Appeal from the Order entered August 13, 1985 in the Court of Common Pleas of Philadelphia County, Civil Division, at No. 2874 September Term, 1983.
Henry H. Janssen, Philadelphia, for appellant.
Warren T. Pratt, Philadelphia, for appellee.
Beck, Popovich and Hoffman, JJ.
[ 357 Pa. Super. Page 241]
The issue presented is whether funds of a bankrupt on deposit in a bank are immune from execution by a secured creditor where the Bankruptcy Court has expressly permitted the secured creditor to enforce any security interest he may have in the bankrupt's property under state law.
Appellant Triffin became a secured creditor of Interstate Printing Co., Inc. ("Interstate") by virtue of a Security Agreement between the parties executed on January 15, 1981. Pursuant to the Security Agreement, Interstate granted Triffin a security interest in ". . . all . . . assets now owned or hereafter acquired; and all proceeds of such assets" of Interstate. This interest secured the repayment by Interstate of all monies then owing or in future owed by Interstate to Triffin. On May 15, 1981, Interstate gave Triffin a promissory installment note in the principal amount of $60,000. The note provided that in the event of
[ 357 Pa. Super. Page 242]
default by Interstate, Triffin could confess judgment against Interstate for the balance due.
In May 1983, Interstate filed a petition in bankruptcy under Chapter 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Pennsylvania. In August 1983, Interstate opened two bank accounts with appellee Girard Bank (subsequently rechartered as Mellon Bank (East) National Association) (the "Bank"). By order of the Bankruptcy Court dated September 7, 1983, the automatic stay imposed by Section 362 of the Bankruptcy Code was lifted as to Triffin. The Bankruptcy Court's order permitted Triffin to "enforce any security interest in the debtor's property which he may have under state law."
In accordance with the order of the Bankruptcy Court, and in compliance with the confession of judgment rules, Pa.R.C.P. No. 2950 et seq., Triffin filed a complaint in confession of judgment in the amount of $72,000 in the Philadelphia Court of Common Pleas at September Term 1983, No. 2874 and caused judgment to be entered against Interstate. Interstate did not object and has never objected to the entry of the confessed judgment.
On September 19, 1983, seeking to execute his judgment by attaching Interstate's accounts at the Bank, Triffin filed a praecipe for a writ of execution and served the writ along with interrogatories in ...