Court Opinion

ID: 6833606
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:59:23.730802+00
Date Added: 2024-06-11T16:04:38.042061
License: Public Domain

SCHOONMAKER, District Judge.
This case comes to the court on certificate to review the findings of the referee in bankruptcy allowing as a preferred claim the mortgage debt of the Cambria Title & Trust Company in the sum of $8,000. The facts of the case as found by the referee are: “The Cambria Title Savings & Trust Company, hereafter referred to as the bank, of Ebensburg, loaned Bloom $8,000 on a second mortgage, which Was .dated September 2, and recorded September 8,1924. $3,500 was placed to Bloom’s credit on his cheeking account, and $4,500 was used to take up obligations owed by Bloom as maker or indorser to the- bank. The bank was depository for Bloom, and, where he transacted his business, Bloom was adjudicated a bankrupt on the 15th of December, 1924.”
Under this state of facts we are of the opinion that the referee was clearly wrong in holding this mortgage to be a valid preferred lien for more than $3,500. As we view it, $3,500 was the only present consideration for the execution and delivery of that mortgage. Under section 67d of the Bankruptcy ■ Act (Comp. St. § 9651), mortgage liens within the four-month period are valid only to the extent of the present consideration. We hold that under the facts disclosed $4,500, the balance of the mortgage beyond the sum placed to the credit of the bankrupt, was to secure a past indebtedness of the. bankrupt to ■ the *393bank. In re Thomas (D. C.) 29 Am. Bankr. Rep. 945, 199 F. 214; Schacht Motor Car Co., 31 Am. Bankr. Rep. 624; City National Bank of Greenville v. Bruce, 6 Am. Bankr. Rep. 311, 109 F. 69, 48 C. C. A. 236; Farmers Bank v. Carr, 11 Am. Bankr. Rep. 733, 127 F. 690, 62 C. C. A. 446; In re C. J. McDonald & Son (D. C.) 24 Am. Bankr. Rep. 446, 178 F. 487, Thompson, Trustee, v. American Lumber Co., 4 Am. Bankr. Rep. (N. S.) 40, 148 Tenn. 470, 256 S. W. 447; Great Lakes Lumber Co., In re (D. C.) 5 Am. Bankr. Rep. (N. S.) 850, 8 F.(2d) 96.
We therefore must overrule the findings of the referee to the extent that he allowed the claim of the Cambria Title Savings & Trust Company as a preferred mortgage lien for more than $3,500.
An order may be submitted accordingly.