Chichester

Based upon an involuntary petition in bankruptcy, an order was entered on December 7, 1953, adjudging Kenneth P. Schmidt Builders, Inc., a corporation, bankrupt. At the time of the filing of the petition and at the date of the adjudication, clear legal title to a piece of real property stood in the name of the bankrupt corporation. Through their attorney, Chester E. Polikowsky and Winnifred Polikowsky filed a petition for an order to show cause directed to Kenneth P. Schmidt and Mary Wilkins Schmidt, the bankrupt corporation and the Trustee in Bankruptcy, requiring them to show cause why a vendor’s lien should not be impressed upon the real property so standing in the name of the bankrupt. Each of these parties so summoned answered and denied the existence of any vendor’s lien, claiming that the title was in the bankrupt corporation free and clear of encumbrances.

The Referee in Bankruptcy denied the petition and found generally the facts which are set. forth below. The bankrupt was engaged ixi the business of constructing homes on building tracts and selling these to the public. Kenneth P; Schmidt owned or controlled practically all of the capital stock of this corporation and…