United California Bank, a California Corporation v. John M. England, as Trustee in Bankruptcy of Felden Industries, Inc.

The Referee held that a chattel mortgage in favor of Appellant was invalid as against the Appellee, the Trustee in Bankruptcy. The District Court, on review, affirmed the Referee and this appeal followed. This Court has jurisdiction under Section 24 of the Bankruptcy Act ( 11 U.S.C. § 47 ).

The essential facts are these:

In June, 1962, in Alameda County, California, Cyclone Sandblast Equipment Company, hereinafter called “Cyclone”, became a creditor of Metal Fab Enterprises, Inc. On July 31, 1963, Metal Fab gave its note and chattel mortgage covering certain inanimate personal property, not crops, to Appellant. The mortgagee recorded the chattel mortgage in Ala- meda County on August 2, 1963. On August 29, 1963, the bankrupt purchased the assets and assumed certain liabilities of the mortgagor, including the debt due Cyclone, but excluding the debt due the mortgagee. The debt due the mortgagee was eventually assumed by the bankrupt on April 20, 1964, but Metal Fab remained the mortgagor. Cyclone had no actual notice of the mortgage and never released the mortgagor. Shortly after August 29, 1963, the bankrupt moved the assets purchased, including the mortgaged property, to San…