240 F. 427 | D.N.J. | 1917
This controversy relates to the disposition to be made of a fund realized from several fire insurance policies, which covered certain personal property of the bankrupt that was destroyed and damaged by fire prior to the institution of the bankruptcy proceedings. About June 1, 1914, the bankrupt borrowed, directly or indirectly, about $7,700 from the Second National Bank of Hoboken, N. J. (hereinafter referred to as the “Bank”), on its promissory note, indorsed by certain of its officers. It also gave, as collateral security for the loan, a chattel mortgage for the same amount on certain of its property. The mortgage was made to one Philip Stephan, an employé of the Bank, who, admittedly, has at all times held it as trustee for the Bank. The note was renewed several times, and finally, when it became due in March, 1915, was protested for nonpayment. In the meantime the bankrupt had incurred considerably more indebtedness to the bank, represented by its own promissory notes which had been discounted by the bank, as well as a few notes upon which other parties were the makers. On February 13, 1915, a part of the bankrupt’s personal property was destroyed and damaged by fire, and shortly afterwards it assigned to the Bank all of the moneys due or to grow due to it on the fire insurance policies which it held on the property so destroyed and damaged. The amounts thus due were subsequently adjusted and paid to the Bank by the insurers. But before these payments were made, and on May 24, 1915, another fire occurred in the premises then occupied by the bankrupt, and resulted in the destruc
I am forced to the conclusion, therefore, that the Bank is entitled to the fund now in court to the extent necessary to pay the amount due upon the Stephan mortgage. If there is any balance, it should go to the Trust Company. In reaching this conclusion I have not attempted to determine whether the referee’s conclusion — that the two chattel mortgages were invalid as to creditors — is correct, because it has seemed to me, for the reasons before stated, that it is quite immaterial as to whether they were or not. The referee’s order will, accordingly, be reversed, and he will be directed to enter an order in accordance with these conclusions.