The opinion of the court was delivered by: WATSON
Plaintiff brought this action to have set aside a transfer to the defendant of certain assets of the bankrupts on the ground that the transfer constituted a preference as defined in the Bankruptcy Act. Pursuant to an agreement of counsel, the case was submitted on briefs. Counsel agreed to the existence of certain facts. No testimony was taken.
1. On April 30, 1954, a voluntary petition in bankruptcy was filed on behalf of Joseph J. Noto to Bankruptcy No. 10928.
2. On May 4, 1954, a voluntary petition in bankruptcy was filed on behalf of Edward J. Slavinski to Bankruptcy No. 10929.
3. On January 11, 1954, a chattel mortgages was given by Joseph J. Noto and Edward J. Slavinski, trading as Fashion Builders, to Noto Lumber Company, and recorded in the Office of the Prothonotary of Lackawanna County in Chattel Mortgage Book No. 11, at page 353.
4. Said chattel mortgage covered various items of personal property of the bankrupts, situate at Rear 519 O'Hara Street, Scranton, Pennsylvania.
5. On November 10, 1952, Noto Lumber Company sold certain building materials of the value of $ 2,100 to the bankrupts.
7. Bankrupts defaulted on payment of several of the notes and, after several such defaults, Noto Lumber Company demanded additional security.
8. Pursuant to the demand of Noto Lumber Company for additional security, the chattel mortgage above-mentioned was executed and recorded.
9. There is no evidence or stipulated fact from which this Court might find that the Noto Lumber Company knew or had reasonable cause to believe that Edward J. Slavinski and Joseph J. Noto were, or that either of them was, insolvent at the time the transfer was made to the Noto Lumber Company.
10. The defendant, Noto Lumber Company, neither knew, nor had reasonable cause to believe, that Edward J. Slavinski and Joseph J. Noto were, or that either of them was, insolvent at the time of the transfer to the Noto Lumber Company.
The Court is required to decide in this case whether or not a chattel mortgage given by the bankrupts to the defendant constitutes a preferential transfer as defined by the Bankruptcy Act. The chattel mortgage, which covered certain machinery and tools owned by the bankrupts, was executed and delivered to defendant on January 11, 1954. On April 30, 1954, Joseph J. Noto filed a ...