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BUTLER FAIR AND AGRICULTURAL ASSOCIATION v. BUTLER SCHOOL DISTRICT (05/29/57)

May 29, 1957

BUTLER FAIR AND AGRICULTURAL ASSOCIATION, APPELLANT,
v.
BUTLER SCHOOL DISTRICT, APPELLANT.



Appeals, Nos. 152, 153 and 160, March T., 1957, from orders of Court of Common Pleas of Butler County, June T., 1956, No. 109, in case of Butler Fair and Agricultural Association v. School District of the City of Butler. Orders reversed as to the association and Chambers; appeal of school district dismissed.

COUNSEL

Lee C. McCandless, for judgment creditor and for assignee.

John H. Marshall, with him John H. Jackson, Charles E. Dillon, James E. Marshall, Harry K. McNamee, and Marshall, Marshall & McNamee, for Butler School District.

Before Jones, C.j., Bell, Chidsey, Musmanno, Arnold, Jones and Cohen, JJ.

Author: Jones

[ 389 Pa. Page 172]

OPINION BY MR. JUSTICE BENJAMIN R. JONES

These three appeals arise from a controversy between a debtor-school district, a creditor-fair association and an assignee of the creditor-fair association concerning the payment of an award made in an eminent domain proceeding.

In 1955, Butler Fair and Agriculture Association (hereinafter called Association) was the owner of a leasehold which would expire in 1970. This leasehold covered 67 acres of ground in Butler County upon which the Association, and its predecessor, had operated a county fair for approximately fifty years, and upon which were located approximately forty buildings used for fair purposes.

In August, 1955, the School District of the City of Butler (hereinafter called District), on behalf of itself and eight other districts comprising a Jointure, condemned the land covered by the Association's leasehold and entered into an agreement with the land owners for the purchase of their fee simple interest subject to the leasehold.

On November 7, 1955, a Board of Viewers awarded the Association $160,000 as the damages sustained by reason of the District's condemnation of its leasehold interest and this award was confirmed by the Court on April 3, 1956. After a stipulation that the Association was to have the right to remove all its buildings from the land, the award was reduced to a final judgment in favor of the Association and against the District which was entered on April 5, 1956.

On April 30, 1956, the District certified to the Association that provision had been made in its 1956-57

[ 389 Pa. Page 173]

    school budget for payment of the amount of the judgment. For the purpose of enabling the Association to purchase other ground for its purposes, on April 30, 1956, one Philip Chambers loaned $60,000 to the Association and received as collateral the Association's judgment against the District. The Association on the same day assigned "all its right, title and interest in the principal and interest" in the judgment to Chambers. Chambers entered a judgment against the Association on May 14, 1956. The District was notified, in writing, on May 17, 1956 by the Association of its assignment of the judgment against the District to Chambers. It was not until January 28, 1957 that the assignment from the Association to Chambers was entered formally of record.

Undoubtedly, upon the receipt of its tax money, the District would have paid the Association's judgment and the Chambers loan would have been repaid and his judgment satisfied were it not for the fact that on June 13, 1956, an equity suit was instituted by certain stockholders of the Association's predecessor against the Association, certain of its officers and directors and the District. This equity suit set in motion the chain of events which led to the institution of three different lawsuits which have now resulted in the present appeals.

The Butler Fair and Exposition (hereinafter called Exposition), a Pennsylvania business corporation, was incorporated in 1925, for the purpose of conducting a county fair. In October, 1945, the Exposition owned certain assets including cash, a leasehold on the fair grounds and certain buildings thereon. On October 22, 1945, the Exposition's directors voted to recommend to the Exposition's stockholders that the corporation be dissolved and that a sale of its assets be made to one Richards, a director and Exposition's largest stockholder,

[ 389 Pa. Page 174]

    subject to the stockholders' approval. By a majority vote the stockholders votes to dissolve the corporation and sale of the Exposition's assets was made. Eventually the assets passed from the Exposition to the Present Association.

Alleging that this sale - which took place eleven years previously - was fraudulent in that the fact of renewal of the leasehold was concealed, three former Exposition stockholders, representing fourteen shares, on June 13, 1956, filed a complaint in equity against the Association, the District and ten individuals who were former directors and officers of Exposition, seeking - insofar as relevant herein - a stay of the eminent domain proceedings, a declaration that the Exposition stockholders were entitled to the Board of Viewers' award and that they were the owners of the Association's assets together with an injunction against the District restraining it from paying over to the Association any money in satisfaction of the Association's judgment. Preliminary objections filed by the Association were sustained by the court below on January 22, 1957. It has been represented to us that an appeal has been taken from this action of the court below, which appeal has not yet been heard and, of course, is not involved in this proceeding.

On June 29, 1956 - approximately two weeks subsequent to entry of the equity suit - on the theory that because of the equity suit it stood in a position of being subjected to multiple liability and that it could not determine the persons entitled to payment of the judgment, the District requested the court for permission to pay the money into court, under the Act of 1949.*fn1 The lower court, on September 28, 1956, refused to permit the District to pay the money into court and directed

[ 389 Pa. Page 175]

    it to be paid to the Association. Upon exceptions filed, the court below, on January 23, 1957, reversed its previous order and directed the District to pay the money into court. From this order the Association has appealed.

On December 5, 1956, the District filed a petition for an interpleader, under the Act of 1949, supra, and the Rules of Civil Procedure,*fn2 seeking to have the equity suit plaintiffs, the Association and Chambers interpleaded and requesting permission to pay the money into court. The lower court, on January 21, 1957, refused the interpleader petition. From that order the District has appealed.

On January 11, 1957, Chambers - the Association's assignee - petitioned the court, under the Act of 1949, supra,*fn3 to issue a writ in the nature of a mandamus against the District directing it to pay the amount of the Association's judgment. The court, on February 13, 1957, dismissed this petition. From the order of dismissal Chambers has taken an appeal.

Each appeal will be considered seriatim.

The Association's Appeal From The Order Permitting The District To Pay ...


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