Opinion
December 11, 1967.
March 21, 1968.
Practice — Foreign attachment — Pa. R.C.P. No. 1269(b) — Petition to release attached property — Tenancy by entireties — Severance — Proceeds of sale — Stipulation — Property in escrow bound during pendency of action — Disposition of property after judgment.
1. In view of Pa. R.C.P. No. 1269(b), where a defendant in foreign attachment is personally served and a general appearance is entered on his behalf, the quashing of the writ of foreign attachment would have no effect upon the pendency of the action itself, which would continue to judgment.
2. Defendant and his wife owned real estate as tenants by the entireties. The property was under agreement of sale to third persons. Plaintiff brought an action in foreign attachment against defendant husband, alleging certain conversions. The writ was served upon defendant and his wife and the purchasers at a time when they were together to make settlement.
In order to complete settlement, counsel for plaintiff and defendant entered into a stipulation which provided, in part, that the proceeds of sale of the property should be held in a savings account, in the names of counsel for plaintiff and counsel for defendant, "subject to the Order of Court, to be distributed upon termination of this action in accordance with the Judgment of the Court". The stipulation was filed of record, and approved by the court below. On the same date, plaintiff filed his complaint, and counsel for defendant entered his appearance for defendant.
Defendant filed a "petition for release of attached property", which petition was dismissed by the court below. Defendant appealed.
It was Held that the court below properly decided that the property in escrow should remain subject to the attachment.
It was Held that the force of the stipulation bound the property in escrow, regardless of the validity of the attachment itself.
3. It was Held that neither the pleadings nor the record required a finding as to the status of the fund in escrow at this time, and that there was not sufficient evidence in the record to establish such status.
Before WATKINS, MONTGOMERY, JACOBS, HOFFMAN, and SPAULDING, JJ. (ERVIN, P.J., and WRIGHT, J., absent).
Appeal, No. 592, Oct. T., 1967, from order of Court of Common Pleas of Montgomery County, No. 66-12436, in case of J. Russell Brode, Inc. v. Richard Van Emburg. Order affirmed.
Proceeding upon petition of defendant to release property from writ of foreign attachment.
Order entered dismissing petition, opinion by SMILLIE, J. Defendant appealed.
J. Willard Schoelkopf, for appellant.
Stanford S. Hunn, with him Pearlstine, Salkin, Hardiman, Robinson Hunn, for appellee.
MONTGOMERY, J., filed a dissenting opinion.
Argued December 11, 1967.
Plaintiff, J. Russell Brode, Inc., brought this action in foreign attachment against its former employee, Richard Van Emburg. Its complaint alleged that Van Emburg overdrew his commissions in 1964, 1965 and 1966, caused personal insurance to be placed in his own behalf at plaintiff's expense, and fraudulently withdrew cash from plaintiff's cash drawer. Defendant left the employ of plaintiff and moved to New Jersey in 1966.
Defendant and his wife owned real estate in Montgomery County, Pennsylvania, as tenants by the entireties. This property was under agreement of sale to Robert K. and Dorothy E. Greaser. On October 11, 1966, the Van Emburgs and the Greasers gathered at the Red Hill Savings and Loan Association to make settlement. Also present, among others, was J. Willard Schoelkopf, attorney for the Van Emburgs. At that time, a deputy sheriff of Montgomery County, accompanied by Stanford S. Hunn, attorney for plaintiff, served the instant writs of foreign attachment on all those present.
In order to complete settlement, counsel for plaintiff and defendant entered into a stipulation which provided, in part:
"And now, this 11th day of October, 1966, it is stipulated and agreed by and between Stanford S. Hunn, Attorney for Plaintiff, and J. Willard Schoelkopf, Attorney for Defendant, as follows: . . .
"2. Proceeds of sale of Magazine Road, Sumneytown, Pennsylvania, premises shall be held in a savings account in Red Hill Savings and Loan Association entitled `Stanford S. Hunn and J. Willard Schoelkopf subject to the Order of Court', to be distributed upon termination of this action in accordance with the Judgment of the Court."
This stipulation was filed of record on October 14, 1966, and approved by the Honorable FREDERICK B. SMILLIE. On that same date, plaintiff filed his complaint and J. Willard Schoelkopf, Esquire, filed a warrant of attorney and entered his appearance on defendant's behalf.
On November 2, 1966, defendant filed a "petition for release of attached property." On May 4, 1967, this petition was dismissed by Judge SMILLIE.
Defendant appealed to our Court under the Act of April 26, 1917, P.L. 102, § 1, 12 Pa.C.S.A. § 1108. Plaintiff moved to quash the appeal as interlocutory. We ordered that the argument on the motion to quash be heard together with the appeal on the merits.
The above-cited act provides: "In all cases now pending, or which may hereafter be brought, where a writ of foreign attachment has been or shall be dissolved or quashed, or the court has refused or shall refuse to dissolve or quash the same, the party against whom such order is or has been made, or whose interest is affected thereby, may appeal to the Supreme or to the Superior Court, as in other cases. In the case of a refusal to dissolve or quash, the right to appeal shall be immediate, without waiting for the final judgment in the case."
By virtue of this statute, an immediate right of appeal is granted from an order refusing to quash a writ of foreign attachment, even though the order appealed from is interlocutory.
Defendant contends that his petition to release attached property is equivalent to a motion to quash a writ of foreign attachment. Plaintiff contends, however, that the petition merely seeks to quash the attachment rather than the writ — a distinction which has been suggested in Bergman v. Straus, 264 Pa. 439, 107 A. 810 (1919). See also 9 Standard Pa. Practice, Ch. 38, § 59 at p. 56 (1962).
After noting this distinction, however, the Supreme Court in Bergman concluded that, "It is not necessary, however, to pursue this matter further, for the same result would be reached if both matters were now reviewable." Similarly in our case, as the lower court correctly recognized, assuming that defendant's motion does grant him the right to appeal, there is no basis upon which to release the attached property.
Preliminarily, note should be taken of Pa. R.C.P. No. 1269(b), which provides: "If the defendant is served with the writ or complaint, appears or files a bond or security, the action continues as if commenced by personal service of a summons or complaint."
Here, the sheriff served the writ personally on defendant, and defendant's attorney filed his warrant of attorney and entered a general appearance. Accordingly, the quashing of the writ of foreign attachment would have no effect upon the pendency of the action itself which would continue to judgment, jurisdiction over the person of the defendant having been acquired by service and the general appearance of defendant's attorney. The single question for us to determine is whether the property in escrow should be released immediately.
The lower court concluded that this property should remain subject to the attachment. The court, in the pertinent portion of its opinion, stated as follows: "Defendant maintains that the property included in part two of the Stipulation belongs to him and his wife as tenants by the entireties, and as such is not subject to attachment in a suit against one spouse. That statement is correct but the fact is that defendant and his wife, through their attorney voluntarily entered into the Stipulation and severed the tenancy. Defendant and his wife, through their common attorney, and in order to facilitate a real estate settlement severed their tenancy by the entireties. They agreed that the proceeds of the sale be held in escrow until there is a judicial determination of the husband's liability to his former employer by reason of his conversions. In Pennsylvania, it is axiomatic and needs no citation of authority that a tenancy by the entireties can be severed by agreement of the tenants. Both the husband and wife benefited from the Stipulation because it released funds which they needed. . . ."
The lower court stated in its opinion that defendant's attorney declared that he represented both defendant and his wife in entering into the stipulation. Defendant does not, on appeal, suggest otherwise. (footnote ours)
We agree with the lower court that the property should not be released at this time. Our conclusion, however, is based on the simple fact that the parties entered into a stipulation under which the funds were to be held in escrow, "to be distributed upon termination of this action in accordance with the Judgment of the Court." They then submitted this stipulation to the lower court for its approval. It is clear to us that the force of this stipulation binds the property in escrow, regardless of the validity of the attachment itself.
We do not consider the further conclusions of the lower court relating to an implied severance of the tenancy. The stipulation is certainly unclear as to the disposition of these funds if and when judgment against the defendant is obtained. Certainly, question could be raised as to whether the intent of the parties was that plaintiff should obtain all of the escrow money or only one-half of the escrow money after judgment. In our view, neither the pleadings nor the record requires a finding as to the status of the funds in escrow at this time, nor is there sufficient evidence in the record to establish such status. Any implication to the contrary in the opinion of the lower court should be ignored at this time and should be the subject for consideration only if judgment is obtained against defendant.
In summary, personal jurisdiction over the defendant was acquired by reason of personal service and the general appearance of his attorney. Consequently, even if the property was not attachable, its release would not terminate this action. The defendant and his wife, in effect, waived their right to question the propriety of the attachment by entering into a stipulation, subsequently approved by the court, providing that their funds be held in escrow " to be distributed upon termination of this action in accordance with the Judgment of the Court." On this basis, the court acted correctly in dismissing the petition to release the property from the attachment at this time.
Order affirmed.
I would quash this appeal as interlocutory.
By the writ of foreign attachment plaintiff-appellee attached in the hands of Robert K. Greaser and wife et al., money allegedly belonging to the appellant-defendant. Part of the property attached consisted of the proceeds due from Mr. and Mrs. Greaser to the appellant and his wife under an agreement for the sale of real estate by the Van Emburgs to the Greasers. Other proceeds from this sale also attached were in the hands of J. Russell Brode, an escrow agent of the parties. In addition, other property unrelated to the aforesaid sale was attached in the hands of Harry Blank and Paul W. Barndt as that of appellant.
Following service of the writ Mr. and Mrs. Greaser and Mr. and Mrs. Van Emburg, acting through their legal counsel, stipulated in writing that the attachment of Mr. and Mrs. Greaser and Mr. Brode be vacated and that the funds in their hands "be held in a savings account in Red Hill Savings and Loan Association entitled `Stanford S. Hunn and J. Willard Schoelkopf subject to Order of Court', to be distributed upon termination of this action in accordance with the Judgment of the Court"; and further, that the attachment of the other property in the hands of Blank and Barndt continue. This stipulation was approved by the court.
In my opinion the effect of this stipulation was to dissolve the attachment in which Mr. and Mrs. Greaser and Mr. Brode were garnishees but to preserve the writ and the attachment in which Blank and Barndt were garnishees. Thus, when subsequently Mr. Greaser petitioned for the release of the proceeds of the sale he was seeking a release of the property being held in escrow under the stipulation and not under the attachment.
However, said petition also seeks release of the real property and some income therefrom in the hands of Blank and Barndt which remained subject to the attachment. The aforesaid stipulation did not affect this attachment other than to authorize the garnishees to apply the money coming into their hands for the preservation of the property, i.e., payment of mortgage and other expenses in connection therewith. Although it is petitioner's contention that said property is not a proper subject of attachment for his debt, reciting that Harry Blank and his wife are owners of an undivided one-half interest in the same real estate in the Bechtelsville Borough, Berks County, Pennsylvania, in which appellant and his wife are the owners by the entirety estate of the other undivided half interest, Paul W. Barndt being the agent of the several parties in the collection of rents, etc., the petitioner does not ask that the attachment be dissolved or the writ quashed.
It would appear that appellant has utilized a petition to secure the release of attached property rather than follow the procedure provided by R.C.P. 1271. I find no authority for such a petition and would not consider it as either a motion to dissolve the attachment or to quash the writ.
"The defense of immunity or exemption of property from attachment and the defense that no property of the defendant was in the possession of the garnishee at the time of service of the attachment, may be raised by the defendant without thereby subjecting himself to the jurisdiction of the court
(1) by preliminary objection under Rule 1017(b)(1), or
(2) by a petition to open judgment, filed at any time before the garnishee files his answer to interrogatories."
Therefore, in my opinion, the order of the lower court in dismissing appellant's petition was not such an order refusing to dissolve an attachment or to quash the writ of foreign attachment as was made appealable under the Act of April 26, 1917, P.L. 102, § 1, 12 Pa.C.S.A. § 1108.
I respectfully dissent.