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IN RE SUPERIOR KITCHEN PRODS. CORP.

April 20, 1942

In re SUPERIOR KITCHEN PRODUCTS CORPORATION


The opinion of the court was delivered by: CAMPBELL

CAMPBELL, District Judge.

This is a hearing on a petition to review an order of the Referee dated January 27th, 1942, directing the sale by the Trustee of all of the physical assets of the bankrupt free and clear of the lien of the Florence Trading Corporation, arising by virtue of the chattel mortgage held by it covering property of the bankrupt, at public auction, and transferring the lien of the said Florence Trading Corporation in and to the said property to the proceeds of said sale.

The property has been sold, and a sum in excess of the claim of said Florence Trading Corporation has been realized by the Trustee to which the lien of the said Florence Trading Corporation has attached.

 There had been no order of distribution granted when the petition to review herein was filed, therefore the petitioner herein seeks only to review the order of the Referree ordering a sale of the property covered by said chattel mortgage free and clear of the lien of said chattel mortgage, and I am not passing on any other question.

 As the petitioner would have been compelled to sell the property, and the property has been sold, and on such sale has produced more than the claim of the petitioner, the question of the order for a sale free and clear of the lien of the petitioner seems to me to be a moot one.

 I will, however, consider the question presented.

 The chattel mortgage in question was made by the bankrupt to Florence Trading Corporation on October 8th, 1941, and filed on October 10th, 1941.

 On the 18th day of December 1941, the bankrupt made a general assignment for the benefit of creditors to Louis P. Rosenberg.

 On the same day the general assignment was filed and the assignee qualified as required.

 The property covered by the said chattel mortgage from then on was in custodia legis of the State Court, subject to, of course, the taking over by a receiver or trustee in bankruptcy, if a petition in bankruptcy should be filed.

 On, or about, the 19th day of December 1941, the petitioner instituted a suit in which at its instance an order of replevin was issued to obtain the property alleged to be covered by the chattel mortgage.

 The petitioner knew of the general assignment made by the bankrupt, but did not obtain the permission of the State Court to obtain the replevin as against the assignee, and in fact did not make the assignee a party to the suit or issue the summons in that action against the assignee.

 At about 9.30 o'clock A.M. on the 22nd day of December 1941, the Sheriff of Kings County allegedly acting under said order of replevin in said action forcibly took possession without the knowledge or consent of the assignee of said property, but did not serve the order upon the assignee, or any agent or servant of the assignee, but served it only upon a watchman or janitor of the building in which the bankrupt's place of business was located.

 On the same day, the 22nd day of December 1941, at about 2.30 o'clock P.M. an involuntary petition in bankruptcy was filed against the above named bankrupt in the Clerks Office, of this Court, and the petitioner was stayed ...


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