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CESCO SUPPLY CO. v. BROWN. APPEAL GRUBER (03/12/51)

March 12, 1951

CESCO SUPPLY CO.
v.
BROWN. APPEAL OF GRUBER



COUNSEL

Don F. D'Ivernois, Warren H. Van Kirk, Pittsburgh, for appellant.

C. Harold Skodol, McKeesport, for appellee.

Before Hirt, acting P. J., and Reno, Dithrich, Ross, Arnold and Gunther, JJ.

Author: Gunther

[ 168 Pa. Super. Page 555]

GUNTHER, Judge.

This appeal is from a decree of the court below making distribution among creditors of funds paid into court representing the purchase money of a sale under the Bulk Sales Act.*fn1

[ 168 Pa. Super. Page 556]

On October 17, 1945, Cesco Supply Company entered into an agreement with Thomas M. Brown, trading as Tom Brown, to sell to the latter its inventory in bulk under the Bulk Sales Act for the sum of $20,851.43. On December 20, 1945, an officer of the vendor furnished, in accordance with the provisions of the Bulk Sales Act, a list of the vendor's creditors together with the amounts of indebtedness due thereon. Philip G. Gruber, appellant, is there listed as a creditor with a notation after his name as follows: 'Contract declared forfeited by his default in performance'. Appellant had been employed by the Cesco Supply Company and his claim was based on a written contract of employment. Subsequently, ten days' notice was given to all creditors, including appellant, setting forth the date the sale was to be consummated; that shortly after the sale at a meeting of the creditors of the vendor it was agreed among the creditors that a 50% distribution of the purchase price should be made to creditors. Although appellant received notice thereof, he did not appear. In January, 1946, the sale was conducted. Sometime in 1946 (there is no evidence as to the date), this partial distribution was made to creditors based upon a 50% payment against their claims. Appellant did not participate in this 50% partial distribution. After the 50% distribution was made, a balance of $7,211.59 remained in the hands of the vendee. On May 8, 1946, more than ninety days after the sale, appellant sued his former employer and two years later, on April 26, 1948, obtained a judgment against Cesco Supply Company in the amount of $2,224.04. Subsequent to this partial distribution, all creditors have been paid through other sources except three -- Allegheny-Ludlumn Steel Corporation, Midwest Abrasive Company; and Philip G. Gruber, the only creditors to be considered. Allegheny-Ludlum Steel Corporation's claim amounts to $8,002.67; Midwest Abrasive Company's claim

[ 168 Pa. Super. Page 557]

    amounts to $4,137.50, and appellant's claim amounts to $2,224.04. On July 8, 1948, Gruber, after obtaining his judgment against Cesco Supply Company, issued an attachment execution naming the vendee as garnishee, and on December 28, 1948, obtained a judgment against the garnishee in the amount of $2,224.04. On March 22, 1949, the vendee garnishee, pursuant to Section 3 of the Bulk Sales Act, paid into court the sum of $7,211.59, representing the balance due on the purchase price not paid to the vendor or his creditors and undistributed. The court below appointed a master to recommend a scheme of distribution, and the master, after hearing and taking testimony, recommended that appellant was entitled to receive 50% payment on his claim as if participating in the original partial distribution, and a final distribution of 14 1/2% representing one-third of the balance remaining which was shared one-third each with Allegheny-Ludlum Steel Corporation and Midwest Abrasive Company. The master also recommended that $900 be set apart out of the funds until such time as other pending litigation in which Cesco Supply Company has sued appellant for $900 was settled, whether in favor of appellant or Cesco Supply Company. Appellant filed exceptions to the master's report contending that the master erred in not allowing his claim in full. The court below followed the recommendation of the master that appellant was entitled to 50% and 14 1/2% of his claim, but reversed the master regarding the withholding of $900. The court reduced this amount to $580.50.*fn2 This appeal followed.

Appellant contends that he, as an execution creditor, is entitled to payment in full of his claim with

[ 168 Pa. Super. Page 558]

    costs out of the fund remaining in the hands of the court; that because he has reduced his claim to judgment, issued an attachment execution, and obtained judgment against the vendee as ...


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