Source: https://law.justia.com/cases/federal/appellate-courts/F2/511/460/398572/
Timestamp: 2017-11-21 17:31:23
Document Index: 233146473

Matched Legal Cases: ['§ 1403', '§ 70', '§ 110', '§ 9', '§ 11', '§ 29', '§ 70', '§ 11', '§ 70', '§ 213', '§ 60', '§ 96', '§ 16', '§ 70', '§ 67', '§ 107', '§ 67', '§ 107', '§ 70', '§ 70', '§ 96', '§ 11', '§ 1301', '§ 49']

George Feldman, As Trustee in Bankruptcy of Leasingconsultants, Incorporated, Bankrupt, Plaintiff-appellee, v. First National City Bank, Defendant-appellant, 511 F.2d 460 (2d Cir. 1975) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Second Circuit › 1975 › George Feldman, As Trustee in Bankruptcy of Leasingconsultants, Incorporated, Bankrupt, Plaintiff-ap...
George Feldman, As Trustee in Bankruptcy of Leasingconsultants, Incorporated, Bankrupt, Plaintiff-appellee, v. First National City Bank, Defendant-appellant, 511 F.2d 460 (2d Cir. 1975)
US Court of Appeals for the Second Circuit - 511 F.2d 460 (2d Cir. 1975)
Citibank continued, without objection from Feldman or anyone else, to collect rentals under the lease assignments until April 18, 1973. On that date Feldman initiated this action, belatedly claiming that the bank's failure to comply with the recording provisions of the Federal Aviation Act of 1958, 49 U.S.C. § 1403 (1970),2 rendered the various assignments unenforceable against a bankruptcy trustee asserting his powers under § 70 of the Act, 11 U.S.C. § 110 (1970). Feldman consequently sought to recover the post-petition payments made to the bank by Raffa Van Atta, True, and Vieques. Citibank moved to dismiss pursuant to Fed. R. Civ. P. 12(b) (6), arguing that its interest in the assigned leases was properly perfected by filing and possession under N.Y.U.C.C. §§ 9--304 and 9--305 (McKinney's Consol.Law c. 38, 1964), and that in any event the trustee's action was time-barred by the statute of limitations created by the Bankruptcy Act, § 11e, 11 U.S.C. § 29(e) (1970). Feldman cross-moved upon affidavits and exhibits for summary judgment.
The district court, citing its earlier opinion in Feldman v. Chase Manhattan Bank, 368 F. Supp. 1327 (S.D.N.Y. 1974), held that the exclusive method for perfecting a security interest in an assigned aircraft lease was that provided by the Federal Aviation Act. Since Citibank had failed to record its interest with the FAA Registry, the court found, its claim to rentals was unenforceable against the trustee acting in his capacity as a hypothetical judicial lien creditor under § 70c of the Bankruptcy Act. Judge Bauman also found no merit to the statute of limitations claim. Relying upon the Supreme Court's interpretation of § 11e in Herget v. Central National Bank & Trust Co., 324 U.S. 4, 65 S. Ct. 505, 89 L. Ed. 656 (1945), he stated that the two year period provided by that section did not apply to 'those claims which originate outside the Bankruptcy Act.' Since the trustee's powers under § 70c were those which a judicial lien creditor would possess under state or non-bankruptcy federal law, the district court judge concluded that the trustee's action was to be governed by the longer time period provided for such suitors. Finding no specified period of limitations in the Federal Aviation Act, Judge Bauman applied the six year statute which in New York would govern an action for monies had and received, to set aside a conveyance of personalty, or upon a constructive trust. N.Y.C.P.L.R. § 213(1) (McKinney 1972). Since the action was begun by the trustee on April 18, 1973, well within six years after the date of adjudication, he held it timely, and granted summary judgment. We reverse.
Exactly when federal or state law will permit a 'further period of time' is a matter which the Act does not resolve. Reviewing the history of the Chandler Act of 1938, ch. 575, 52 Stat. 840, in Herget v. Central National Bank & Trust Co., supra, the Supreme Court concluded that the critical question was whether the trustee's cause of action had been 'inherited . . . from the bankrupt or the bankrupt's creditors', or had on the contrary 'aris(en) under the bankruptcy statutes.' Id. at 6--7, 65 S. Ct. at 507. Herget, the trustee, had filed a complaint under § 60 of the Act, 11 U.S.C. § 96, attempting to recover payments made by the bankrupt within four months prior to the filing of the petition. Although the claim was brought more than two years after the date of adjudication in bankruptcy, the Illinois residual statute of limitations, Ill.Rev.Stat.1943, ch. 83, § 16, permitted 'all civil actions not otherwise provided for (to) be commenced within five years next after the cause of action accrued.' Despite this language in the Illinois statute, the Court held that the action was untimely brought. It emphasized that the powers which Herget sought to exercise were generated by the Bankruptcy Act itself, which defined the elements of a preferential transfer voidable by the trustee. That being the case, the Court concluded, there was little reason to look beyond the Act to another federal or state law for the proper period of limitations.
Although it does not appear that the question has ever been presented in the context of § 70c, the distinction drawn by the Herget Court has governed trustees' actions under other provisions of the Act. Thus it has been held that a proceeding under § 67a(1), 11 U.S.C. § 107(a) (1), which permits avoidance under certain defined conditions of judicial liens obtained within four months of petition filing, must be brought within two years of adjudication. Samuels v. Kockos Bros., Ltd., 307 F.2d 147 (9th Cir. 1962). A similar rule has been applied to a trustee's action to avoid a transfer made fraudulent by § 67d(3) of the Act, 11 U.S.C. § 107(d) (3), rather than by state law. Wells v. Place, 92 F. Supp. 477 (N.D. Ohio 1950). Actions under § 70e, however, have been allowed to proceed even after expiration of the two year period. See, e.g., Harrington v. Yellin, 158 F. Supp. 456, 458--459 (E.D. Pa. 1958); Schutte v. Wittner, 149 F. Supp. 451, 452 (E.D.N.Y. 1957); Halpert v. Engine Air Service, Inc., 116 F. Supp. 13, 15 (E.D.N.Y. 1953); MacLeod v. Kapp, 81 F. Supp. 512 (S.D.N.Y. 1948). That provision allows the trustee to invalidate any transfer made or obligation incurred by the bankrupt which an existing creditor might have avoided under state or non-bankruptcy federal law, had bankruptcy not intervened. See also Hummel v. Equitable Assur. Soc., 151 F.2d 994, 997 (7th Cir. 1945) (action under § 70a(5) governed by state limitation period).
11 U.S.C. § 96(a) (2). There is, however, no requirement of an existing creditor holding such a lien, whose rights would flow to the trustee. In such cases, the trustee has been required to bring his action within the two year period provided by § 11e.
Partly in response to this argument, the trustee contended that the 'leases' assigned to the bank were in fact conditional sales contracts, since the payments by the lessees in each case were substantially equivalent to the value of the plane, and since each contract provided a purchase option. See 49 U.S.C. § 1301(16) (b). The regulations under the Act make clear that an assignment of an interest under a contract of conditional sale is a recordable conveyance. 14 C.F.R. § 49.31.