decided: August 13, 1968.
SHERYL RECORDS, INC., APPELLANT,
THE CYRKLE. KOLBER, APPELLANT, V. THE CYRKLE
Appeals from orders of Court of Common Pleas No. 10 of Philadelphia County, June T., 1966, No. 4139, and Dec. T., 1966, No. 1440, in cases of Sheryl Records, Inc. v. "The Cyrkle", N. Earle Pickens, also known as Earle Pickens, Don Dannemann et al.; and Gene Kolber, also known as Gene Kaye v. Same.
Samuel P. Lavine, with him Steinberg, Greenstein, Richman & Price, for appellants.
Marvin D. Weintraub, with him I. Raymond Kremer, and Kremer, Krimsky & Luterman, for appellees.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Cohen. Mr. Justice Roberts concurs in the result.
[ 431 Pa. Page 300]
These appeals arise out of two separate actions commenced by way of writs of foreign attachment against
[ 431 Pa. Page 301]
appellees who are nonresidents of Pennsylvania for breach of contract.*fn1 Attachments were filed in each case against Columbia Broadcasting System, Inc. (CBS) as garnishee, alleging that CBS had funds belonging to the individual appellees and were therefore subject to attachment.*fn2
In the original and first amended complaint the appellees were named individually. Appellees filed a petition in the nature of a preliminary objection to dissolve the attachments on the basis that any funds in the hands of CBS owing to appellees constituted salary or payment for personal services rendered and as such were exempt from attachment under the Act of April 15, 1845, P. L. 459, 42 P.S. § 886.*fn3
After the petition was argued and pending a determination, appellants filed amended complaints alleging that the funds held by CBS were owed to appellees as a partnership known as "The Cyrkle" (a singing group)*fn4 or in the alternative that it was owed to
[ 431 Pa. Page 302]
appellees individually. As a result of this substantive change, "The Cyrkle" was added as a party defendant.
On June 2, 1967, the court below entered an order granting appellees' petition and dissolving the writs of foreign attachment on the basis that (1) appellants failed to establish that CBS held funds belonging to a partnership, and (2) the funds owed to appellees individually are in the nature of wages or salary for personal services and are consequently exempt from attachment. This appeal followed.
These appeals raise the following questions: (1) are the royalties owed by CBS partnership funds and as such not exempt from attachment under the Act of 1845, supra, and (2) are royalties payable to appellees individually, a group of recording artists engaged in the business of making records, exempt from attachment
[ 431 Pa. Page 303]
proceedings under the Act as "wages or salaries."
The lower court in rejecting the contention of appellants that the royalties payable by CBS are partnership funds and hence subject to attachment remarked as follows: "Plaintiff attempted to avoid the salary exemption by claiming the money is owed to 'The Cyrkle', a 'copartnership or association' 'composed of the individual defendants'. However, there are at least two reasons why this attempt must fail. First, as we construe the contract, it is between CBS and the individual defendants, Dawes, Fried and Dannemann. These individuals signed as individuals and not as members of a group. The funds due under the contract are due to the individuals. 'The Cyrkle' seems to be nothing more than a stage name under which Defendants are known and perform. Thus we determine that under the contract no funds are owing to 'The Cyrkle' by CBS."
With respect to appellants' first contention, we need only comment that after reviewing the record before us, we find ourselves in agreement with the lower court's determination. We are completely satisfied that appellants have failed to establish (1) the existence of any partnership between the individual appellees and (2) that the whole or any part of the fund held by CBS is payable to a partnership known as "The Cyrkle."
Resolving this contention against appellants, we next turn to a discussion of whether or not the royalties constitute wages or salaries within the meaning and purpose of the exemption statute.
Appellants argue that the royalties payable to appellees represent the combined services of appellees, their two managers, their arrangers and their musicians who furnished the accompaniment and background
[ 431 Pa. Page 304]
music, and thus since the royalties represent an element of profit on the services of others, at least part of the fund is attachable.
Under paragraph 7 of the agreement entered into between appellees and CBS, appellees were to receive "an aggregate royalty of 5% of all phonograph records . . . manufactured and sold . . . ." As indicated by paragraph 6(b) of the agreement,*fn5 the royalties payable to appellees represent net sums after CBS has deducted the costs of accompaniment and arrangements. Therefore, in any event the funds sought to be attached do not represent payment for services rendered by the arrangers and musicians.
We are also satisfied that the royalty payments are payable only for the personal services and efforts of appellees and in light of the statutory purpose of the exemption do not constitute profits on the services of appellees' managers.
The general principles applicable in determining whether a particular fund is exempt from attachment under the Act of 1845, was aptly reviewed in McCloskey v. Northdale Woolen Mills, 296 Pa. 265, 269, 145 Atl. 846 (1929), wherein it was said: "The legislative class intended to be protected by the Act of 1845 has also been the subject of frequent consideration. Whether the compensation be called 'wages' or 'salary' is immaterial: Com. ex rel. Wolfe v. Butler, 99 Pa. 535. It was intended to cover amounts due for mental or manual labor expended: Watson Co. v. Christ, 62 Pa. Superior Ct. 604;
[ 431 Pa. Page 305]
Hartman v. Mitzel, 8 Pa. Superior Ct. 22. It included wages due (Catlin v. Ensign, 29 Pa. 264), though the employee was compelled to pay expenses from the sum received (Pa. Coal Co. v. Costello, 33 Pa. 241), as well as commissions collectible for services performed, such as those incurred by the ordinary salesman (Hamberger v. Marcus, 157 Pa. 133), or wages and commissions (Watson Co. v. Christ, supra), and cases where a bonus was added if employment was continued for a definite period: Danziger v. Ferber, 272 Pa. 193." See Bell v. Roberts, 150 Pa. Superior Ct. 469, 28 A.2d 715 (1942). Moreover, in McCloskey, the Court indicated that if the fund in whole or part is not recompense for personal efforts or services, it cannot qualify for an exemption under the statute since any profits derived as a result of personal services of another are not within the contemplation of the exemption provision.
In McCloskey the Court held that there was an element of profit on the services of others, since the debtor was being compensated not only for the services he rendered but also for the services of others he employed to perform the identical work. However, in the instant case, appellees are being compensated in the form of royalty payments for their own services and not for the services of their managers. The mere fact that once the funds are received by appellees, they in turn remunerate their managers is of no import in view of the statutory purpose.
This statutory purpose was carefully scrutinized in Hartman v. Mitzel, 8 Pa. Superior Ct. 22, 26 (1898), wherein the Court observed: "The aim and scope of the statute, as above stated, were not qualified; and they were further defined in Smith v. Brooke, 49 Pa. 147, where it is stated that: 'the statute secures to the laborer and his family the earnings of his own hands;
[ 431 Pa. Page 306]
but this is its full intent and scope. . . .' It was not meant, however, to confine the operation of the act to manual labor; it applies to the wages or salary of personal labor of the hand, voice or brain, whether skilled and artistic, or unskilled and uneducated. Thus the salary of a chorister is within the proviso: Catlin v. Ensign, 29 Pa. 264, as well as the earnings of a workman in the coal mine: Coal Company v. Costello, supra."
The funds received by appellees, while in the nature of royalties on the number of records sold, are nevertheless payment for personal services rendered by themselves without the aid or assistance of their managers. It is the personal effort and talent of appellees which is being compensated by CBS and as such constitute "salary" within the meaning of the exemption statute. We are convinced that such a holding comports with the basic underlying legislative policy to secure to the laborer the earnings of his own personal labor.