In re Steiner

• Court: U.S. District Court — Eastern District of New York
• Citation: In re Steiner, 249 F. 880 (E.D. N.Y. 1918)
• Decision Date: 28 March 1918
• Parties: In re STEINER.

249 F. 880

In re STEINER.

United States District Court, E.D. New York.

March 28, 1918

Edward J. Dowling, of New York City, for petitioner.

Otterbourg Steindler & Houston, of New York City, for trustee.

CHATFIELD District Judge.

A chattel mortgagee claims the proceeds of sale of certain property of the bankrupt, to the amount of the balance remaining open upon the mortgage, viz., $1,925. The special master has reported that the mortgagee had reasonable cause to believe that the bankrupt was insolvent at the time the chattel mortgage was executed, and that the chattel mortgage was intended as a preference. He has therefore found that the chattel mortgage was voidable and invalid as a preferential payment, and also invalid as security for past indebtedness as against creditors. The testimony plainly supports these findings.

The record shows, also, that a present consideration of $500 was paid at the time of giving the chattel mortgage, but additional security for this advance, in the form of a claim against a third party for $400, was assigned to the mortgagee and has been collected. Thus the mortgage is security for $100 of this present consideration, and an agreement was made to extend future credit, if needed. It is necessary therefore, to consider whether the mortgage was properly filed, so as to be valid security for whatever part of the money was advanced at the time.

The law of the state of New York, as set forth in sections 232-235 of the Lien Law of the state (Consol.Laws, c. 33; chapter 38, Laws 1909) requires that a mortgage of chattels in the city of New York be filed in the county of the residence of the bankrupt, as well as in that county where the chattels are located. The bankrupt had been doing business in New York county, the chattels were located there, and the chattel mortgage was filed in that county. The law (section 232) provides that the county of residence shall be the county "where the mortgagor alleges to reside at the time of the execution of the mortgage." This provision amended the preceding law by introducing the word "alleges."

It is evident that the defect in the law as it formerly existed arose from contradictory statements of residence, or from conflicts between oral statements of the mortgagor and proof by creditors as to actual legal residence. The present statute was evidently intended to require a statement in the mortgage showing the place of residence of...