William v. Martin, as Trustee in Bankruptcy for Aerocolor, Inc., Dba Aero Press Co., a Corporation v. Crocker-Citizens National Bank

Aerocolor, Inc., was in bankruptcy in the United States District Court for the Southern District of California. The ap-pellee herein, Crocker-Citizens National Bank, applied to the referee in bankruptcy for leave to exercise the bank’s power of sale under a chattel mortgage which the bank claimed to have received from Aerocolor before Aerocolor became bankrupt. The referee in bankruptcy denied the bank’s application, stating several reasons for the denial. We shall discuss only one of those reasons, the failure of the officers of Aerocolor to acknowledge, in the presence of the notary public who attached his certificate to the document, their signatures to the chattel mortgage.

The referee having denied the bank’s application for leave to sell the chattels under the mortgage and the bank having sought review of the referee’s decision by the District Court, the bank and the trustee in bankruptcy entered into a stipulation providing for the sale of the chattels in order to prevent deterioration and wastage, the proceeds of the sale to belong ultimately to the trustee or to the bank, depending upon the outcome of the bank’s appeal.

The District Court reversed the judgment and order…