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IN RE INVESTORS FUNDING CORP.

May 23, 1978

IN THE MATTER OF INVESTORS FUNDING CORPORATION OF NEW YORK, IFC COLLATERAL CORPORATION, 2141 LEMOINE AVENUE CORPORATION, et al., Debtors


The opinion of the court was delivered by: BONSAL

MEMORANDUM

 (APPLICATION OF LESTER WEBER)

 BONSAL, D.J.

 The Trustee moves pursuant to Chapter X Rule 10-701 and Bankruptcy Rule 756 for summary judgment dismissing the application of Lester Weber. Weber cross-moves for an order determining that the Court lacks summary jurisdiction over this matter and permitting him to withdraw his application. The motion was argued on April 5, 1978.

 On or before February 20, 1974, Lester Weber was the owner of real property located at 2031 Hudson Street in Fort Lee, New Jersey ("the Property"). On or about February 20, 1974, Weber made an agreement ("the Agreement") to convey the Property to Plaza Corporation ("Plaza") in consideration of $ 1,000,000 to be paid as follows: (a) $ 250,000 on the date of the Agreement, (b) $ 35,000 by Plaza's taking title to the Property subject to a first mortgage in that amount held by the First National Bank of Fort Lee, and (c) $ 715,000 to be paid within two years from the date of the Agreement. The Agreement also provided that if Plaza failed to pay the $ 715,000 balance by the close of the two-year period, title to the property would revert to Weber and he would be permitted to keep the $ 250,000 as liquidated damages. Finally, under the Agreement, Weber was allowed to collect and retain all rentals from the Property during the two-year period.

 Pursuant to the Agreement, Plaza paid Weber $ 250,000 on February 20, 1974. The deed, dated February 20, 1974, executed by Weber conveyed absolute title to Plaza, reciting a consideration of $ 1,000,000, receipt of which was acknowledged. The deed was recorded the same day. It did not refer to the Agreement, which was not recorded.

 Plaza had been acquiring title to other tracts of land in Fort Lee in order to develop a "multi-use complex" near the New Jersey side of the George Washington Bridge ("George Washington Bridge Assemblage"). Plaza's acquisitions were partly financed by Investors Funding Corporation of New York ("IFC"), one of the debtors herein.

 On or about March 5, 1974, March 19, 1974, April 1, 1974, April 16, 1974, and May 15, 1974, Plaza executed mortgages to IFC Collateral Corporation ("Collateral"), another of the debtors herein. These mortgages included the Property which Weber had conveyed to Plaza and secured existing debts and/or additional loans which would be made in connection with the George Washington Bridge Assemblage. Each mortgage was recorded.

 In May, 1974, Plaza became unable to meet its mortgage obligations, and by agreement dated June 7, 1974, Plaza agreed, in lieu of foreclosure, to convey the George Washington Bridge Assemblage to an affiliate of Collateral, 2141 Lemoine Avenue Corporation ("Lemoine"). By deed dated the same day, the Property was conveyed to Lemoine, and the deed was recorded.

 Weber has remained in possession of the property and has been collecting and retaining rentals from sub-tenants since February 20, 1974.

 On October 21, 1974, IFC and its wholly owned subsidiary, Collateral, filed petitions for reorganization pursuant to Chapter X of the Bankruptcy Act. On October 30, 1974, other debtor corporations, including Lemoine, filed a joint consolidated petition for reorganization under Chapter X. These petitions were approved, and by order dated November 1, 1974 James Bloor was appointed Reorganization Trustee.

 By Order to Show Cause, dated May 19, 1975, Weber applied for an order determining that he has an equitable purchase money mortgage on the Property, declaring that his Agreement with Plaza is in default, and ordering that the Property be reconveyed to him. On June 24, 1975, the Trustee filed his answer, counterclaims, and cross-motion to Weber's application. The parties then adjourned the Court's consideration of the matter while they conducted extensive discovery for two and one-half years. On December 7, 1977, the Trustee filed his motion for summary judgment dismissing Weber's application. The motion was adjourned several times owing to Weber's substitution of attorneys. His new attorney then cross-moved for an order permitting Weber to withdraw his application on the grounds that the Court lacked jurisdiction over this matter.

 I.

 JURISDICTI ...


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