Pacific Firestone Escrow Co. v. Food Giant Markets, Inc.

BALTHIS, J.

This is an appeal from a judgment in an interpleader action. Action was brought by the Pacific Firestone Escrow Co. (hereinafter referred to as the “escrow company”) against numerous creditors of Lido Liquors, Inc., who had filed claims with the escrow company at different times concerning escrowed funds. These funds were the proceeds from the sale of a liquor license from Lido Liquors to defendant Food Giant Markets, Inc., and were placed in escrow pursuant to escrow instructions and the provisions of section 24074 of the Business and Professions Code. The escrow company felt that it could not safely determine the rights and priorities of the numerous creditors who had filed claims and it brought this interpleader action to obtain a judicial determination of the matter. A number of the defendants who were regularly served with process failed to appear and answer the complaint and their defaults were entered.

The trial court found that certain defendants had filed claims with the escrow company prior to August 30, 1959, and that three defendants, including the sole appellant, Carlton W. Moore, filed claims with the escrow company subsequent to August 30, 1959. The trial court determined that defendants, who filed their claims with the escrow company prior to August 30, 1959, were entitled to priority of payment as against defendants, including appellant, who filed claims subsequent to August 30, 1959.

The court used the date of August 30, 1959, to determine priorities among the creditors by virtue of the provisions of section 24074 of the Business and Professions Code which reads as follows :

“Before the filing of such a transfer application with the department, if the intended transfer of the business or license involves a purchase price or consideration, the licensee and the intended transferee shall establish an escrow with some person, corporation, or association not a party to the transfer acting as escrow holder, and the intended transferee shall deposit with the escrow holder the full amount of the purchase price or consideration. The licensee and intended transferee shall also enter into an agreement, which agreement shall be deposited with the escrow holder, directing the escrow holder,

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out of the purchase price or consideration, to pay the claims of the bona fide creditors of the licensee who file their claims with the escrow holder before the escrow holder is notified by the department of its approval of the transfer of the license or if the purchase price or consideration is not sufficient to pay the claims in full, to distribute the consideration pro rata to the creditors of the licensee. The agreement shall also provide that the escrow holder shall make the payment or distribution within a reasonable time after the completion of the transfer of the license.”