Senft v. Lewis
| Decision Date | 09 January 1917 |
| Docket Number | 127. |
| Parties | SENFT v. LEWIS et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Vincent P. Donihee, of New York City, Henry M. Cummings, of Coney Island, N.Y., and Robert E. Moffett, of Brooklyn, N.Y., for appellants.
L. & M Blumberg, of Brooklyn, N.Y. (Leopold Blumberg, of Brooklyn N.Y., of counsel), for appellee.
Before WARD, ROGERS and HOUGH, Circuit Judges.
The questions presented by the assignments of error render unnecessary any full statement of the facts. White conducted a hotel at Coney Island, the premises being leased to him. Lewis held a chattel mortgage upon (apparently) the contents of the hotel, which he assigned to the Ulmer Brewery. The validity of this mortgage is not attacked; but when it became necessary to file a statement exhibiting the interest of the mortgagee or his assignee, in order to continue the lien, the Ulmer Brewery, as assignee, stated of record that the amount due was '$1,500 and interest.'
After the assignment of mortgage to the Brewery, and within four months of petition in bankruptcy filed against White, he transferred to Lewis the hotel and its contents. Thereafter the Brewery foreclosed the mortgage, and $2,800 was realized at the foreclosure sale. Thereupon upon the trustee of White brought this suit, alleging that the transfer to Lewis by White was in fraud of creditors within section 67e of the Bankruptcy Act, and demanding from the Ulmer Brewery so much of the amount received at the foreclosure as exceeded $1,500. The lower court so decreed.
The record is barren of evidence tending to show that there was anything of value conveyed from White to Lewis, except the mortgaged chattels; we therefore have to deal with them alone and their proceeds.
The errors insisted on are: (1) That the statement to continue mortgage above mentioned was erroneous; the amount really due on the mortgage was much more than $1,500; that as between the parties the original mortgage remained valid and enforceable; wherefore the erroneous statement for continuation may be disregarded, as the trustee in bankruptcy merely stands in White's shoes.
This argument overlooks both the language of the state statute and the Bankruptcy Act. By the Lien Law of this state (Laws 1909 c. 38 (Consol. Laws, c. 33) Sec. 235) every chattel mortgage is invalid 'as against creditors of the mortgagor' under the circumstances here existing unless a statement 'showing the interest' (e.g.) of the Ulmer Brewery therein is filed. Creditors are entitled to depend absolutely upon this recorded statement, with a possible exception of clerical errors obvious to any person of ordinary intelligence. No such exception is possible here the Brewery would have no rights at all,...
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