A & a Sign Company, Inc. v. Rex E. Maughan, Trustee of Mayer Central Building Corporation, a Debtor

A & A Sign Company, Inc (“A & A”), appeals from that portion of an order of the District Court declaring A & A an unsecured creditor of Mayer Central Building Corporation, the debtor in Chapter X proceedings. The District Court’s order was entered following hearings held pursuant to sections 196 and 197 of the Bankruptcy Act (11 U.S. C. §§ 596, 597). Appellee is the trustee of the debtor. Our jurisdiction is based on 11 U.S.C. §§ 47 , 521.

The debtor was the developer of three contiguous parcels of real property located in Phoenix, Arizona: (1) a parcel called the “South property,” upon which the debtor caused to be constructed a 25-story office building and a garage. The construction was financed by two construction loans from the Valley National Bank of Arizona, totaling $10 million, secured by mortgages on the South property; (2) a parcel called the “North property,” owned by a Massachusetts corporation and leased in 1959 to the debtor for 99 years. A 9-story building was built on the North property, fi nanced by loans from two creditors in excess of $4 million, secured, respectively, by a mortgage on the North property lease-hold, an assignment of rents, and by a mortgage on…