In re Bavitz, Bankruptcy No. 5-81-00220

• Decision Date: 29 June 1982
• Docket Number: Adv. No. 5-81-0390.,Bankruptcy No. 5-81-00220
• Citation: 27 BR 189
• Parties: In re Henry BAVITZ and Viola Bavitz, i/t/a Bavitz Colonial Lanes a/k/a Bavitz Bowling Lanes, Debtors. AMF, INCORPORATED, Plaintiff, v. Henry Adam BAVITZ and Viola Bavitz, i/t/a Bavitz Colonial Lanes a/k/a Bavitz Bowling Lanes and John J. Thomas, Trustee and Bernard Stesney and Helen Stesney i/t/a Colonial Lanes, Defendants.
• Court: U.S. Bankruptcy Court — Middle District of Pennsylvania

27 B.R. 189 (1982)

In re Henry BAVITZ and Viola Bavitz, i/t/a Bavitz Colonial Lanes a/k/a Bavitz Bowling Lanes, Debtors AMF, INCORPORATED, Plaintiff, v. Henry Adam BAVITZ and Viola Bavitz, i/t/a Bavitz Colonial Lanes a/k/a Bavitz Bowling Lanes and John J. Thomas, Trustee and Bernard Stesney and Helen Stesney i/t/a Colonial Lanes, Defendants.

Bankruptcy No. 5-81-00220, Adv. No. 5-81-0390.

United States Bankruptcy Court, M.D. Pennsylvania.

June 29, 1982.

Robert N. Opel, II and Ronald V. Santora, Wilkes-Barre, Pa., for plaintiff.

Gifford R. Cappellini, Wilkes-Barre, Pa., for debtor.

John J. Thomas, Wilkes-Barre, Pa., Trustee.

John H. Doran, Wilkes-Barre, Pa., for Stesney.

OPINION AND ORDER

THOMAS C. GIBBONS, Bankruptcy Judge:

AMF, Incorporated (AMF), commenced this adversary proceeding following the debtors' filing of a petition for relief under Chapter 7 of the Bankruptcy Code. In this action AMF seeks possession of bowling lanes and equipment which it leased to the debtors prior to the commencement of bankruptcy.

AMF leased eight bowling lanes to the debtors in 1969. The lease between AMF and the debtors provided that the lanes "shall at all times remain the sole and exclusive property of AMF . . . and Operator shall have no right, title or interest to the machines but only the right to use them under this Agreement. . . . Operator shall not transfer, deliver, sublease or encumber the machines to any other person, corporation or firm. . . ." The lanes were annexed to the debtors' place of business, a leasehold located at 438 East Main Street, Nanticoke, Pennsylvania. Prior to annexation the debtors received from the lessor of the real property a waiver of his interest in the fixtures. In August or September of 1979, the debtors removed the lanes from the East Main Street property in violation of the debtors' lease with AMF. The debtors promptly annexed the equipment to another property they subsequently leased in the Colonial Village Shopping Center, Nanticoke, Pennsylvania. The lessor of the shopping center subsequently sold the center to the Stesneys, defendants in this action. Due to the debtors' failure to pay current rentals on the bowling equipment, AMF declared the equipment lease in default and demanded the return of the lanes in November of 1980. The debtors refused to deliver the equipment notwithstanding the notice of default. Shortly after the default with AMF the debtors defaulted on the lease with the Stesneys and apparently abandoned the premises and the bowling equipment. The Stesneys have continued to use the bowling lanes since they first came into possession of them. They have not paid any rental to AMF for the use of the lanes; consequently, the Stesneys have accrued rental indebtedness on the lanes in the amount of $9,600.00. The debtors filed for relief under the Bankruptcy Code on March 20, 1981. The instant adversarial proceeding was commenced against the Stesneys, the debtors and trustee on September 11, 1981. For their failure to defend against this action, default judgment was entered against the debtors and the trustee.

The plaintiff asserts it is the owner of the bowling equipment and has paramount rights to possession of such equipment. In defense of AMF's request for relief the Stesneys contend that AMF's failure to secure a waiver of their interest in the bowling lanes gives them full ownership rights since the lanes are fixtures on the Stesneys' realty. Due to the breach of the lease between the Stesneys and the debtors, the Stesneys also contend that the bowling equipment is rightfully theirs since that lease provides that any property remaining on the premises after the termination of the lease is deemed abandoned and becomes property of the landlord. The Stesneys lastly contend that they are entitled to satisfaction of their claim for back rent against the debtors upon the sale of the bowling lanes due to Pa.Stat.Ann. tit. 39, § 96 (Purdon). The Stesneys assert that this statute gives them a priority claim over general unsecured creditors in the proceeds from a sale of the bowling equipment.

The plaintiff asserts it is the owner of the bowling equipment and is entitled to immediate possession. AMF's prima facie claim of ownership is sound. It is uncontested that the lanes were the property of AMF prior to 1969, when the lanes were leased to the debtors. The lease granting the debtors the right to use the equipment clearly indicated that AMF remained the exclusive owner of the lanes while the debtors gained nothing but the bare right of use and possession of the lanes. The lease also provided that the debtors could not unilaterally grant their rights of use and possession to another party. The Stesneys claim that the debtors were able to convey to them greater rights in the property than they possessed but, in fact, their claim to possession is subject to all the limitations that bound their predecessors in possession, the debtors. Therefore, since the debtors were not...