Victor Gruen Associates, Inc. v. Morris M. Glass and Hilda Glass, Irving Sulmeyer, Receiver, California Federal Savings and Loan Association

In this proceeding under chapter XI of the Bankruptcy Act, the district court affirmed an order of the referee authorizing the sale of Doheny Towers, an apartment house owned by the debtors, and the release of other assets. Victor Gruen Associates, Inc. (Associates) holding a recorded mechanic’s lien on the property sold, and claiming that the effect of the referee’s order is to deprive it of the right to have the assets of the debtors marshaled, appeals.

On October 10, 1960, a trust deed in the amount of $2,425,000 in favor of California Federal Savings and Loan Association (Cal-Fed), to secure a promissory note in that amount, was recorded against Doheny Towers. This trust deed was reconveyed to the debtors on December 11, 1961, in exchange for a new trust deed in the amount of $2,750,-000 in favor of Cal-Fed, to secure a promissory note in that amount. The latter trust deed was recorded on December 22,1961. This trust deed ran against Doheny Towers and also three other parcels of real property owned by the debtors, namely the Hacienda Apartments, the debtors’ residence on Queensbury Drive, and an unimproved lot on Drury Lane, all situated in Los Angeles County,…