In re Dumont-Airplane & Marine Instruments, Inc.
| Decision Date | 23 March 1962 |
| Citation | 203 F. Supp. 511 |
| Parties | In the Matter of DUMONT-AIRPLANE & MARINE INSTRUMENTS, INC., and LeJohn Manufacturing Company, Debtors. |
| Court | U.S. District Court — Southern District of New York |
Webster, Sheffield, Fleischmann, Hitchcock & Chrystie, New York City (Frederick P. Haas, M. Holt Meyer, New York City, of counsel), for McGinnis Investment Corp.
Javits Trubin Sillocks Edelman & Purcell, New York City (John Trubin and Charles R. Bergoffen, New York City, of counsel), for trustee.
This is a proceeding initiated by the Trustee of the debtors to determine whether the liability of LeJohn Manufacturing Company to McGinnis Investment Corporation should be classified as a "General Unsecured Claim" or as a "Secured Claim", as defined in the Plan of Reorganization of LeJohn approved by Judge Alexander Bicks on August 19, 1960.
The liability is in the amount of $13,689, and is evidenced by a promissory note of $11,700 dated July 21, 1955 and bearing 6% interest from its maturity date of January 1, 1956.
The classification of the debt hinges upon the effect given to a Chattel Deed of Trust, dated July 21, 1955, executed by LeJohn Manufacturing Company to secure the debt. The Chattel Deed was filed in the office of the County Clerk for Cabell County, West Virginia on July 25, 1955, and in the office of the Prothonotary of the Court of Common Pleas, Clearfield County, Pennsylvania, on July 10, 1958. Some time during the months of March, April, and May, 1958, the equipment secured by the Chattel Deed was moved from Huntington, West Virginia to Clearfield, Pennsylvania. On October 31, 1958, LeJohn filed a petition for reorganization under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq., which petition was approved by this Court on the same date. Subsequently, a plan of reorganization was approved and confirmed by the Court, providing that secured creditors are to be paid in cash to the full extent of their respective security interests. General unsecured creditors will be paid out of the remaining cash and will not, in fact, be paid in full.
Pursuant to an order of the Court dated April 24, 1961, virtually all of the tangible assets of LeJohn were sold at public auction; the net proceeds from the sale of the equipment covered by the Chattel Deed exceeded the amount of the liability to McGinnis Investment Corporation.
It is conceded by counsel for McGinnis Investment Corporation that the filing of the Chattel Deed in Clearfield County was not accompanied by any filing with the Secretary of the Commonwealth of Pennsylvania.
The determinative issue before the Court is whether on October 31, 1958, the date that LeJohn filed a petition for reorganization under Chapter X of the Bankruptcy Act, the creditor had a valid security interest under state law. The Court finds that it did not.
There is no question that Pennsylvania law is controlling. Reconstruction Finance Corp. v. Weiner, 192 F.2d 760 (2d Cir. 1951), cert. denied 343 U. S. 956, 72 S.Ct. 1051, 96 L.Ed. 1356 (1952); In re Industrial Sapphire Mfg. Co., 182 F.2d 589 (3d Cir. 1950).
As a general rule, where a trust deed or a chattel mortgage is properly recorded in the state where it is made, as concededly was the case here with the West Virginia filing, the subsequent removal of the property which is the subject of the deed to another state with (or without) the consent of the mortgagee, where such removal was not contemplated in the original transaction, will not affect the validity of the deed or mortgage, even though not recorded in the second state, unless re-recording is expressly required by the law of the second state. Collier on Bankruptcy, 14th ed., § 70.81. Under Pennsylvania law validity, or perfection, of a security interest on property subject to a valid security interest in another state does not continue beyond a four month period after the property is brought into Pennsylvania, unless within the four months the security interest in the property is again perfected in Pennsylvania. Pa. Stat.Ann. Purdon (1954) Title 12A, § 9-103(3) which reads, in...
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In re Komfo Products Corporation, 27055.
...a creditor who, in the absence of notice of the prior security interest, would prevail. Cf. Matter of Dumont-Airplane & Marine Instruments, 203 F.Supp. 511, 513 (S.D.N.Y., 1962). Actual knowledge, however, on the part of any such creditor would be at least the equivalent of the notice that ......
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Wind v. Westinghouse Credit Corp.
...interest was not re-perfected in Maryland, it became unperfected at the end of the four-month period. See Re Dumont-Airplane & Marine Instruments, Inc., 203 F.Supp. 511 (D.C.N.Y.1962); U.C.C. § 9-103, 1972 Amendments, in Anderson, Uniform Commercial Code (Cum.Supp.1970-1974) at 1074-76. B. ......