In re Bristol Associates, Inc., No. 72-276.
| Citation | 369 F. Supp. 1 |
| Decision Date | 20 December 1973 |
| Docket Number | No. 72-276. |
| Parties | In the Matter of BRISTOL ASSOCIATES, INC., Debtor. |
| Court | United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania) |
Lewis H. Gold, Philadelphia, Pa., for receiver of Bristol.
Howard T. Glassman, Philadelphia, Pa., for Girard Trust Bank.
Presently before the Court is a petition for review of the decision and Order of the Honorable Thomas J. Curtin, Bankruptcy Judge. Girard Bank originally filed a reclamation petition with the Bankruptcy Court seeking to recover from the Receiver the amounts paid monthly by the Commonwealth of Pennsylvania to the Receiver for the rental of a state liquor store which occupies premises leased from the debtor, Bristol Associates, Inc. The basis of Girard's claim is that the lease between the debtor and the Commonwealth of Pennsylvania was assigned to Girard as security for a loan to the debtor. The Receiver opposed Girard's petition on the ground that the assignment of the lease and the rentals thereunder created a security interest in personal property and that Girard failed to file a financing statement to perfect its security interest, thus making Girard's claim invalid as against the Receiver.
The Receiver also filed a counterclaim to recover the sum of $750 from Girard. This amount, representing one month's rent received from the state liquor store, was paid by the Receiver to Girard subsequent to the filing of the Chapter XI petition. The Receiver alleges that in the absence of a perfected security interest, Girard must be considered as a general, unsecured creditor and not entitled to receive this payment.
The Bankruptcy Court denied Girard's reclamation petition and ordered the petitioner to return to the Receiver the $750 which had previously been paid under the Receiver's mistaken assumption that Girard's security interest in the lease had been perfected.
The parties have filed a stipulation which sets forth the relevant facts. In January, 1971, the debtor delivered to Girard its promissory note in the amount of $185,000. This note provides that as security for the payment of the obligation the debtor pledges with Girard "the Commonwealth's Pennsylvania Liquor Control Board lease for State Store # 9112 — 10 yrs."
By agreement dated January 28, 1971, the debtor did "assign, transfer and set over unto Girard Trust Bank all of its right, title and interest, in and under an agreement of lease dated September 29, 1969" between the debtor and the Commonwealth of Pennsylvania. The agreement further provides that none of the duties under the lease are assigned to Girard, and Girard does not assume any duties under the lease. The agreement does, however, specifically provide that "it secures the undertakings" of the debtor to Girard, and that the assignment shall be null and void at such time as the principal and interest on the note, and all other charges due the bank, have been paid in full.
Girard Bank did not file a financing statement or any other document with any recording officer in the Commonwealth of Pennsylvania setting forth its interest in the lease agreement between the debtor and the Commonwealth of Pennsylvania or the rentals due thereunder. The bank contends that the assigning of the lease, and the rents thereunder, is not included within the coverage of Article 9 of the Uniform Commercial Code; hence, there was no necessity to file a financing statement to perfect its interest in the lease.
The issue presented for this Court's determination is whether assignment of a lease, and the rentals due thereunder, for the purpose of securing the payment of a promissory note creates a security interest in personal property within the meaning of Article 9 of the Uniform Commercial Code.
Article 9-102(1) provides that, with certain exceptions enumerated in Article 9-104, Article 9 applies to any transaction which is intended to create a security interest in personal property or fixtures. "Security interest" is defined in Article 1-201(37) as an interest in...
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AMERICAN TRAIN. SERV., INC. v. Veterans Administration
...interest, since it does not extinguish the original debt but merely secures faithful performance, relying on In re Bristol Associates, Inc., 369 F.Supp. 1 (E.D.Pa. 1973), rev'd on other grounds 505 F.2d 1056 (3d Cir. 1974), and In re Joseph Kanner Hat Co., Inc., 482 F.2d 937, 940-941 (2d Ci......
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Bristol Associates, Inc., In re, 74-1178
...the lease that had been assigned. The Bankruptcy Court denied the petition, and the denial was affirmed by the district court. 369 F.Supp. 1 (E.D.Pa. 1973). Under section 70(c) of the Bankruptcy Act, 11 U.S.C. 110, and section 9-301(3) of the Code, the Receiver assumes the rights of a lien ......