In re Zenith Air Conditioning Corp.
| Decision Date | 26 October 1950 |
| Docket Number | No. 1-10.,1-10. |
| Citation | 93 F. Supp. 604 |
| Parties | In re ZENITH AIR CONDITIONING CORP. |
| Court | U.S. District Court — Southern District of Iowa |
B. J. Powers, Des Moines, Iowa, for claimant Des Moines Bank & Trust Co.
Robert E. Dreher, of Brunk & Janss, Des Moines, Iowa, for trustee.
Des Moines Bank & Trust Company, holder of a chattel mortgage against a portable ice manufacturing machine, executed by the bankrupt, filed an application herein on Aug. 25, 1950, for an order to require the Trustee to turn over to it certain equipment and items, to wit: 35 ice cans, each 300 pound capacity; 35 aerator tubes; 1 thawing needle; 1 chain fall or hoist; 1 deironizer; which it claims were integral parts of the said ice manufacturing machine covered by its mortgage. The Trustee answered by alleging that the bankrupt had accepted possession of one five-ton Zenith ice manufacturing machine No. 2001, that the bank's chattel mortgage does not specifically identify the items of personal property now claimed, nor is there any language in the said mortgage which would indicate to any purchaser or to the Trustee that a lien did exist upon this specific personal property. Further, the Trustee asserts that the bank having failed to offer evidence concerning its claim to the items above mentioned in a former hearing to test the validity of the mortgage as it related to machine No. 2001, is res adjudicata of the present issue and a waiver of its rights now to claim additional items than those which were contested in the former hearing.
The material facts in this controversy are:
On Aug. 3, 1949, the Des Moines Bank & Trust Company loaned the bankrupt $10,000, and the bank obtained therefor the promissory note and chattel mortgage of the bankrupt in said amount. The chattel mortgage described the security for the loan as follows: "A manufacturing machine No. 2001, known as 5 ton model, 25' Long 8' 6" Wide, 6' 6" High. Capacity 5 tons, Standard 300 lb. Ice Cakes. Freon refrigerant. 10 H.P. Water Cooled Compressor, Automatic Controls, approximate shipping weight — 12 tons. Retail Price, $12,730.00, and known as Zenith Movable Ice Plant Machine, now located and situated in Des Moines 65 West University Ave., In the County of Polk, State of Iowa", which mortgage was duly filed for record.
On Nov. 4, 1949, an adjudication of bankruptcy was entered herein.
On Dec. 24, 1949, the Trustee filed a petition, which was later amended, for a show cause order against the Des Moines Bank & Trust Company, seeking to require it to show why the said chattel mortgage should not be declared null and void on the ground that as the construction of the ice manufacturing machine No. 2001 had barely commenced on Aug. 3, 1949, the security for the loan was not then in existence and could not be specifically identified.
This application was heard by Referee George A. Heisey of Minneapolis, Minn., assigned to this District. He found that the construction of machine No. 2001 was completed before the adjudication in bankruptcy and therefore under the Iowa law the bank's chattel mortgage lien had attached to the said machine and was perfected to the point where it was valid against the Trustee. He further held that Section 70(c) of the Bankruptcy Act did not in any way affect this situation as the lien had inured to the bank prior to any rights of the Trustee therein. No question was raised at that hearing as to what were the includible items in Machine No. 2001 to which the lien attached.
After the ruling by Referee Heisey the Trustee relinquished possession of the basic machine No. 2001 to the bank but declined to relinquish those items and equipment set out in the first paragraph of this memorandum and insists that it is now too late for the bank to make claim to them, and further that ...
To continue reading
Request your trial