LAURENTIDE FINANCE CORP. OF AMER. v. Capitol Products Corp., 16773.

• Decision Date: 08 April 1968
• Docket Number: No. 16773.,16773.
• Citation: 392 F.2d 444
• Parties: LAURENTIDE FINANCE CORPORATION OF AMERICA, Appellant, v. CAPITOL PRODUCTS CORPORATION.
• Court: U.S. Court of Appeals — Third Circuit

392 F.2d 444 (1968)

LAURENTIDE FINANCE CORPORATION OF AMERICA, Appellant, v. CAPITOL PRODUCTS CORPORATION.

No. 16773.

United States Court of Appeals Third Circuit.

Argued December 21, 1967.

Decided April 8, 1968.

John B. Pearson, Bailey & Pearson, Harrisburg, Pa., for appellant.

Arthur Berman, Berman & Boswell, Harrisburg, Pa., for appellee.

Before BIGGS, McLAUGHLIN and VAN DUSEN, Circuit Judges.

OPINION OF THE COURT

BIGGS, Circuit Judge.

The appellant, Laurentide Finance Corporation of America, appeals from an order of the District Court for the Middle District of Pennsylvania dismissing the appellant's amended complaint. Jurisdiction is based on diversity of citizenship. 28 U.S.C.A. § 1332.

The salient facts are as follows. In December of 1961, John Reber Baking Corporation desired to purchase a large "tunnel" oven, a product manufactured by the defendant-appellee, Capitol Products Corporation. Reber arranged with Amacorp, a finance company, to have the latter purchase the oven from Capitol and then "lease" the oven to Reber, the "rental" payments to result eventually in Reber owning the oven outright. The basis of the dispute presented here is a guaranty agreement that Capitol signed in favor of Amacorp,¹ which provides as follows:

"To: Amacorp Industrial Leasing Co., Inc.

"In consideration for your entering into Lease G-3-1352, dated January 15, 1962, by your company, as Lessor, and John Reber Baking Corporation, as Lessee, a copy of said Lease being attached hereto and made a part hereof, the undersigned, Capitol Products Corporation, hereby guarantees the payment by Lessee of the monthly rentals, in accordance with the terms of said Lease, and, in event of such default by Lessee, agrees to pay, but only to the maximum extent of, an amount equal to the unamortized invoice value of equipment of our manufacture included in said Lease based on our contract price of $143,838.00 to John Reber Baking Corporation.

"This obligation upon the undersigned company will be assumed upon demand, except that it is agreed:

"1. After written notice to the undersigned given immediately after the default, the undersigned shall have the right to notify you that it desires a grace period of one hundred eighty days or six months after such written notice of default during which time the undersigned shall have the right to cure the default and if during said period of time the default is cured, by whomever, then you shall not have the right to accelerate the outstanding unpaid balance but the contract shall continue as theretofore; and

"2. All equipment included in said master Lease will be treated by you as a unit and preserved intact during said grace period with respect to its repossession, distribution, sale or lease to others in the event of default by John Reber Baking Corporation, to allow the undersigned and the guarantors of the other equipment included in said master Lease to locate and secure a suitable purchaser or lessee acceptable to you without removal of any equipment from the described location.

"The `unamortized invoice value\' shall mean the contract price of $143,838.00 reduced by an amount equal to 1/65 thereof for each month\'s rental paid by or on behalf of John Reber Baking Corporation to Amacorp Industrial Leasing Co., Inc., the Lessor.

"Notwithstanding anything to the contrary herein stated, if any, there shall be no obligation on the undersigned unless and until your company delivers to the undersigned f. o. b. the plant of John Reber Baking Corporation, free and clear of all taxes, liens and encumbrances, in as good condition as when sold, ordinary wear and tear alone excepted, all of the said equipment of our manufacture originally sold to you and described on Schedule A attached hereto.

"The liability of the undersigned hereunder shall not be modified in any manner whatsoever by any extension that may be granted to Lessee by any court in any proceedings under the bankruptcy act, or any amendments thereto, or to any state or other federal statutes, the undersigned expressly waiving the benefits of any such extension.

"The undersigned hereby waives notice of the acceptance of this guaranty. By the acceptance of this Guaranty Agreement Lessor agrees that it will not without the consent of the undersigned compound, compromise and/or adjust its claims against Lessee or grant extension or any other indulgences to Lessee.

"This Agreement shall terminate with the initial term of said Lease.

"In Witness Whereof, the undersigned has executed this Guaranty Agreement this 15th day of December, 1961.

"Capitol Products Corporation "By L. C. Milliken "President.

"Accepted this 29 day of January, 1962

"Amacorp Industrial Leasing Co., Inc.

"By G. M. Andersen,

"President."

On January 15, 1962, Reber executed the lease and paid the first and last four installments of rent. It also paid the eleven installments due during the balance of 1962 and a portion of the rent due January 15, 1963. However, on January 22, 1963, Reber filed in the United States District Court for the Southern District of New York a petition for an arrangement with its creditors under Chapter XI of the Bankruptcy Act, 11 U.S.C. § 701 et...