MEMORANDUM AND ORDER
TROUTMAN, District Judge.
This matter is before the Court for disposition of debtor's petition for review of an order entered October 3, 1966, by Referee Goldhaber allowing the claim of Henry Lewis Appleton, Marie Todd Appleton and Margaret V. Murta, as a general claim.
Claimants or their assignors were lessors, and Murta, Appleton Co. was lessee, of a written lease dated April 10, 1947, as modified by a Supplemental Agreement dated April 1, 1950. By agreement dated April 10, 1950, Edw. K. Tryon Company, the present debtor, subordinated its rights to those of the Fidelity-Philadelphia Trust Company to any distributions payable on account of a $141,292.93 debt owed to Edw. K. Tryon Company by Murta, Appleton Co. Although dated April 1, 1950, there was executed, subsequent to the Fidelity subordination agreement, an agreement whereby Edw. K. Tryon Company subordinated its rights to the extent of any distributions payable on account of the same $141,292.93 debt to any and all rent claims of the present claimants or their assignors. However, this agreement did not preclude payments to Edw. K. Tryon Company on account of said indebtedness. But "to the extent of any payments hereafter made on account of said indebtedness by or on behalf of Murta, Appleton Co. and received by Edw. K. Tryon Company, its successors or assigns, and not otherwise", Edw. K. Tryon Company unconditionally guaranteed payment to claimants or their assignors of "any and all obligations by way of rental" of Murta, Appleton Co.
On December 27, 1961, Murta, Appleton Co. filed a voluntary petition in bankruptcy in this Court, Bankruptcy Cause No. 27105, wherein the present claimants filed a rent claim which after distribution in that proceeding left a balance of $8,352.70. In that same proceeding, $16,476.84 was ordered to be paid to the Fidelity-Philadelphia Trust Bank as assignee of Edw. K. Tryon Company's interest pursuant to the aforementioned subordination agreement. Thereafter, Edw. K. Tryon Company instituted the present proceedings for an Arrangement under Chapter XI of the Bankruptcy Act. Based upon the guarantee clause of the second agreement, a claim was filed in these Chapter XI proceedings by the present claimants for the unpaid balance of their claim that was filed in the Murta, Appleton Co. bankruptcy proceedings. The Referee allowed the claim,
and the debtor has petitioned this Court for review.
The claimants take the position that pursuant to the first subordination agreement, $16,476.84 was paid to the Fidelity-Philadelphia Trust Company as assignee of Edw. K. Tryon Company's interest; that this is a payment made on account of the subordinated debt "by or on behalf of Murta, Appleton Co. and received by Edw. K. Tryon Company, its successors or assigns, and not otherwise"; and that since their claim does not exceed the amount paid under the first subordination agreement, the guarantee clause of the second agreement entitles them to full payment. Furthermore, so argue the claimants, this issue was decided by the Referee in the Murta, Appleton Co. bankruptcy proceedings adverse to the contentions of the debtor and since the final order of distribution in that proceeding was reviewed and approved by this Court and the Third Circuit Court of Appeals, this issue is now res judicata. The debtor contends that the words, "its successors or assigns" is prospective only and since the first subordination agreement was executed prior to the guarantee clause of the second agreement any payments made pursuant thereto would not thereby give the present claimants any right to payment based upon the guarantee clause. Furthermore, so argues the debtor, this issue was not decided in the Murta, Appleton Co. bankruptcy proceedings.
In the bankruptcy proceedings involving Murta, Appleton Co., appearances were entered and claims were filed by present claimants, Fidelity Trust Company and Edw. K. Tryon Company. A hearing was subsequently held before the Referee at which all claimants were represented by counsel, following which this order was entered:
"AND NOW, December 11, 1962, it is ORDERED that any dividend payable to Tryon shall be paid to Fidelity to the extent that the dividend paid Fidelity on its own claim plus the amount paid on the Tryon claim shall pay in full the Fidelity claim; in the event there shall be any excess of the Tryon dividend it shall be applied to the Murta claim to the extent that the Murta dividend plus the amount paid by the Tryon dividend shall pay in full the Murta claim; and in the event there is still a balance of the Tryon dividend, said balance shall be paid to Tryon."