No. 2826 October Term, 1978, Appeal from Order of November 6, 1978, of the Court of Common Pleas of Monroe County, Civil Action No. 498 January Term, 1973 J.D. and No. 38, June Term, 1978 E.D.
Norman R. Bradley, Philadelphia, for appellant.
Maxwell H. Cohen and John A. Hiscott, Stroudsburg, for Klingner, appellees.
Ralph A. Matergia, Stroudsburg, for Pocono, did not file a brief on behalf of appellee.
Cercone, President Judge, and Price, Spaeth, Hester, Cavanaugh, Wickersham and Hoffman, JJ.
[ 289 Pa. Super. Page 486]
The theoretical propriety of an Article Nine security interest in ticket proceeds is a question of first impression in this Commonwealth, and has received little judicial attention anywhere. Despite the scarcity of cases on the subject, the issue is of major importance to the financing of businesses in the Commonwealth which derive revenues from ticket sales, including theatres, stadiums, concert halls, museums, racetracks, ticket agencies, and possibly airlines and transportation companies.
This appeal seeks resolution of the competing claims of First Pennsylvania Bank N.A. (the Bank), Ellen Klingner (Klingner) and Pocono International Raceway, Inc. (Pocono).
On April 28, 1972, the Bank made a $5,000,000 loan to Pocono and took an Article Nine security interest under the Uniform Commercial Code.*fn1 The 1972 Term Loan Agreement generated a security agreement and financing statements which were amended by an April 9, 1976 First Amendment to the Term Loan Agreement.*fn2
[ 289 Pa. Super. Page 487]
Frank and Ellen Klingner were holders of a $50,000 Pocono judgment note due October 26, 1971. Frank died May 27, 1977, and, Ellen caused the judgment, augmented by accrued interest to an amount in excess of $70,000, to be revived by writ on June 6, 1978 and caused execution process to be issued thereon on July 25, 1978.
At that time Pocono was operating an auto raceway known as Pocono International Raceway (Raceway) and the sheriff levied and took custody of $76,049.50 in ticket proceeds from the "Coca-Cola 500." The Bank thereupon filed a petition seeking to intervene and to have the Klingner levy set aside on the ground that the Bank was a secured and superior creditor whose security interest had priority over the Klingner levy as to the seized proceeds.*fn3
Judge Marsh denied the motions to set aside the sheriff's levy of July 30, 1978, and the Bank brought this appeal.*fn4 We reverse.
[ 289 Pa. Super. Page 488]
In its opinion, the lower court noted that Pocono was indebted to the Bank in a principal amount in excess of $5,000,000 secured by a mortgage for $5,000,000 on Pocono's real estate located on Route 115, Long Pond, Monroe County, Pennsylvania; and further that the indebtedness was also secured by security interests in all Pocono's personal property as evidenced by several financing statements filed in the office of the Prothonotary of Monroe County, particularly by one financing statement filed June 9, 1976.
The levy had proceeded in the following manner. On Saturday afternoon, July 29, 1978, Sheriff Sebring appeared at Pocono's office in Long Pond and met with Pocono's President and Comptroller. Dr. Joseph Mattioli, the President, advised the Sheriff that he would accept service of the Writ and would himself collect and set aside gate receipts of $76,049.50 and would deliver the fund to the Sheriff. During Friday, Saturday and Sunday, July 28, 29 and 30, 1978, the sale of tickets produced funds which were commingled and placed in Pocono's safe. At 11:00 a. m. Sunday, July 30, 1978, Sheriff Sebring arrived at the Pocono offices and received currency in the amount of $76,049.50 and gave his receipt therefor.
We hold that these proceeds from the sale of admissions to the Raceway were proceeds of secured collateral under the April 9, 1976 Security ...