Appeal from decree of Court of Common Pleas of Erie County, Sept. T., 1962, No. 14, in the matter of Erie Drug Company, an insolvent Pennsylvania corporation.
Warren W. Bentz, with him W. Louis Schlesinger, for exceptants, appellants.
John F. Potter, with him A. Grant Walker, and Gifford, Graham, MacDonald & Illig, for appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Roberts
This appeal is from a decree of the Court of Common Pleas of Erie County dismissing certain exceptions to the first and final account filed by the First National Bank of Erie as receiver for the Erie Drug Company, an insolvent corporation.
The Erie Drug Company is a small corporation which was engaged in the wholesale drug business for
a substantial number of years in and around the City of Erie. Prior to his death on July 21, 1960, W. P. Webster was the controlling stockholder and thereafter his widow, Gladys S. Webster, succeeded to his stock and became president of the company. On September 6, 1962, the Court of Common Pleas of Erie County, sitting in equity, and acting upon Erie Drug's petition, appointed the First National Bank of Erie as temporary receiver to liquidate the corporation's assets. On September 27, 1962, First National was made permanent receiver. Its first and final account filed on September 13, 1963, showed distributable assets of $105,775.35 and unsecured claims due general creditors in the amount of $247,079.76.
Among the claims allowed were debts due Gladys S. Webster on a series of notes in the face amount of $84,000 and $12,707 in interest on that sum, computed at the rate of 6% to October 1, 1963. Also allowed was a debt due the receiver as a creditor of Erie Drug on a note in the amount of $26,000, plus $1,484.82 in interest computed at 5% to October 1, 1963.
Appellants, a majority of the general creditors, filed several exceptions to the receiver's account. The court below directed the receiver to amend its final account so as to eliminate $5,400 in interest allowed Mrs. Webster on a $60,000 loan for the period August 22, 1961, to September 22, 1963, which interest Mrs. Webster had failed to demand in her proof of claim. All other exceptions were dismissed. Since Mrs. Webster has taken no appeal, the matter before us involves only certain of the exceptions which were dismissed.
Appellants contend that Gladys S. Webster, being the principal stockholder, president, and director of the corporation, is not entitled to share pro rata in the distribution of assets among the general creditors. The general rule is that a corporation is an entity separate and distinct from its shareholders, Green v. Philadelphia Page 44} Inquirer Co., 329 Pa. 169, 175, 196 Atl. 32, 34 (1938), and that a shareholder who in good faith advances money to a corporation for the corporation's benefit is not necessarily precluded from sharing in the distribution of the assets upon the same terms as other unsecured creditors. Hill v. Standard Tel. Mfg. Co., 209 Pa. 231, 58 Atl. 147 (1904); Hooven Mercantile Co. v. Evans Mining Co., 193 Pa. 28, 44 Atl. 277 (1899). Appellants, however, rely on Gordon ...