Massachusetts Mut. Life Ins. Co. v. CENTRAL-PENN NAT. BK.
| Decision Date | 30 August 1973 |
| Docket Number | Civ. A. No. 43188. |
| Citation | 362 F. Supp. 1398 |
| Parties | MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY v. CENTRAL-PENN NATIONAL BANK OF PHILADELPHIA et al. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
William J. Kennedy, Philadelphia, Pa., for Mass. Mutual.
Richard M. Shusterman, Philadelphia, Pa., for Central-Penn.
Harry A. Dower, Allentown, Pa., for Lehigh Valley.
Peter C. Paul, Philadelphia, Pa., for Mercantile Financial.
Raymond T. Cullen, Jr., Philadelphia, Pa., for Federation Bank (now Franklin Bank).
Stanley Schlesinger, Philadelphia, Pa., for Marine Midland (MacNair Assignee).
Morris M. Shuster, Philadelphia, Pa., for Mokrins.
Carl E. Esser, Philadelphia, Pa., for Pioneer Leasing.
Edward Cohen, Philadelphia, Pa., for Gordon Miller.
This is an interpleader action under 28 U.S.C. § 1335. The question before the court is whether the scope of this proceeding should be limited to a resolution of the priority of claims to a fund admitted to be due, or be expanded to resolve disputes between the interpleading plaintiff and the person to whom it admittedly owes some money concerning the contract between them which gave rise to the indebtedness. For reasons hereafter stated, I conclude that these proceedings will be restricted to a determination of the priorities to the fund with limited inquiry as to whether the interpleading party has paid the proper amount into court.
By a contract dated April 1, 1951, Gordon S. Miller became a general agent for Massachusetts Mutual Life Insurance Company (Mass. Mutual). The contract provided, inter alia, for the payment to Miller of commissions on insurance policies written during Miller's general agency, including some continuing payments of commissions on renewals at reduced rates after termination1 of the agency. While serving as a general agent for Mass. Mutual, Miller engaged in various outside financial transactions, in some of which he made assignments of amounts due him under the contract, and others of which resulted in judgments against him and subsequent attachments of the amounts due him under the contract. On July 6, 1966, Mass. Mutual terminated Miller's contract as general agent.
On July 24, 1967, because of a multiplicity of claims and attachments asserted against it by creditors holding assignments from, or judgments against, Miller, Mass. Mutual filed this complaint in interpleader, naming as defendants Central-Penn National Bank, Lehigh Valley Trust Co. (now Industrial Valley Bank), Mercantile Financial Corp., Curtiss National Bank, Federation Bank and Trust Co. (now Franklin National Bank), Marine Midland Grace Trust Co., Isadore Mokrin and Dorothy Mokrin, Pioneer Leasing Corp., Gordon S. Miller and Mrs Gordon S. Miller. With the filing of the complaint, Mass. Mutual paid into the registry of the court the sum of money which it contended was then due and owing to Miller2 ($173,845.39) as commissions under the contract, with renewal commissions computed at the reduced rates following termination of the general agency. To date (as of June 30, 1973) the accrued commissions total $612,398.89; Mass. Mutual estimates there will be another $62,000 added to this fund. The parties are agreed that if commissions were paid at the unreduced rates, the size of the fund would be increased by over $500,000.
After the complaint was filed, Curtiss National Bank withdrew its claim with prejudice. On December 9, 1968, two Florida attorneys, Guilmartin and Bartel, were permitted, by stipulation, to intervene as defendants.
The claims and attachments, and the bases therefor, are:
Central-Penn National Bank $550,000.00
Assignment, Note 4/25/63
Financing Statements 6/6/63
Franklin National Bank 62,000.00
Attachment in Massachusetts 2/7/66
(Superior Court of Suffolk County
Equity No. 85075)
Mercantile Financial Corp. 165,021.12
Judgment on guaranty agreement
in E.D.Pa. 9/22/65 (Civil Action
No. 39086)
Writ of Execution on all but wages
and salaries 1/66/66
Marine Midland Grace Trust Co. 34,357.03
Judgment on note in E.D.Pa. 6/29/66
(Civil Action No. 40569); Petition to
Reach and Apply in D.Mass. 7/15/66
(EBD No. 66-103)
Isadore and Dorothy Mokrin 221,056.03
Judgment in Pennsylvania 3/17/67
(Court of Common Pleas, Philadelphia
County, March Term 1967
No. 1002)
Attachment in Massachusetts 4/20/67
Lehigh Valley Trust Co. $100,000.00
Assignment 5/6/64
No financing statement
Admitted subordination to Central-Penn
Pioneer Leasing Corp. 27,620.02
New Jersey Judgment on lease 12/2/66
(Superior Court, Law Division, Camden
County, No. L-23323-65)
Attachment in Massachusetts 11/17/67
(District Court of Springfield, Hampden
County, No. 191365)
Guilmartin & Bartel 13,232.19
Florida judgment for fees 3/14/68 (Circuit
Court of Eleventh Judicial Circuit
for Dade County, No. 68-2416)
Florida Writ of Garnishment 4/8/68
___________
TOTAL Claims and Attachments ... $1,173,286.39
=============
By order dated July 27, 1967, the named defendants were directed to file statements of claim within 20 days of service of the complaint in interpleader, and to file answers to the statements of claim filed by the others within 20 days after service of the statements of claim. The order further provided that, upon payment of the sum of money into the registry of the court, defendants were enjoined from instituting suits or prosecuting claims or suits already instituted in other courts based upon moneys due Miller from Mass. Mutual, except as parties to the interpleader proceeding. All named defendants except the Millers (and the Florida attorneys who were permitted to intervene later) complied with the order and filed timely statements of claim.3 The Millers were granted an extension of time, allowing them until September 22, 1967, to file answers to the complaint in interpleader and to the claims. The Millers did file such answers, but at no time did either of them file a statement of claim.
Answers to the complaint in interpleader filed by several of the claimants denied that Mass. Mutual had paid into court the entire sum due Miller under the general agency contract, alleging that Mass. Mutual had improperly set off and asserted liens against commissions due Miller. On March 6, 1968, the court approved a stipulation of the parties dated October 31, 1967 (document No. 55), which provided for Mass. Mutual's discharge from liability only as to the sum ($173,845.39) paid into court, and not as to the sum ($32,817) or any other amount withheld by Mass. Mutual as an offset or lien against funds otherwise due and payable to Miller. The stipulation provided further that Mass. Mutual's entitlement to set off would be litigated after priority of the claims to the fund had been determined. On March 12, 1968 (document No. 56), the court approved a further stipulation providing for the transfer of the fund from the registry of the court to Central-Penn to hold in escrow pending determination of the validity and priority of the claims. The stipulation further provided for the periodic payment by Mass. Mutual to Central-Penn of amounts due and owing to Miller and for the discharge of Mass. Mutual from liability to the extent of the payments so made.
On September 18, 1968, the Millers filed a motion for summary judgment contending that (1) the action was improperly before an equity court, since it sought to fix the rights of judgment creditors; (2) the subject matter of the contract, namely earned commissions due Gordon Miller, was not a proper subject of interpleader; (3) commissions due and payable are exempt from attachment or assignment under Pennsylvania law; and (4) assignment of the commissions could not be made without the consent of Mrs. Miller. On June 30, 1969, Judge Kraft, before whom the motion was argued, filed an opinion and order (document No. 122) holding that the Millers were not entitled to move for summary judgment because they had failed to comply with the court's orders concerning the filing of a statement of claim. To facilitate disposition of the case however, Judge Kraft, acting pursuant to Rule 56(d), resolved certain questions of law. He ruled that wages, commissions and salaries are assignable under Pennsylvania law; that joinder of a wife in such an assignment is not necessary; that attachments made in Massachusetts by attaching creditors under Massachusetts law are valid with an exemption of $50 for wages; and that because wage attachments are valid under the law of Massachusetts, the courts of Pennsylvania will give effect to such attachments. He concluded therefore and so ordered, that:
In 1970, the case was assigned to me under the individual calendar system. A preliminary pretrial conference was held on March 26, 1970. Questions were raised concerning the extent to which Miller should be permitted to participate in the interpleader proceedings in view of the ruling concerning his failure to file a statement of claim. At the conference, Miller's counsel contended that Miller was entitled to commissions at the unreduced rates notwithstanding the termination of the contract. He contended that the provision for reduction after termination did not apply to "vested" commissions, i. e. commissions which were dependent solely on payment of premiums by the policyholder. Mass. Mutual took the position that Miller's claim flew directly in the face...
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