In re Mark Shoe Co.

D. Massachusetts

In re Mark Shoe Co.

289 F. 74, 1923 U.S. Dist. LEXIS 1582

CourtDistrict Court, D. Massachusetts

DecidedMay 3, 1923

DocketNo. 27315

StatusPublished

This text of 289 F. 74 (In re Mark Shoe Co.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

In re Mark Shoe Co., 289 F. 74, 1923 U.S. Dist. LEXIS 1582 (D. Mass. 1923).

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Opinion

BREWSTER, District Judge.

The trustee in bankruptcy, and prior to his appointment an assignee for, the benefit of creditors, occupied premises of one Stone and continued thereon the business in which the -bankrupt had been engaged until the merchandise and fixtures were sold by the trustee under order of the referee. The property sold was subject to a chattel mortgage for $4,200 held by the Home National Bank. The referee found the mortgage to be valid to the extent of $570.95. The sale was made free from all liens, and lien of the mortgagee was transferred to the proceeds. These proceeds amounted to $1,015, and'the amount now in the hands of the trustee is $634.12. A claim for rent amounting to $715 is presented by an assignee of the lessor. While the amount due on the mortgage and the amount of the rent have been matters of dispute, no question is now raised regarding either of these amounts. The lessor’s assignee contends that the rent should be borne in part by the mortgagee, on the ground that it was [75]*75an expense incurred in preserving the assets of the estate. It has been held that the reasonable cost appropriate to foreclosing and selling incumbered property may he assessed on the lienholder in case the proceeds are insufficient to satisfy the lien, but that expenses incurred in the general administration of the estate will not be charged to the lienholder (Gugel v. New Orleans Nat. Bank, 39 Am. Bankr. R. 160, 239 Fed. 676, 152 C. C. A. 510), and in some cases the lienholder has been required to contribute to expenses of preserving the assets, when obviously the expenses were incurred for the benefit of the lien-holder. The Bethulia, 37 Am. Bankr. R. 227, 200 Fed. 879. But in the instant case the referee has found as a fact that the expenses for rent were incurred, not for the benefit of the mortgagee, but for the benefit of the creditors of the bankrupt, whose representative, as trustee in bankruptcy, elected to continue the business on the premises for the sole purpose of enabling him to sell the property more advantageously as a going concern.

In view of this finding of the referee T do not think the cases cited by the trustee warrant a reversal of the order of the referee directing the trustee to pay over to the Home National Bank the sum of $570.95, and this order is affirmed.

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BREWSTER, District Judge.

The trustee in bankruptcy, and prior to his appointment an assignee for, the benefit of creditors, occupied premises of one Stone and continued thereon the business in which the -bankrupt had been engaged until the merchandise and fixtures were sold by the trustee under order of the referee. The property sold was subject to a chattel mortgage for $4,200 held by the Home National Bank. The referee found the mortgage to be valid to the extent of $570.95. The sale was made free from all liens, and lien of the mortgagee was transferred to the proceeds. These proceeds amounted to $1,015, and'the amount now in the hands of the trustee is $634.12. A claim for rent amounting to $715 is presented by an assignee of the lessor. While the amount due on the mortgage and the amount of the rent have been matters of dispute, no question is now raised regarding either of these amounts. The lessor’s assignee contends that the rent should be borne in part by the mortgagee, on the ground that it was [75]*75an expense incurred in preserving the assets of the estate. It has been held that the reasonable cost appropriate to foreclosing and selling incumbered property may he assessed on the lienholder in case the proceeds are insufficient to satisfy the lien, but that expenses incurred in the general administration of the estate will not be charged to the lienholder (Gugel v. New Orleans Nat. Bank, 39 Am. Bankr. R. 160, 239 Fed. 676, 152 C. C. A. 510), and in some cases the lienholder has been required to contribute to expenses of preserving the assets, when obviously the expenses were incurred for the benefit of the lien-holder. The Bethulia, 37 Am. Bankr. R. 227, 200 Fed. 879. But in the instant case the referee has found as a fact that the expenses for rent were incurred, not for the benefit of the mortgagee, but for the benefit of the creditors of the bankrupt, whose representative, as trustee in bankruptcy, elected to continue the business on the premises for the sole purpose of enabling him to sell the property more advantageously as a going concern.

In view of this finding of the referee T do not think the cases cited by the trustee warrant a reversal of the order of the referee directing the trustee to pay over to the Home National Bank the sum of $570.95, and this order is affirmed.

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289 F. 74, 1923 U.S. Dist. LEXIS 1582, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-mark-shoe-co-mad-1923.

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