18. As of this date Old Commonwealth had outstanding 20,000 shares of stock of par value of $ 100 each, while Penn-Title had 50,800 outstanding shares of par value of $ 10 each.
19. On March 20, 1944, Central-Penn, in order to facilitate liquidation of Penn-Title, purchased $ 220,000 worth of mortgages from Penn-Title. Between March 24 and 31, 1944, Central-Penn, as 'trustee' for Penn-Title's stockholders who would not accept shares of New Commonwealth, received from Penn-Title, as a liquidating dividend, cash in the amount of $ 464,441.00 and assets having a net fair market value of $ 192,326.77, or a total of $ 656,767.77.
20. As of March 31, 1944, the securities comprising the major portion of the reserve fund of $ 174,189.67 had been liquidated in contemplation of its transfer along with the remaining assets to New Commonwealth.
21. On March 31, 1944, New Commonwealth was incorporated with an authorized capital stock of $ 3,125,000 divided into 31,250 shares of par value of $ 100 each. Besides taking over all the assets which had been owned by Old Commonwealth, it adopted the seal and by-laws of that company and had the same powers and privileges possessed by the former company.
22. Upon New Commonwealth's incorporation, Central-Penn did not receive any stock in New Commonwealth, but accepted payment of $ 277,000 in cash from Old Commonwealth. New Commonwealth, having succeeded to the rights of Old Commonwealth, obtained title to the title plant, fixtures, furniture and the $ 174,189.67 fund of Penn-Title; it also assumed, as a matter of law, the contingent liabilities of over 347 million dollars of outstanding title insurance of Penn-Title.
23. The fund of $ 174,189.67 was transferred from the account in which it was deposited with Central-Penn to the new account opened by New Commonwealth by check drawn on the 'Pennsylvania Title Insurance Co. Reinsurance Reserve Fund' to the order of the 'Commonwealth Title Company of Philadelphia Legal Reserve Fund'. This fund was added to that of New Commonwealth's reserve fund, bringing it to a total of $ 490,644.88, just $ 9,355.12 short of the required statutory maximum of $ 500,000. This reserve fund was earmarked and kept separate and apart from the general funds of New Commonwealth just as Old Commonwealth and Penn-Title had done in the past with their reserve funds.
24. The assets of Penn-Title were transferred to Central-Penn and New Commonwealth by means of a liquidation. Those assets, exclusive of the reserve fund, transferred to New Commonwealth were purchased for $ 277,000 in cash.
25. The reduction of $ 41,000 in the purchase price and the transfer of the $ 174,189.67 fund were in consideration of New Commonwealth's assumption of Penn-Title's insurance liabilities. Together they constituted a premium for reinsurance.
26. On or about March 31, 1944, Penn-Title delivered to the designated three directors three shares each of New Commonwealth stock. These shares were purchased by Old Commonwealth for the sum of $ 2,722.66.
27. The stock certificates representing the 50,710 shares of Penn-Title were retained by Central-Penn and were at no time surrendered or transferred by it.
III. Facts Concerning the Third Issue
28. For some time prior to 1945, New Commonwealth had given consideration to ways and means of improving the operation of its active title plant -- the one which had originally been acquired from the Title Company of Philadelphia in 1929 -- in order to eliminate some of the labor and to reduce the time required to issue settlement certificates. While the information contained in that plant in conjunction with that obtained from the other two plants was adequate, the arrangement of records and the method of compiling the desired information was cumbersome for the purpose of searching the title on a particular piece of property when title insurance was ordered. Therefore it decided to install a system proposed by Remington Rand, Inc. for additions and a rearrangement of some of the information already contained in the active plant.
29. On June 4, 1945, New Commonwealth entered into a contract with Remington Rand, Inc. under which the latter agreed to furnish materials, services and part of the labor needed in connection with the installation of the system.
30. Pursuant to that contract, with certain modifications, Remington Rand did the following:
(a) Dexigraphed (photostated) all deeds recorded in the Recorded of Deeds office during the period November 1, 1925 to October 1, 1945;
(b) Prepared a title folder for each parcel of real estate in Philadelphia; bound in chronological order all the dexigraphs of the recorded deeds relating to a particular piece of property and placed them in the folder for that property; transcribed on the folder in the space provided for that purpose the volume numbers and pages of the official deed books in which the related deeds appear and the dates of the deeds, and also the application number of the policy (back title bundle), if previously insured by New Commonwealth and its predecessors in title, covering the parcel of real estate or a larger tract of which the parcel is a part. These folders were filed in accordance with the prior locating code. They eliminated the use of registry books and the making of typed abstracts of recorded deeds.
(c) Prepared 'Soundex' cards, an index system of various colored cards, on which information possibly affecting wills were typewritten.
(d) Assisted in setting up the 'Photo Plan Index' by photographing each city block in Philadelphia shown on the large locating map, and then filing each photograph alphabetically or numerically by street names.
31. A summary of the amounts paid by New Commonwealth for the labor and materials supplied by Remington Rand, and the year in which and the purpose for which it was paid is as follows:
Material $ 11,908.07 $ 137,852.70
b. Title Folders
Labor 6,591.93 86,544.30
c. Soundex Cards
Labor 32,500.00 3,500.00
Material 4,937.53 1,524.71
d. Photo Index Plan
Total: $ 76,321.53 $ 234,821.95
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