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IN RE PENN HOUS. CORP.

December 5, 1973

In the Matter of PENN HOUSING CORPORATION et al.

Weber, District Judge.


The opinion of the court was delivered by: WEBER

WEBER, District Judge.

 This is a Petition for Review by the Trustee from an Order of the Bankruptcy Court granting to Security-Peoples Trust Company the accounts receivable and the inventory of the Bankrupt as a secured creditor. The accounts receivable and the inventory have been sold and by stipulation the proceeds are being held pending the determination of this question.

 The question at issue is whether the Security-Peoples Trust Company held a perfected security interest in the inventory and accounts receivable.

 The transactions between the parties are evidenced by:

 
(a) a recorded financing statement;
 
(b) a series of eleven promissory notes;
 
(c) a letter of the debtor acknowledging the debt and a pledge of security;
 
(d) a course of dealing between the debtor and the secured party.

 Of the eleven promissory notes recited seven (7) are stamped "paid by renewal" and statements contained in them are not being considered as material in this issue. Three notes are material. With respect to another note of June 21, 1971 in the amount of $100,000, this was secured by a mortgage of a leasehold interest. There is no dispute over the perfection of the security interest in this collateral. The mortgage was foreclosed, the sale produced $125,000. The debt on this account being $106,250, the surplus from this sale should be administered by the Bankruptcy Court as an asset of the bankrupt's estate.

 There are three remaining notes material to the security interest issue:

 
(1) April 14, 1971
 
face amount $126,500
 
balance due 76,500
 
Recital: "This note is/is not further secured by: a security interest arising under agreement of even date (if other than specify) in the following property.
 
Inventory Title Mack Tk."

 It is not disputed that the security interest in the Mack truck was never perfected by the required delivery of an endorsed title. The proceeds of the sale of the truck were administered as assets of the bankrupt estate.

 This note also recites:

 
"The security interest(s) set forth above secures all other obligations of any of the undersigned to bank which now exist or may rise in the future and covers ...

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