Abraham J. Levinson, Philadelphia, for appellant.
Ronald Ervais, Becker, Fryman & Ervais, Philadelphia, for appellee.
Jones, C. J., and Eagen, O'Brien, Roberts, Nix and Manderino, JJ. Pomeroy, J., did not participate in the consideration or decision of this case. Roberts, J., filed a dissenting opinion. Jones, C. J., dissents.
The appellant, Lauretta Adams, filed a complaint in equity against two corporate defendants, appellees here. The complaint alleged that the appellant was a creditor of one of the corporate defendants, 800-Lincoln Bar Corporation (Lincoln), at the time when, without consideration, Lincoln transferred all of its assets to the second defendant, Lierka Corporation (Lierka). The amount
alleged to be due the appellant, including interest, was $28,527.10. Claiming that the transfer was illegal, the appellant asked that it be declared null and void, that the transferee corporation, Lierka, be enjoined from disposing of or encumbering any of the transferred assets, that Lierka be declared a trustee of the transferred assets to the extent of the appellant's debt, and that the court grant such other relief as necessary to protect the appellant. Lincoln did not file an answer to the complaint but Lierka did. A trial followed but no findings of fact were made by the trial judge. Rather, the trial judge and the parties agreed that the parties would submit a stipulation of facts upon which the trial court would make a decision. After the filing of the stipulation, the trial court denied any relief to the appellant and dismissed appellant's complaint. Appellant's exceptions were dismissed. At the time of oral argument before the court en banc, however, it was agreed that one paragraph in the trial court's opinion was without factual foundation and was to be disregarded. That deletion is not relevant to this appeal.
In 1968 the appellant owned a hotel and restaurant business licensed to sell liquor and malt beverages. The business was located on real estate also owned by the appellant. In January of 1968, appellant sold both the business and the real estate to Lincoln for a total consideration of $33,000. Appellant received the sum of $10,000 and was to be paid the balance in installment payments over a period of years. The balance due was secured by a second mortgage given by Lincoln in favor of the appellant. The first mortgage on the real estate was held by Henrietta Silverstein and Libby Baumholtz who had made a loan to Lincoln in the amount of $9,700. The appellant, as well as Silverstein and Baumholtz, also received a bond and warrant evidencing the respective debts due from Lincoln. Lincoln soon experienced difficulty in making payments on both the first and second
mortgages. Silverstein and Baumholtz repeatedly demanded that appellant make installment payments to Lincoln on the first mortgage if appellant desired to protect her second mortgage. During this period of nonpayment, appellant became the president, treasurer, and director of Lincoln, and attempted to operate Lincoln profitably. For a period of time in 1969, Lincoln, while the appellant was serving as president, treasurer, and director, was able to make some payments to Silverstein and Baumholtz on the first mortgage. Lincoln made no payments to the appellant on the second mortgage either before, during, or after the time appellant served as president. In September of 1969, while appellant was still serving as president of Lincoln, Silverstein and Baumholtz foreclosed on the first mortgage and Lincoln's real estate was sold at a sheriff's sale. As a result of the sheriff's sale appellant's second mortgage on the real estate was divested. The sheriff's sale proceeds were not sufficient to pay the full amount owing to Silverstein and Baumholtz, and thus Lincoln was still indebted to them for $5,700. Since the proceeds from the sale of the real estate were insufficient to pay Silverstein and Baumholtz, the appellant, of course, received no proceeds from that sale. At this point, therefore, both the appellant and Silverstein and Baumholtz continued as creditors of Lincoln as evidenced by the bonds and warrants previously executed by Lincoln.
At some point in 1969 (the exact date is not clear from the stipulation of facts) the appellant relinquished her positions with Lincoln. Subsequently, in April of 1970, Silverstein and Baumholtz took control of Lincoln and began serving as its officers and directors. On November 5, 1970, about six months after Silverstein and Baumholtz took control, Lincoln transferred all of its assets to ...