Phoenix Title and Trust Company v. Myles Stewart, Trustee of the Estate of Arthur Peabody and Olive Peabody

This is a proceeding in bankruptcy to determine the validity of a security interest in specific property asserted by Phoenix Title and Trust Company (Phoenix Title) . The referee determined that the asserted security interest is void and ordered the company to turn over to the trustee in bankruptcy property obtained in the exercise of purported rights accorded by such, security interest. On review the district court approved and confirmed the referee’s order. Phoenix Title appealed and the trustee cross appealed.

Between July 23 and 26, 1956, Arthur Peabody and Olive Peabody, his wife, executed and delivered to Phoenix Title four instruments. One of these is a deed to Phoenix Title, “as Trustees,” to several parcels of real property situated in Pima County, Arizona, subject to certain restrictions, reservations and encumbrances. This deed, which was dated July 23, 1956, and acknowledged July 26, 1956, gives Phoenix Title full power to hold, sell, convey, mortgage or pledge the property “in the same manner as though the Phoenix Title and Trust Company held the said property in fee simple and not as Trustee.” The instrument makes no reference to an indebtedness of the Peabodys to…