Gardner

These are consolidated appeals from orders of the District Court confirming the-orders of a Referee in Bankruptcy which held void a chattel mortgage given by the bankrupts (Mr. and Mrs. Rell) to appellant.

The Rells, on May 4, 1945, entered into a three party escrow agreement to purchase a garage business and equipment from one Wilson, with part of the purchase price to be paid from funds loaned to the Rells by appellant bank. In consideration of this loan and as security for it appellant was to receive a chattel mortgage, executed by the Rells, on the garage equipment sold by Wilson [including one Ford truck], and, included in the mortgage were two automobiles, the title to which was to be acquired by the Rells from persons other than Wilson. The escrow department of appellant bank was designated as the escrow holder.

The Rells executed the mortgage on May 4 and deposited it with the escrow holder on that date. On May 19 the escrow was closed, at which time appellant’s escrow department delivered the funds to Wilson, the garage equipment and business to the Rells, and the chattel mortgage to appellant.

The notice [required by § 3440 of the California Civil Code] of intention…