The opinion of the court was delivered by: BAUMAN
This is an action by a trustee in bankruptcy brought under § 70 of the Bankruptcy Act, 11 U.S.C. § 110, to invalidate assignments of aircraft leases made by a bankrupt lessor to defendant bank and to declare defendant's interests in them subordinate to those of the plaintiff trustee. Plaintiff also seeks the proceeds from the sale of certain equipment in which defendant claims to have perfected a security interest.
Plaintiff moves for summary judgment pursuant to Rule 56 of the Federal Rules and for an order directing defendant to turn over all payments received under the leases subsequent to the filing of the petition in bankruptcy. Defendant moves to dismiss pursuant to Rule 12(b) (6) of the Civil Rules on the ground that the action is time barred.
On December 15, 1969, Leasing Consultants, Incorporated (hereinafter "LCI") and First National City Bank (hereinafter "FNCB") entered into a loan and security agreement, pursuant to which FNCB agreed to assist LCI in its business of purchasing and then leasing equipment to its customers by making loans to LCI. LCI agreed to assign and deliver the leases to FNCB and grant it a continuing security interest in the property leased. On December 30 and 31, 1969, FNCB filed UCC-1 financing statements against LCI with the Registrar of the City of New York, Queens County, and with the New York Secretary of State covering a "[continuing] security interest in leases and any and all rents due and to become due thereunder, including all related equipment described therein, chattel paper represented thereby, accounts receivable therewith and proceeds arising therefrom."
LCI filed a petition for arrangement under Chapter XI of the Bankruptcy Act in the United States District Court for the Eastern District of New York on August 18, 1970, and was adjudicated a bankrupt on October 16, 1970.
There is no dispute as to the following facts.
LCI and Vieques Air Link, Inc. (hereinafter "Vieques") executed a lease dated March 5, 1970 covering a Piper Cherokee airplane for which LCI had paid $27,878. Under its terms Vieques undertook to make 60 monthly payments of $662.10, aggregating $39,726, and was granted an option to purchase the airplane upon the completion of the lease for $1,393.90, which Vieques prepaid. LCI assigned the Vieques lease to FNCB in an instrument dated July 24, 1970. Neither the lease nor its assignment was recorded with the Federal Aviation Agency pursuant to 49 U.S.C. § 1403.
An issue of fact exists between the parties as to the number of payments received by FNCB under the Vieques lease.
On December 8, 1969, LCI and Raffa Van Atta, Ltd. (hereinafter "Raffa") executed a lease covering a 1963 Beechcraft airplane for which LCI had paid $43,800. The lease required Raffa to make 60 monthly payments of $1,093.25, for a total of $65,595, upon completion of which Raffa was given an option to purchase for $4,380, which sum Raffa prepaid upon execution of the lease. LCI assigned the Raffa lease to FNCB on December 29, 1969; neither the lease nor its assignment was recorded with the FAA.
The amount received by FNCB under the Raffa lease is at issue between the parties.