Court Opinion

ID: 8830964
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:03:52.316924+00
Date Added: 2024-06-11T17:04:55.494701
License: Public Domain

HOUGH, Circuit Judge
(after stating the facts as above). In this court, argument for appellant largely rests on the assertion that the mortgage was given under circumstances rendering it obnoxious to section 66 of the Stock Corporation Law of New York, because the execution and delivery of the mortgage amounted to a transfer of a part of its property ultimately to an officer of the bankrupt corporation, and was made at a time when said corporation had, in the language of the act, “refused to pay [some] of its notes or other obligations when due.”
We have examined the record sufficiently to reach belief that the point is not well taken on the proven facts; but we decline to discuss the matter further than to point out that the argument is not open to appellant, because this whole matter rests in point of form on appellant’s petition to the lower court seeking, to have the chattel mortgage in its entirety invalidated. In that petition the reasons for alleged invalidity are specifically enumerated, to wit, that the mortgage amounted to a hindering, etc., of creditors, and to an unlawful preference, using the language of the Bankruptcy Act,1 and that it was obnoxious to section 6 of the Stock Corporation Law. Such a petition is a pleading, and to it the pleader must be bound. The point with regard to section 66 is not mentioned in the petition, and so far as we can discover from the opinions of both referee and District Judge was never mentioned in the court below. On familiar principles the matter is not to be raised for the first time in an appellate tribunal.
 The question with regard to section 6 of the Stock Corporation Law is one wholly of New York law. It is not denied that this mortgage was valid under Black v. Ellis, 129 App. Div. 140, 113 N. Y. Supp. 558, affirmed 197 N. Y. 402, 90 N. E. 958. The point of that decision is that, where the consent of the requisite number of shareholders was in fact given, and was also proved, the spirit, if not the letter, of the statute was complied with. The matter has been examined not infrequently under the Bankruptcy Act, and the case just cited adhered to or found inapplicable in the following decisions: G. V. B. Mining Co. v. Bank, 95 Fed. 23, 36 C. C. A. 633; Karasik v. People’s Trust Co., 252 Fed. 337, 164 C. C. A. 261, affirming (D. C.) 252 Fed. 324; In re Post, 219 Fed. 171, 135 C. C. A. 69; In re Astell, etc., Works (C. C. A.) 284 Fed. 967.
It is now suggested that the New York courts in Leffert v. Jackman, 227 N. Y. 310, 125 N. E. 446, have departed from the rule of the Black Case. We do not think that such change of view has taken place. In the Leffert Case it was found as a fact that the necessary consent of shareholders had not been obtained. There has been no departure from the rule, now of considerable antiquity, that there must *130be such-consent, but that the "evidence thereof is not confined to the particular mode of production specified in the statute. Of course, the reason for this rule is the reason of the statute, viz. to protect the shareholders of the corporation from mortgages created without their knowledge. It is not the object of the statute to furnish to corporate creditors a weapon against. another and perhaps equally deserving creditor. This is true, although the right of the trustee in bankruptcy to use the stockholders/ right is also' admitted.
The remarks of this cqurt. in Re 'Post, supra, expressing agreement with the dissent in Black v. Ellis, .supra, must be now regarded as obiter. '
Order affirmed, with costs..

 Comp. St. §§ 9585-9656.