* * * for the total price of $ 33,477.84, and has agreed to pay for same upon delivery provided the property described in * * * (category (b)) is delivered without charge to Philco Corporation * * *,'
'10. The price which Philco Corporation has offered for said property bears a reasonable relationship to the value thereof as determined by the cost records of the bankrupt and also bears a reasonable relationship to the percentage of completion and to the prices payable under the said contract, and is much more than could be obtained for said property in any other disposition of the same,
'11. * * * by reason of the scrap value of said property except for the purposes of said contract, the sale of same to Philco Corporation for the above sum represents the most profitable disposition which can be made under the circumstances and is in the best interest of creditors,
'12. By reason of the urgency of the sale herein proposed under the circumstances hereabove set forth, your petitioner requests that a hearing be held to consider this petition upon such short notice to the creditors committee appointed herein as may be practical.'
The petition prayed 'that an order be entered, after hearing as set forth hereinabove, granting leave to sell to Philco Corporation the property described in its offer to purchase for the sum of $ 33,477.84 upon the terms and conditions of said offer.'
After hearing, the referee signed on January 25, 1956, the annexed order 'that the trustee in bankruptcy is authorized and directed to accept the offer of Philco Corporation attached to the within petition and pursuant thereto to sell at private sale to Philco Corporation for the total price of $ 33,477.84 the property described * * * upon the terms and conditions of said offer, delivery to be made upon receipt of check * * *,' and ordering the fund to be segregated.
The trustee delivered the goods covered by the $ 33,477.84 offer, as well as the goods in category (b), and received the money.
On the subsequent petition to pay over, the referee found this transaction to have been simply a sale and not an assumption of the existing contract.
While a finding that the first Philco transaction was a sale would not necessarily preclude the second from being an assumption of the contract, I can find nothing in the facts or the law to distinguish the two. There was no future manufacturing contemplated in the second transaction, and in fact, by disposing of the tooling, it was clearly contemplated by both the trustee and Philco, as in the Chrysler transaction, that the trustee would do no manufacturing: i.e. that the trustee would not perform the contract. The order of the referee with reference to the second Philco transaction will be affirmed.
The government and the bank have sought to place on all these transactions a strained construction in order, in effect, to convert their security interest in the contract proceeds into what would amount to a lien on tangible goods. In this the law and the facts do not support their efforts. The contracts were entered into in Pennsylvania and Pennsylvania law controls. The enactment of the Uniform Commercial Code in Pennsylvania, effective July 1, 1954, 12A P.S. § 1-101 et seq., provided a convenient method of establishing a lien on the goods more than a year before the bankruptcy. The bank could have taken advantage of its terms, but did not. The courts cannot now do this for these claimants.
The order of the referee as to the Chrysler transaction and the first Philco transaction is reversed; as to the second Philco transaction it is affirmed.