Benedict & Eberle Co. v. Hollman

Opinion by

Head, J.,

The single question for our determination is, should the attaching creditor have judgment against the garnishee on the answers filed. The process of attachment execution is familiar. We suppose we may assume that “in order to sustain an attachment execution, there must be a debt due from the garnishee to the defendant in the judgment which may be payable at the time of the service of the writ or may become payable subsequently.” We quote from Lane’s App., 105 Pa. 49. It would follow the right of an attaching creditor can rise no higher than that of his debtor. What the latter could not sue for and recover from the garnishee is beyond the grasp of an attaching creditor. Let us look then to the origin of the fund in the possession of the garnishee and the essential nature of the obligation or duty that lies at the base of that possession.

Prior to October 15, 1913, one Hollman was conducting a wholesale liquor dealer’s business under a license from the Court of Quarter Sessions of Allegheny County. On. the date named he entered into a written agreement for the sale of his lease, personal property and fixtures, good will, etc., of his business to one Gerlowsky for the sum of $9,000. The parties to this agreement were sui juris and in every way competent to contract. There was nothing illegal, immoral or against public policy in what they undertook to do. The sale contracted for, however, was a sale upon a condition subsequent. The happening or nonhappening of the vital condition depended on the exercise of a power which neither of the contracting parties could control. If the Court of Quarter Sessions of Allegheny County would see fit, in the exercise of its discretionary power, to transfer the wholesale license from the seller to the purchaser, then the sale provided for in the contract would no longer be conditional but absolute and both parties would be bound by the terms of their agreement. Thus far nothing appears to in any way invalidate it.

It was apparent, however, the sale contemplated was within the class of sales regulated by the Act of March 28, 1905, P. L. 62, commonly known as the “Bulk Sales Act.” Were it not for the provisions of that statute, the parties to the contract could have, inter sese, carried it into complete execution. But because of that act the purchaser needed some protection in order to be assured that what he had bought and paid for might not be thereafter seized by some of the creditors of the seller. That situation resulted in the insertion into the contract of purchase and sale of the following clause: “The payment of the above mentioned sums shall be made in escrow to the firm of Prestley & Nesbit, Attorneys-at-Law, 902 Frick Building, Pittsburgh, Pa., who shall retain the same until said transfer of license shall be granted or refused, at which time, if said license be granted, they shall apply said sums to the amounts appearing to be owing by said Charles S. Hollinan to his creditors and turn the balance, if any, over to him. In case, however, said transfer of said license should be refused, then and in that case Prestley & Nesbit shall return to Michael Gerlowsky the balance of said money after deducting costs and attorney’s fees as aforesaid.” Notice of the proposed sale and of the application for the transfer of the license was duly given to the creditors of Hollman as required by the Bulk Sales Act. Of course it was desirable they should make no objections in the Court of Quarter Sessions to the proposed license transfer. Such courts, with great propriety, scrutinize with some care, applications for the transfer of a license under such conditions in order to be reasonably assured the transfer is not to be made an instrument to defraud the creditors of the existing licensee. In the case at bar the creditors of Hollman apparently concluded their debtor, with a fund of $9,000, appropriated by the agreement that created it, would be at least as well able to pay what he owed as if he continued in the possession of the property and business he then had. No objection therefore was made by any one. The license was transferred and the whole of the purchase-money was paid into the hands of the trustee named in the agreement we have quoted.

Would it have been legally possible for Hollman, the judgment debtor in the present case, to have thereupon maintained an action against the trustees in the possession of the fund for the recovery of the money? It seems clear to us such an action could not have been successfully prosecuted. The agreement had so far been executed that it was beyond his power to revoke it. The interests of other persons had intervened and there was, as we view it, a valuable consideration furnished by the creditors of which the trustees named were bound to take notice. This was the situation when the appellant company, a creditor, issued its writ of attachment execution. We agree with the learned judge below that the fund in the hands of the garnishee was immune from the grasp of the attaching creditor. The garnishee had accepted the trust created in the agreement referred to and was bound to distribute the fund in accordance with the conditions of the instrument that created it unless some paramount authority intervened. The valuable rights of others had vested and could not be disturbed or overthrown by the act of an attaching creditor.

On its face the agreement to which we have referred was not, as we view it, either a voluntary assignment for the benefit of creditors or an act of bankruptcy. Whether it was either or both would necessarily depend upon the ascertainment of facts altogether outside of the scope and terms of the agreement. But we do not regard the determination of any such questions as material to the disposition of the single problem here presented. We are satisfied the fund in the hands of the garnishee was beyond the reach of the attaching creditor and that, as a consequence, the conclusion reached by the learned court below was correct.

Judgment affirmed.