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In re Quaker City Uniform Co.

decided: October 31, 1956.

IN THE MATTER OF QUAKER CITY UNIFORM CO., INC., BANKRUPT. DANIEL P. VELORIC, APPELLANT.


Author: Staley

Before GOODRICH, KALODNER and STALEY, Circuit Judges.

STALEY, Circuit Judge.

This appeal involves the distribution of certain funds in the hands of the trustee in bankruptcy for the Quaker City Uniform Co., Inc., of Philadelphia, Pennsylvania, which was adjudged a bankrupt on July 2, 1953, by the District Court for the Eastern District of Pennsylvania. Specifically, we are asked to determine the relative order of distribution among (1) chattel mortgage holders prior in time to any claimants, (2) the landlord of the bankrupt who had made a distraint for rent but who had not sold any property, (3) various wage claimants, and (4) administration expenses.

The facts are stipulated. The bankrupt leased premises for its business from the Delsea Corporation, the landlord. The bankrupt gave a chattel mortgage to one Veloric on August 30, 1951, and a second chattel mortgage to Fidelity-Philadelphia Trust Company on August 19, 1952. Both mortgages were duly recorded on their respective days of delivery. Non-payment of rent prompted the Delsea Corporation to issue a landlord's warrant on May 12, 1953. The constable levied on all the goods on the bankrupt's premises, including the goods securing both chattel mortgages. The sale of the goods under the distraint was stayed by execution issued by the sheriff. On June 16, 1953, an involuntary petition in bankruptcy was filed. The following claims were asserted against the fund of $9,896.77 in the hands of the trustee:*fn1

1. Administration expenses $676.00

2. Philadelphia Joint Board, Amalgamated Clothing

Workers of America, valid wage claims 2,543.53

3. College Hall Fashions, assignees of valid wage claims 1,517.00

4. Synthetic Specialists, Inc., assignees of valid wage claims 7,001.60

5. Delsea Corporation, landlord; gross rent in arrears 3,641.07

6. Veloric, chattel mortgagee 3,480.00

7. Fidelity-Philadelphia Trust Company, chattel mortgagee 2,612.80

Section 64 of the Bankruptcy Act, 11 U.S.C.A. ยง 104, provides priorities among certain unsecured creditors. This section does not purport to dictate priorities among holders of valid liens. In fact, it is only after ...


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