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IN RE BENSON

January 18, 1952

In re BENSON


The opinion of the court was delivered by: GOURLEY

The matter before the Court in this bankruptcy proceeding relates to a Petition for Review from the Referee's Order denying a reclamation demand for household furniture of the bankrupt.

The Court must pass upon the referee's findings of fact, adopt or modify them or, if necessary, make findings of its own. Moonblatt v. Kosmin, 3 Cir., 139 F.2d 412.

 The findings of a referee in bankruptcy on oral evidence are entitled to great weight. In re Barcia, 2 Cir., 147 F.2d 288; In re Morris et al., 7 Cir., 152 F.2d 178.

 It must, therefore, be determined if the referee's findings of fact and conclusions of law were so clearly erroneous and such a plain mistake as results in the defeat of justice.

 The facts are not in dispute.

 On or about August 1, 1950, Bankrupt received a loan from petitioner, his father-in-law, in the amount of $ 2,000. It was orally agreed Bankrupt would give a judgment note and a lien against his household furniture. In October 1950, Bankrupt changed his place of residence and moved the furniture to his new home at Pittsburgh, Allegheny County, Pennsylvania. Petitioner made a trip to Pittsburgh, bringing with him the papers which he had prepared without aid of legal counsel. These included a judgment note and a separate paper which reads as follows:

 'For value received subject to satisfaction of attached note in the amount of $ 2,000, I, Howard Clifford Benson, of 69 Rocklyn Place, Pittsburgh 28, Pennsylvania, do hereby sell and convey to Roy L. Hershey, of 900 Mt. Rose Avenue, York, Pennsylvania, all title and right of use in and about any and all household goods, furniture and personal property located at said address (69 Rocklyn Place). Said property may not be removed from this address without his written consent. This is to include all furniture, appliances, household goods, supplies and personal property housed at and in this residence as of this date.

 'Signed: Howard Clifford Benson Dolores Mae Benson

 'Witness: Donald V. Radcliff'

 Petitioner left the note and paper with his daughter, Bankrupt's wife, with instructions to record them. She and the Bankrupt took them to the Prothonotary in Pittsburgh, Pennsylvania. The two papers were 'pinned' together with a paper clip but the Prothonotary would not record the paper attached to the note, but entered the note of record on March 26, 1951 at 2109 April 1951 D.S.B., Allegheny County, Pennsylvania. After the filing of the petition in bankruptcy, petitioner first learned that the paper attached to the note had not been recorded.

 The sole question for determination is whether the transfer from the Bankrupt to the petitioner was on the one hand a pledge or chattel mortgage, or, on the other hand, a complete conveyance of the title to the goods sought to be reclaimed.

 In the event such transfer constituted a conveyance, the property rights therein would reside with the petitioner, and creditors could assert no claim thereto. On the other hand, if such transfer was in the nature of a pledge or chattel mortgage, then such pledge or mortgage would have to be perfected in order to prove valid against creditors of the pledgor or mortgager, the Bankrupt-

 There is no question but that there were two papers executed by Bankrupt and the petitioner- one being the judgment note and the other being the alleged document of title. These papers were in accordance with the oral agreement of the two parties, that is to say, that the document of alleged title was intended as mere security for the loan. This document read in part, ...


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