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IN RE PENN CENT. TRANSP. CO.
October 25, 1974
In the Matter of PENN CENTRAL TRANSPORTATION COMPANY, Debtor, UNITED NEW JERSEY RAILROAD & CANAL COMPANY, Secondary Debtor, Prolerized Schiabo-Neu Company, Petitioner to Reclaim Property and For Other Relief
The opinion of the court was delivered by: FULLAM
Re: Petition of Prolerized Schiabo-Neu Company to Reclaim Property and For Other Relief
Petitioner, Prolerized Schiabo-Neu Company ("Prolerized"), seeks to recover $8,500 deposited with the railroads in connection with its agreement to purchase 6.44 acres of land, located in Greenville Yard, New Jersey. The land to be sold under the agreement was, and still is, owned by the Secondary Debtor and leased to the Debtor for a term of 999 years from July 1, 1871. Because Penn Central's management failed to approve the transaction, as required by the terms of the agreement, the property was never conveyed to Prolerized.
The unsettled issues are whether Prolerized is entitled to reclaim its down payment, and, if not, whether its claim against the estates of the railroads is secured by a vendee's lien. The Trustees of the Debtor take the position that Prolerized's claim is an unsecured pre-bankruptcy claim for $8,500, and have verified it as such for purposes of the Debtor's proof of claims program.
On May 13, 1970, Prolerized entered into the sale contract now the basis for its $8,500 claim. In language which reflects the casual disregard for the distinct corporate entities of parent and lessor-subsidiaries that existed before reorganization, the agreement began:
"The United New Jersey Railroad & Canal Company (hereinafter called Grantor) has agreed through C. Nichols, Manager-Real Estate, Penn Central Transportation Company, Lessee, subject to the approval of the management and Board of Directors of Penn Central Transportation Company and of Grantor (if other than Penn Central Transportation Company) and the Public Utility Commission of the State of New Jersey to sell to [Prolerized] (hereinafter called the Grantee) the land in Grantor's Greenville Yard. . . ."
Other paragraphs of the contract included these terms:
"In the event either management or Board of Directors fails to approve and authorize this transaction . . ., then the sum paid on account will be refunded without interest to Grantee who hereby agrees to accept same, whereupon this writing shall be cancelled and annulled and neither party hereto shall have any claim whatever against the other by reason hereof.
On behalf of the grantor, the contract was signed as follows:
"The United New Jersey Railroad & ...
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