June 28, 1937
SMITH ET AL.
D. A. SCHULTE, INC., OF NEW YORK
Appeal from the District Court of the United States for the Southern District of New York.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
This appeal presents only one variant upon Central Manhattan Properties, Inc., v. D. A. Schulte, Inc., of New York (C.C.A.) 91 F.2d 728, handed down herewith. The lessor, Schulco Company, Inc., mortgaged some of the parcels of land in question to the Central Hanover Bank & Trust Company, together "with the right to receive all rents due or to become due thereunder." The debtor argues that this passed title to the rents out of the lessor. That is plainly untrue; the transfer was nothing more than a mortgage of future rents, and it is well settled in New York that until the mortgagee gets a foreclosure receiver, or the equivalent, the rents belong to the mortgagor. Sullivan v. Rosson, 223 N.Y. 217, 119 N.E. 405, 4 A.L.R. 1400; In re Brose, 254 F. 664 (C.C.A. 2); In re Kings County Real Estate Corp., 67 F.2d 895 (C.C.A. 2); Walker v. Irving Trust Co., 73 F.2d 270 (C.C.A. 2); Prudential Ins. Co. v. Liberdar Holding Co., 74 F.2d 50 (C.C.A. 2); In re Humeston, 83 F.2d 187 (C.C.A. 2).
Order reversed; claim allowed for fourteen-fifteenths of the subrents.
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