The opinion of the court was delivered by: MARSH
This matter is before the court on petition of respondent, Simon Silverman, for review of an order of the Referee in Bankruptcy made on September 29, 1966, which ordered Silverman forthwith to turn over and deliver to the Trustee in Bankruptcy of American Home Furniture Co. of Pittsburgh (American), and its subsidiaries, "six motor vehicles which belong to the bankrupt estates, together with the certificates of title thereto." We think the order of the Referee should be affirmed.
On April 11, 1966, American and its subsidiaries filed a petition for an arrangement under Chapter XI of the Bankruptcy Act. The debtors were permitted to remain in possession and operate their businesses. Further proceedings were referred to the Referee.
In American's Statement of Affairs, United Credit Corp. (United) was listed as a secured creditor holding securities valued at $376,551.01 on a loan of $111,750.
Schedule B-2-J disclosed that personal property owned by American, inter alia, included an undisclosed number of trucks and autos. For the personal property the schedule noted a depreciated value of $376,551.01 subject to a security loan of $111,750.
The respondent was obligated as a principal and guarantor on this loan to United (T., pp. 120, 139).
On April 29, 1966, American presented a petition to the Referee requesting authorization to sell certain of its personal property which was subject to liens in favor of United. The petition set forth that American and its subsidiaries were indebted to United in the sum of $111,750 and accrued interest, and as security for the obligation, United held, inter alia:
"A properly recorded security interest in all Petitioner's personal property other than stock-in-trade (Petitioners' equipment) wherever located".
Paragraph (5) of the order signed by the Referee stated:
"Petitioners are authorized to sell equipment and fixtures covered by the financing statements to United Credit Corporation. Such sales may be made at prices agreeable to Petitioners and to United Credit Corporation. The proceeds from such sales shall be paid over to United Credit Corporation on account of its obligation due from Petitioners. No notice to creditors need be given to effectuate such sales."
This order was consented to by United. The petition and order contained no reference to motor vehicles.
There was testimony that United's financing statements covered all equipment owned by the debtor, including motor vehicles (T., pp. 127-128). The financing statements were not introduced into evidence.
Prior to June 23, 1966, United consented to the sale of the six motor vehicles to the Silverman family for $5,000 (T., pp. 129-130).
On June 23, 1966, pursuant to a petition of the debtors, signed by their president, Simon Silverman, an order was entered adjudging them ...