the property was actually owned by the Boksers, not as tenants by the entireties, but as partners. Plaintiff has adduced no facts to support this conclusory allegation, and in the absence of facts to rebut the presumption, we are obliged to treat the bond and mortgage as entireties property.
It is settled that entireties property may be reached by creditors to satisfy the joint debts of the husband and wife. Swope v. Turner, 193 Pa.Super. 217, 220, 163 A.2d 714 (1960); Bank of Erie v. LaJohn, 27 Pa.Dist. & Co. R.2d 705 (C.P.1962); Budget Plan v. Hicks, 25 Pa.Dist. & Co. R.2d 365 (C.P.1961). It only remains to determine whether the writ is broad enough to reach jointly-held property and whether the complaint sufficiently states a joint claim against husband and wife. See A. Hupfel's Sons v. Getty, 299 F. 939 (C.A.3, 1924).
The writ of fraudulent debtor's attachment, as we have seen, purports to attach all the personalty of Lewis and Sara L. Bokser. Both parties concede that a bond and mortgage, at least as to third parties, are personalty. Gallagher v. Rogan, 322 Pa. 315, 318, 185 A. 707 (1936); Harper v. Consolidated Rubber Co., 284 Pa. 444, 451, 131 A. 356 (1925). There is, therefore, no reason, if the complaint furnishes the underlying support, why the attachment should not include personalty held jointly as tenants by the entireties, such as the bond and mortgage here in question.
This court, through Judge Kraft, has held in an earlier proceeding in this case that the acts and conduct of Remark Corp. alleged in the complaint are those of Remark's principals, whom the affidavits disclose to be Lewis and Sara L. Bokser. 227 F. Supp. 263, 266 (E.D.Pa., 1964). That is, as the court ruled, enough to justify the attachment of the Boksers' individual property. But to sustain the attachment of entireties property, Remark's alleged transactions which form the basis of the cause of action must have been participated in jointly by both husband and wife. A. Hupfel's Sons v. Getty, supra.
Because of the notice pleading system that prevails in the federal courts, it is difficult to be absolutely certain from the complaint that joint participation is alleged with any specificity. The amended complaint does, however, allege in paragraph 5 an "unlawful conversion and fraudulent diversion by defendant [Remark] of merchandise and proceeds of at least 85 of the accounts receivable and/or chattel paper transactions assigned by defendant to plaintiff, constituting a conversion and diversion of approximately $45,000.00 worth of the collateral assigned to plaintiff as security." Paragraph 17 of the amended complaint avers that "Remark Corp. and its principals " have "concealed or transferred * * * property or proceeds thereof in which the plaintiff has a security interest pursuant to the provisions of the Pennsylvania Uniform Commercial Code." Paragraph 17 appears to refer to the "accounts receivable and/or chattel paper transactions" alleged in paragraph 5 to have been converted by Remark, and thus by the Boksers. These two paragraphs, then, taken together sufficiently state joint acts on the part of Lewis and Sara L. Bokser so as to subject their entireties property to a fraudulent debtor's attachment at the instance of an alleged creditor of the two jointly. Since this is so, it becomes unnecessary for us to determine whether a complaint which states a cause of action against a corporation whose acts must be regarded as those of its two principals would, without more, support an inference of joint acts sufficient to sustain an attachment of entireties property.
Accordingly, life insurance policies in which Lewis Bokser is the insured and Sara L. Bokser or children or dependent relatives are named as beneficiaries must be released from the attachment, but the proceeds of the sale of the bond and mortgage must remain attached. The petition is, therefore, granted in part and denied in part.
In my opinion of November 16, 1965, I concluded that "life insurance policies in which Lewis Bokser is the insured and Sara L. Bokser or children or dependent relatives are named as beneficiaries must be released from the attachment, but the proceeds of the sale of the bond and mortgage must remain attached." The parties are unable to agree on the form the order should take. To effectuate the decision rendered at that time, I have decided, upon briefs and argument, that the doctrine of marshaling of assets is applicable in the instant situation.
"* * * The marshaling doctrine may be stated as follows: when one creditor has a claim against two funds as security and another creditor has a claim against only one of these funds, the claim of the former must be first satisfied out of that fund which is security for his loan only. * * *" American Nat. Ins. Co. v. Vine-Wood Realty Co., 414 Pa. 263, 269, 199 A.2d 449, 454 (1964).
That, of course, is exactly the situation in the case at bar. Here one creditor, the Industrial Valley Bank, has a claim against two funds as security, viz., the pledged life insurance policies and the proceeds of the sale of the bond and mortgage. Since the policies "must be released from the attachment," another creditor, Consumers Time Credit, Inc., now has a claim against only one of these funds.
Counsel for the petitioners has advanced two reasons why the marshaling doctrine ought not to be invoked: (1) Marshaling "is never applied when it will bring about an unjust or inequitable result", Miller Lumber & Coal Co. v. Berkheimer, 342 Pa. 329, 331, 20 A.2d 772, 773, 135 A.L.R. 736 (1941); and (2) the doctrine is waived if there is no "seasonal assertion of it," American Nat. Ins. Co. v. Vine-Wood Realty Co., supra, 414 Pa. at 271, 199 A.2d at 455.
In the context of this case, neither of these considerations is applicable. In Miller Lumber, the debtor against whose security marshaling was to be used was only a surety, and not the principal debtor. In this case, it is undisputed that the Boksers were joint debtors. Here, the result of failing to require marshaling would itself be inequitable, for it would release the policies not merely from the attachment, from which I have held them exempt, but also from the pledge. It would permit the senior lienor, the bank, to proceed against the bond and mortgage proceeds and allow it to defeat the valid attachment of them by the plaintiff. The policies were pledged voluntarily. In that transaction, the statutory exemption of 40 P.S. § 517 was waived. There is no equitable reason for me to refrain from applying the marshaling of assets doctrine.
I reach the same conclusion on the waiver issue. In Vine-Wood, the first assertion of the right to marshaling occurred six months after the foreclosure sale distributing the funds. There it was held that "* * * appellants having failed to make timely exceptions based on the applicability of the marshaling doctrine, they have waived the right to now raise it. * * *" 414 Pa. at 271, 199 A.2d at 455. Here, however, the fund has not yet been distributed; there is no claim of prejudice; the garnishee raised the issue long ago by refraining from satisfying its debts out of the bond and mortgage proceeds solely because of the marshaling doctrine; and even the petitioners' brief concedes that "[because] of the marshalling of assets doctrine, injected into the case by the plaintiff's writ, Garnishee did not use the balance of the mortgage proceeds to satisfy the petitioners' remaining loan." Marshaling has been in this case all along, and I find no effective waiver.
I adopt substantially the same order as was submitted by counsel for the plaintiff on December 17, 1965.
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