In re Zurn

SCHOONMAKER, District Judge. This certificate of review presents the question of the validity of a landlord’s claim for priority in • distributipn of the sale-price realized on sale of bankrupt’s personal property, which had been located on premises rented by bankrupt from the landlord Baldwin, who claims a first lien on the sale-price by virtue of an alleged prior levy on a landlord’s distress warrant. Bankrupt’s personal property, which had been on the premises rented by Baldwin to the bankrupt, came into the possession of the trustee, and was sold by the trustee at public sale for $276. This sum was distributed by an order of the referee made on September 24, 1938, which awarded the total sale-price to costs, expenses, and prior claims. No part of the sale-price was awarded to the landlord Baldwin. The facts are briefly these. Bankrupt conducted a beverage business at 212 E. 12th Street, Erie, Pa., which premises he rented from Baldwin on written lease dated January 13, 1937. On March 5, 1938, bankrupt prepared and signed his petition and schedules in bankruptcy; but the papers were not actually filed in this court until March 21, 1938. On March 5, 1938,. he closed his business, and locked the premises at 212 E. 12th' Street, Erie. On March 14, 1938, Baldwin issued a landlord’s warrant directed to Thomas Clapper, a constable in Erie, directing him to distrain the goods and chattels on the premises and sell the same. On that date the constable went to the premises, found the front door open, and one James Baldwin, an employee or associate of the landlord Baldwin, on the premises. The constable then made his levy on the goods, and directed Baldwin to remove them to the basement of a 12th Street market where the constable later saw the goods and sold a part of them, i. e., the empty beer cases, to Baldwin for $14. When the trustee was appointed, he took possession of the property of the bankrupt at the basement of the 12th Street market, and sold it at public sale, realizing the sum of $276 covered by the referee’s distribution order here being reviewed. The landlord Baldwin, on April 6, 1938, filed a rent claim with the referee for $235, claiming a preference. The referee found that the distress made by the landlord Baldwin was illegal and invalid under the authority of Ewald v. Fidelity Title & Trust Company, 43 Pa.Super. 593, which holds that where a landlord and his agent pick a lock of an outer door of the demised premises for the purpose of distraining the tenant’s goods, they commit an illegal act; and the distress thus made is contrary to law and is invalid. That is the precise situation found by the referee to exist in the instant case. The bankrupt locked the door of the premises on March 5, 1938, with a yale lock. This lock was changed and a padlock put on the door. The constable found James Baldwin, -an associate or employee of the landlord, in possession of the premises on March 14th. Neither the landlord nor James Baldwin took the witness-stand to explain the manner - of entry. The conclusion is irresistible that, the landlord made an illegal entry into the premises. No notice of the distress was given the bankrupt. As Baldwin had no valid lien on the goods of the bankrupt at the time bankruptcy intervened, his claim for priority over costs of administration was properly disallowed. See In Re Philbin, D.C., 53 F.2d 218. [831] PER CURIAM. It is hereby ordered that the order of distribution made by the referee on September 24, 1938, be, and the same is, hereby approved and confirmed.