272 F. 886 | 2d Cir. | 1921
This is a petition to revise an order of Judge Mantón, sitting in the District Court for the Southern District of New York, directing that the property of the bankrupt be sold free of the lien of a mortgage dated August 1, 1909, to the Title Guarantee & Trust Company, as trustee, to secure an authorized issue of the company’s bonds to the amount of $700,000, most of which the petitioner-appellant, Green, owns.
As the business of the company, now being conducted by the receiver, is in a so to speak perishable condition, all parties request us to pass upon the validity of the mortgage, which Judge Mantón declined to do. This being plainly for the benefit of all concerned, we shall proceed to do so. The property covered by the mortgage is described as follows:
“All goods and chattels wherever situated,. including plant, machinery, equipment, supplies of all kinds, furniture, and all personal and other property, property rights, good will, copyrights, trade-marks, and choses in action of every kind whatsoever, as now owned or which may hereafter be acquired or owned by the company, and also all the estate, right, title, interest, property, possession, income, and demand whatsoever, as well in law as in equity of the company, to have and to hold the same and every part thereof.”
“Until such default the company may sell any of the property hereby mortgaged, which, it no longer needs for the purpose of its business, except trade-marks and copyrights. It may also, at all times, issue and sell any of its periodicals or publications of every kind whatsoever, and use the proceeds of such sales of property, periodicals, or publications for any corporate purpose.”
This provision made the mortgage fraudulent as matter of law and void in toto as to creditors. Russell v. Winne, 37 N. Y. 591, 97 Am. Dec. 755; Skilton v. Codington, 185 N. Y. 80, 90, 77 N. E. 790, 113 Am. St. Rep. 885.
We hold that the mortgage is invalid, and affirm the decree of the court below.