Frank M. Chichester, Trustee in Bankruptcy of Estate of S. A. Willen Company, a Corporation, Bankrupt v. Union Bank & Trust Co. Of Los Angeles

In this case the Referee in Bankruptcy held that a chattel mortgage held by the Union Bank and Trust Company of Los Angeles as against the Trustee in Bank ruptcy upon certain personal property of the bankrupt estate was void and of no effect. The District Court reversed the order of the Referee. Judge Ben Harrison filed an opinion setting forth his reasons for his decision as follows:

“It appears from the record that on February 4, 1953, the mortgagor executed the instruments and manually delivered them to the bank in an escrow agreement with the Union Bank and Trust Company of Los Angeles, the intention of the parties being that the money involved should not be paid to the bankrupt until February 20, 1953, at which time the transaction was to be completed, the escrow closed and the money passed. The mortgage was then to take full force and effect. It was recorded on the same date, February 20, 1953. It was stipulated that certain creditors existed prior to the recording and were also creditors at the date of the bankruptcy.

• The Referee held that the escrow itself was void because it was made to one of the parties of the transaction and not to a stranger, and that since it was…