The opinion of the court was delivered by: HERMAN
In late August and early September, 1979, Ezra Martin Company (hereafter referred to as "Martin") defaulted on its payments to a number of persons who had supplied it with livestock. This litigation arose from that default and is related to Civil Action No. 79-1183, in which Commonwealth National Bank (hereafter referred to as "the Bank") sought to enjoin Martin from providing certain information to representatives of the United States Department of Agriculture (hereafter referred to as "the Department"). The Department needed the information to fulfill its obligations under the Packers and Stockyards Act (hereafter referred to as "the Act"), 7 U.S.C. §§ 181-229. In particular, section 206 of the Act imposes a statutory trust on meat packers, such as Martin who have defaulted on payments to suppliers. 7 U.S.C. § 196.
On September 21, 1979 we denied the Bank's motion for a preliminary injunction in No. 79-1183 to block the Department's proceeding and on September 24, 1979 we ordered Martin to obey the subpoena duces tecum served on it by representatives of the Department. Because we believed that action was effectively terminated, we asked counsel for the Bank if it would withdraw its request for a permanent injunction preventing the dissemination of information by Martin. By letter filed December 27, 1979 counsel for the Bank informed us that he felt it would be inappropriate to terminate the action at that time. Counsel later raised the vague possibility of advancing some claim for damages against the Department.
On February 15, 1980 we referred the matter to United States Magistrate Havas who promptly ordered the parties to file briefs concerning the potential dismissal of 79-1183 as moot. On February 28, 1980, before the deadline for the briefs expired, the Bank agreed to discontinue the case.
The matter with which we are immediately concerned arises from the same factual background as Civil No. 79-1183. On September 2, 1980, the Pennsylvania Agricultural Cooperative Marketing Association (hereafter referred to as "PACMA") filed a complaint against Martin seeking recovery for the failure of Martin to pay it for livestock delivered within the terms of the Act. We issued a temporary restraining order on that date restraining Martin from dissipating or disposing of funds it had deposited in account number 808-972-8, American Bank, Greenfield Office, Lancaster, Pennsylvania (hereafter referred to as "the Fund"). Our order required only that Martin retain at least $ 30,000 in the Fund until payments were made in accordance with the Act.
As trustee of the fund, Ezra Martin has the power and authority to make payments from the Fund so long as it contains at least enough money to pay the colorable claims of all unpaid cash suppliers.
The interpleading parties presented their claims and petitions through November and December of 1979. Harleysville Mutual Insurance Company (hereafter referred to as "Harleysville") moved to intervene in the action on January 10, 1980 and Magistrate Havas granted the motion on February 27, 1980.
Magistrate Havas conducted a pre-trial conference and issued discovery and briefing schedules on February 15, 1980. On March 3, 1980 many of the parties represented by counsel supplied us with memoranda explaining the legal issues before us. The Department filed its memorandum, subsequent to receiving an extension of time, on March 7, 1980. PACMA filed a motion for summary judgment with a supporting brief on March 24, 1980.
Counsel for the Bank received from Magistrate Havas a number of oral and written extensions of time in which to oppose PACMA's motion. The Bank opposed PACMA's motion in its brief filed on June 16, 1980. Our proposed order on June 2, 1980, however, indicated that all claims other than those with which it dealt would be dismissed. PACMA did not object to this and we will therefore deny its motion for summary judgment.
On April 14, 1980 counsel for the Bank and Martin stipulated to the payment of the principal claims of most of the suppliers. We accepted the stipulation and ordered Martin to make the payments from the Fund on April 18, 1980. On April 28, 1980 counsel for the Bank and Martin stipulated to the payment of the principal claims of two other suppliers. We ordered payment according to the stipulation on April 30, 1980. The only claim of a supplier not agreed to by the Bank and Martin was from Tri-Springs Farm for $ 1,090.49. Harleysville, as surety on the bond of Martin, has paid that claim.
Our order filed on June 2, 1980 gave all parties until June 16, 1980 to file any objections to our proposed order. By letter dated June 4, 1980, the Bank provided us with an "informal" suggestion that we revise the order. This letter questioned the substance of our proposed order. On June 16, 1980, the Bank filed a formal brief objecting to both the substance and the legal basis of our proposal. No other party has objected to our proposed order.
The Bank does not object to the part of the order entering judgment in favor of the claimants and against Martin for 6% interest. It only objects to satisfaction of the interest judgments from the remaining principal and accrued interest in the Fund.
The Bank claims its priority over the assets of Martin extends to the money remaining in the Fund. That is the sole issue remaining for our determination in this litigation.
Before we discuss the merits of the legal issue presented by the Bank, we feel compelled to examine a statement the Bank made in the closing paragraph of its brief: "The proposed order has the effect of punishing Commonwealth National Bank, severely under the circumstances, for failure of Ezra Martin Company to make prompt payment to sellers of livestock." Brief of the Bank, p. 7 ...