WARNER COMPANY v. BRANN & STUART COMPANY

• Decision Date: 23 October 1961
• Docket Number: Civ. A. No. 27570.
• Citation: 198 F. Supp. 634
• Parties: WARNER COMPANY, Plaintiff, v. BRANN & STUART COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

198 F. Supp. 634

WARNER COMPANY, Plaintiff, v. BRANN & STUART COMPANY, Defendant.

Civ. A. No. 27570.

United States District Court E. D. Pennsylvania.

October 23, 1961.

Schnader, Harrison, Segal & Lewis, W. Bradley Ward, Arlin M. Adams, Tom P. Monteverde, Philadelphia, Pa., for plaintiff.

William F. Scheid, Jr., Philadelphia, Pa., for defendant.

KRAFT, District Judge.

This case is before us on plaintiff's motions to quash a writ of foreign attachment, and to dismiss the third count of the counterclaim, or, in the alternative, to require the posting of a bond in connection therewith.

The nature of the controversy and the issues raised by the pleadings will be noticed at the appropriate place. We merely point out here that defendant filed an answer to the complaint, which was later amended to add a counterclaim. Plaintiff filed a reply.

On April 18, 1961, defendant issued a writ of foreign attachment ancillary to its counterclaim and attached balances in several of plaintiff's bank accounts. Thereafter, we dissolved the attachment on plaintiff's posting a bond in a substantial amount.

Plaintiff's motion to quash is grounded on the contention that, under the Pennsylvania Rules of Civil Procedure, 12 P.S. Appendix, foreign attachment is not available at any stage of the proceedings on a defendant's counterclaim.

We think plaintiff's contention is sound. Under F.R.Civ.P. 64, 28 U.S.C., foreign attachment, inter alia, is "available under the circumstances and in the manner provided by the law of the state in which the district court is held, existing at the time the remedy is sought."

The Pennsylvania Rules of Civil Procedure governing foreign attachment— Rules 1251 to 1279—do not authorize the issuance of foreign attachment at the instance of a defendant. Moreover, in the Commentary under Rule 1252, Goodrich-Amram states (2 Standard Pennsylvania Practice, Procedural Rules Service, pp. 20-21):

"The Rules continue the prior practice, which limited the right to proceed by way of attachment to the plaintiff. A defendant asserting a counterclaim may not attach property of the plaintiff."

The reason for the distinction is explained in a footnote:

"17 Since, historically, attachment was a form of process designed to compel the appearance of the defendant it would obviously be a plaintiff's remedy. See § 1251-2, supra. The change in nature of the writ by the addition of a secondary purpose, to obtain a fund for the satisfaction of a judgment, would provide some basis for extending it to the defendant. This secondary purpose alone, however, is insufficient to justify the grant of a special right to anticipate a judgment on counterclaim by attachment of property before the merits of the cause of action have been litigated."

Under the Pennsylvania statutes, foreign attachment is exclusively a plaintiff's remedy. The rule of strict construction obtains, as pointed out in the very recent case of Alpers v. New Jersey Bell Telephone Co., 1961, 403 Pa. 626, 628, 170 A.2d 360, 361:

"Foreign attachment—an extraordinary remedy—is a creature of statute and the statutory provisions which are subject to strict construction, furnish the sole source for the authority of a court to issue the writ: See: Kohl v. Lyons et al., 125 Pa.Super. 347, 349, 350, 189 A. 498."

Accordingly, plaintiff's motion to quash will be granted.

Defendant contends that, since plaintiff has replied on the merits to the counterclaim, plaintiff's motion to dismiss the third count thereof came too late. We shall treat the motion as one for judgment on the pleadings and rule accordingly. Gaynor v. Metals Reserve Co., 8 Cir., 1948, 166 F.2d 1011; Cal-Therm Industries v. Dun & Bradstreet, D.C.S.D.N.Y.1948, 75 F.Supp. 541.

The complaint, in the first count, avers, inter alia, that on January 29, 1959, plaintiff, Warner Company ("Warner"), and defendant, Brann & Stuart Company ("Brann & Stuart"), entered into an agreement providing for the purchase by Warner from Brann & Stuart of 438,500 shares of capital stock of Atlantic Prestressed Concrete Company ("Atlantic"); that in paragraph 6 of the agreement, Brann & Stuart warranted and covenanted that financial statements of Atlantic prepared by certified public accountants as of December 31, 1958, were true and correct as of that date; that in reliance upon said warranty, Warner purchased the said shares of stock from Brann & Stuart; that said financial statements were not true and correct as of December 31, 1958, and, consequently, Brann & Stuart has breached said warranty; that by reason of said breach of warranty, Warner has been damaged in the amount of $550,000. It is unnecessary here to consider other counts in the complaint.

Defendant's answers to this claim are not material for present purposes.

The counterclaim, in the first count, avers, inter alia, that on January 29, 1959, Warner and Brann & Stuart entered into an agreement to transfer to Warner 438,500 shares of the capital stock of Atlantic owned by Brann & Stuart in exchange for the transfer by Warner to Brann & Stuart of 30,000 shares of Warner common stock "and an additional 10,000 shares of Warner common stock to be delivered if the net earnings of Atlantic exceeded $200,000, at the rate of 25 shares for each $1,000 of earnings over $200,000 during each year of the...