Hertzberg v. Associates Discount Corporation, 13799.
| Decision Date | 01 December 1959 |
| Docket Number | No. 13799.,13799. |
| Citation | 272 F.2d 6 |
| Parties | Stuart E. HERTZBERG, Trustee, Appellant, v. ASSOCIATES DISCOUNT CORPORATION, Appellee. In the Matter of Hyman FREEDMAN, d/b/a Hyman Freedman Kosher Meats & Poultry, Bankrupt. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Herbert Weingarten, Detroit, Mich. (Steven I. Victor, Detroit, Mich., on the brief), for appellant.
Archie Katcher, Detroit, Mich. (Katcher & Feldman, and David W. Laughery, Detroit, Mich., on the brief), for appellee.
Before MILLER, CECIL and WEICK, Circuit Judges.
This case involves the validity of a chattel mortgage on a Chevrolet truck owned by the bankrupt against the claim of the trustee in bankruptcy that the mortgage be declared null and void.
The bankrupt filed a voluntary petition in bankruptcy on January 2, 1958, and was adjudicated on that day. Previously, on June 26, 1957, the bankrupt had purchased the Chevrolet truck and executed a chattel mortgage thereon, which was recorded in the office of the Wayne County Register of Deeds on July 5, 1957, nine days after execution. The bankrupt had possession of the truck from the purchase date until the mortgagee's assignee, Associates Discount Corporation, repossessed it, either shortly before, or shortly after, the date of bankruptcy.
The receiver, who is the present trustee, petitioned the referee for an order to show cause why the mortgage lien of Associates Discount Corporation should not be declared null and void under Sec. 70, sub. c, of the Bankruptcy Act, Sec. 110, sub. c, Title 11 U.S.C.A. Associates Discount Corporation contended that its lien was valid under Act 153 Mich.Public Acts 1956, Sec. 26.929, M.S.A. The referee declared the lien null and void. On review, the District Judge reversed the ruling of the referee and held the lien valid, from which ruling this appeal was taken.
Sec. 70, sub. c, of the Bankruptcy Act provides in part, as follows: "* * * The trustee, as to all property, whether or not coming into possession or control of the court, upon which a creditor of the bankrupt could have obtained a lien by legal or equitable proceedings at the date of bankruptcy, shall be deemed vested as of such date with all the rights, remedies, and powers of a creditor then holding a lien thereon by such proceedings, whether or not such a creditor actually exists."
Michigan Act 153 provides that a chattel mortgage of the kind involved in this action shall be void as against the creditors of the mortgagor, unless the mortgage shall be recorded as therein provided, "Provided, however, That any such mortgage shall not be void in the case of insolvency proceedings as against the creditors of the mortgagor if filed within 14 days from the date thereof; * *."
The trustee argues that Sec. 70, sub. c, gives him the power to avoid this lien since, under its provisions, a trustee is clothed with all the powers of "a perfect hypothetical lien creditor." Sec. 70.47, Vol. 4, Collier on Bankruptcy, 14th Edition; Constance v. Harvey, 2 Cir., 215 F.2d 571, certiorari denied, 348 U.S. 913, 75 S.Ct. 294, 99 L.Ed. 716...
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