Berrara v. City Real Estate Co., 160.
| Decision Date | 17 April 1933 |
| Docket Number | No. 160.,160. |
| Parties | BERRARA et al. v. CITY REAL ESTATE CO. et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Zalkin & Cohen and Nicholas H. Pinto, all of New York City (Israel Akselrod, of New York City, of counsel), for appellants.
C. Elmer Spedick, of Brooklyn, N. Y., for appellees.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
The complainants, as trustees in bankruptcy of Realty Construction Corporation, filed a bill of complaint in the United States District Court for the Eastern District of New York. The first cause of action alleged that on November 20, 1930, when the Realty Construction Corporation was insolvent and had refused to pay its obligations to its creditors in due course, it executed a bond and mortgage to the defendant City Real Estate Company; that the bond was to pay the sum of $820,000, and the mortgage securing the same was upon real estate belonging to the Realty Construction Corporation; that the bond and mortgage were executed and delivered without any consideration; that the Realty Construction Corporation was adjudicated a voluntary bankrupt on January 27, 1932; that on and prior to November 20, 1930, the City Real Estate Company had reasonable cause to believe that the Realty Construction Corporation was insolvent, or its insolvency was imminent; that the lien of the mortgage was void by reason of the provisions of section 15 of the Stock Corporation Law of the state of New York and of section 70e of the Bankruptcy Act (11 USCA § 110 (e).
The second cause of action alleged that prior to November 20, 1930, the defendant Realty Construction Corporation was indebted to defendant Title Guarantee & Trust Company in the sum of $300,000, to the defendant Manufacturers' Trust Company in the sum of $95,000, to the defendant Bank of United States in the sum of $80,000, and to the Chatham Phenix National Bank & Trust Company in the sum of $95,000, which sums were past due and unsecured; that on or about November 2, 1930, Title Guarantee & Trust Company, Manufacturers' Trust Company, Bank of United States, and Chatham Phenix National Bank & Trust Company advanced to City Real Estate Company $150,000, for which they received notes made or indorsed by Realty Construction Corporation. These notes were either paid or renewed. On November 20, 1930, the Realty Construction Corporation executed and delivered to City Real Estate Company the bond and mortgage for $820,000 (already mentioned) at the request of the said banks in order to give a preference to the said banks and with the knowledge of the banks and the City Real Estate Company that Realty Construction Corporation was insolvent, or its insolvency was imminent.
The complaint prayed that the bond and mortgage be declared null and void as a fraud upon the creditors of Realty Construction Corporation, and that the defendants be ordered to account for all moneys, profits, and income collected under the mortgage.
An action was brought by the City Real Estate Company in the New York Supreme Court on January 2, 1932, to foreclose the above mortgage, and a receiver of the rents was appointed by the state court. On January 27, 1932, a voluntary petition in bankruptcy was filed and an adjudication had, and on March 8, 1932, the plaintiffs were elected trustees and thereafter qualified. The foreclosure suit proceeded to trial in the New York Supreme Court, but decision was reserved on account of the present suit which had in the meantime been brought. The trustees in bankruptcy were not made parties to the foreclosure suit.
The defendants herein moved to dismiss the bill of complaint in the District Court on the ground that that court was without jurisdiction to determine the issues involved. The motion was granted, and, from the order granting it, this appeal has been taken.
There is no attempt in this suit to interfere with the state court or...
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In re Hope
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