291.80 1922 392,452.98 August 10, 1935 478,392.13 1936 9,129.72 January 17, 1941 9,129.72

19440201

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