Respondents Brief — Kinsella v. Krueger

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TABLE OF CONTENTS OF BRIEF

PAGE

1. Citations to Opinions Below ................... 2

ELS S'ne KUEN a Kank yO G40dKKGOee saNRERKS 2

a; SUN UO 5 vce a cack a ccccccaceaccves 2

i OE ass Lit ew acne etnbe wks shanacnen 3

NE Pe tt ClLd. neh Lian ae ce hendcaak hehe 3

FSP POP CT OLE T TT eT eT EEE CT TST e 5

A. The Filing of a Petition in Bankruptcy Does

Not Confer Rights Upon Chattel Mortgagees

Greater Than Those Conferred Under State

Law; Nor Does It Give Such Mortgagees

yo gg a Sr eer re 5

B. The Decision Below is Correct, and Does Not

Conflict With any Decision of This Court or

SP EE RIES 0.6 bub akschessaceuaeenses 8

C. The Decision Below Raises No Important

Question of Federal Law ................... 10

SR ee a er en 13

NG Sc thaes che ak. has sSsnd Gicteeeunsed sss 15

Section 1, Act of Assembly (Pa.) June 12,

Re ee eer ere e rr 15

Title and Section 1 of the Pennsylvania Chattel

PE IEE a sacra scenes cnssaneh ies 15

TABLE OF CASES CITED

Ambler National Bank v. Maryland Credit Finance

Co., 147 Pa. Superior Ct. 496, p. 502, 24 A. 2d 123

City of New Orleans v. Harrell, 134 F. 2d 399 ........

Commercial Credit Plan v. Mahoney, et al., 67 Pa. Dis-

trict & County Meperts, OTT 2... csc cccsenccwres

Ferbro Trading Corp. v. Jo-Mar Dress Corp., et al., 78

Pa. District & County Reports, 337 ..............

First National Dank of Jamestown v. Sheldon, 161 Pa.

a gt err re eT eT Tee errs eee

In re Industrial Sapphire Manufacturing Co., 182 F. 2d

| BENET ee TTT TCT ETET ET CET ETT CUT Eee

In the Matter of Quaker City Uniform Co., Inc., Bank-

PU Ae Ws I, I ook sink esha acacscancuswne

Kaufmann & Baer v. Monroe Moior Line, 124 Pa. Su-

on gk ae OP Se eee eee eee eee

Klaus v. Majestic Apartment House Company, 250 Pa.

OF | Pee ee er ere Peer eer rere

Personal Finance Co. v. General Finance Co., 133 Pa.

Superior Ct. 582, 3 A. 2d 174 ......... cee wees

Re George Townsend Co., Inc., unreported (reprinted

in petitioners’ appendix, p. 47) ...............44.

Roberts’ and Pyne’s Appeal, 60 Pa. 400 ...............

Seymour v. Wildgen, 137 F, 2d 160 ..................

PAGE

a ad Cad gna Lawn bs Dae ih i PT nn, A ate Ne is ts

TABLE OF STATUTES AND AUTHORITIES CITED

PAGE

Act of Assembly (Pa.), June 12, 1878, P. L. 207, Section

SLA a RUabORRRERARES EAWAR ROAR SEMEN TLE ES Gee 3,9

Act of Assembly (Pa.), June 1, 1945, P. L. 1358, Title

and Section 1 (Chattel Mortgage Act) .......... 3,5

Bankruptcy Act, 49 Stat. 11 U.S. C. 96 et seq.:

| RE Geen Preee Ty ree Tory re tren 8,9

eee a Ty CE) CR ccna esos teva learns 8

Ee rr rer Tre errr ree cVaRS Ca wee eer 11

NEN Ee CED 5 isan bd usecnber cree reese hrereineens 2,8

4 Collier on Bankruptcy, 296, 1347 (14th Ed.) ........ 7

Restatement Conflict of Laws, Sections 265, 272,279... 6

PRD ay

SSS RRS OE laa oe OR Ps

IN THE

Supreme Court of the United States

October Term, 1956.

No. 717.

In the Matter of:

QUAKER City UniForM Co., Inc., Bankrupt.

DANIEL P. VELoRIC and FIDELITY-PHILADELPHIA

Trust CoMPANY,

Petitione’s,

and

CoLLEGE HALL FASHIONS and SYNTHETIC

SPECIALISTS, INC.,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

States Court oF APPEALS FOR THE THIRD CIRCUIT.

BRIEF FOR RESPONDENTS IN OPPOSITION.

Ce ee ee

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I. CITATIONS TO OPINIONS BELOW.

The citations to opinions below are as set forth in the peti-

tion for a writ of certiorari.

II. JURISDICTION.

Petitioners invoke the jurisdiction of this court under 28

U. S. C., Section 47c.

III. QUESTIONS PRESENTED.

1. Do chattel mortgagees acquire greater rights and prior-

ity of payment, as the result of the filing of a petition in

bankruptcy, than the rights and priority of payment to

which, it is conceded, they are entitled, under state law?

2. Where state law subordinates the lien of a chattel

mortgage to the lien of a landlord’s distraint, and where

such law accords a priority of payment to wage claimants

out of the fund arising from the distraint, are the wage

claimants entitled to a priority of payment out of the fund

realized from the sale of mortgaged chattels upon which

the landlord has caused a distraint and levy to be made?

3. Where state law subordinates the lien of a chattel mort-

gage to the lien of a landlord’s distraint, and also subordi-

nates the lien of a landlord’s distraint in that it accords

priority of payment to wage claimants; and, in addition,

under Section 67 (c) of the Chandler Act, the lien of a land-

lord’s distraint is postponed in payment to both administra-

tion expenses and wage claims, are the wage claimants en-

titled to a priority in payment ahead of the landlord and

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the chattel mortgagees, when a petition in bankruptcy is

filed after a landlord has distrained for rent?

IV. STATUTES INVOLVED.

The statutory provisions involved are as set forth in the

petition for a writ oi certiorari, and in addition, Section 1

of the Act of Assembly (Pa.) of June 12, 1878, Public Law

207, 43 Purdon’s Penna. Statutes 230; and Title and Section

1 of the Chattel Mortgage Act, Act of Assembly (Pa.) of

June 1, 1945, Public Law 1358, 21 Purdon’s Penna. Statutes

940.1, which Acts are printed in the appendix infra, pp. 15

and 16.

V. STATEMENT.

College Hall Fashions and Synthetic Specialists, Inc., re-

spondents in this action, are the assignees of various wage

claimants of Quaker City Uniform Co., Inc., bankrupt. By

a stipulatior: of facts entered into by and between counsel

for the receiver, counsel for the petitioners, counsel for the

landlord, counsel for the Philadelphia Joint Board, Amal-

gamated Clothing Workers of America, and counsel for the

respordents, it was stipulated and admitted, inter alia, that

“18. Proof of claim for wages was filed by College

Hall Fashions in the amount of $1,517.00, as assignees

of a number of wage claims of persons employed by the

Bankrupt, which wages were earned within three

months of the filing of the petition in bankruptcy, and

therefore entitled to priority as such.

19. Proof of claim for wages was filed by Synthetic

Specialists, Inc., in the amount of $7,001.60, as assignee

of a number of wage claims of persons employed by the

Bankrupt, which wages were earned within three

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months of the filing of the petition in bankruptcy, and

therefore entitled to priority as such.”

Prior to the filing of the petition in bankruptcy, the land-

lord made a distraint on all the goods of the bankrupt that

were on the landlord’s premises. The sale under the dis-

traint and levy was stayed under Pennsylvania law because

execution was issued by the Sheriff of Philadelphia on an-

other judgment against the bankrupt. Thereafter, the bank-

ruptcy petition was filed before the sheriff’s sale was held.

The validity of the landlord’s distraint and levy is conceded

by all of the parties.

By agreement between Veloric, one of the petitioners

herein, and the receiver in bankruptcy, the property cov-

ered by the chattel mortgages was sold, and the fund real-

ized therefrom was substituted for the mortgaged chattels.

The landlord and Fidelity-Philadelphia Trust Company, the

other petitioner, acquiesced in this agreement. The respond-

ents were not parties to this agreement.

The proceeds from the receiver’s sale of the goods upon

all of which the landlord had made a distraint and levy

amounted to $9896.77.

The rights and priorities of payment of the various claim-

ants to the fund were then adjudicated by the referee in

bankruptcy, United States District Court for the Eastern

District of Pennsylvania, and twice by the United States

Court of Appeals for the Third Circuit. On two occasions

the United States Court of Appeals for the Third Circuit

has held that the order of distribution of the funds in the

trustee’s hands should be: (1) administration expenses;

(2) wage claimants; (3) landlord; and (4) chattel mort-

gagees. It is from this order of distribution that the peti-

tioners pray that a writ of certiorari issue.

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VI. ARGUMENT.

A. THE FILING OF A PETITION IN BANKRUPTCY

DOES NOT CONFER RIGHTS UPON CHATTEL

MORTGAGEES GREATER THAN THOSE CON-

FERRED UNDER STATE LAW: NOR DOES IT GIVE

SUCH MORTGAGEES PRIORITY OF PAYMENT.

The rights, privileges and priority of payment afforded to

_ chattel mortgagees are only those rights which are afforded

| to them under the applicable state law under which they

hold their security. The lien created in favor of chattel

mortgagees must arise under the state law. It is recognized

in bankruptcy only to the extent of its recognition under

the state law. The Bankruptcy Act does not create liens.

It only recognizes and gives effect to certain liens which

arise out of the state law.

Petitioners have contended throughout this matter that a

chattel mortgage is a consensual or contractual lien for the

sole reason that it arises out of a contract between the mort-

gagor and the mortgagee. While this may very well be true

_ in those states which have recognized liens on chattels as

part of their common law, it is not true in the State of Penn-

sylvania, which has consistently refused to recognize or give

effect to consensual or contractual liens created on chattels

under the common law. In Pennsylvania, chattel mort-

gages are statutory creations, having been created by the

Act of Assembly of June 1, 1945, P. L. 1358, 21 Purdon’s

Penna. Statutes, 940.1.

The courts of Pennsylvania have consistently held that

prior to the passage of the Chattel Mortgage Act, supra, “It

had been the settled public policy of the law of this Com-

monwealth as manifested by legislative acts and judicial de-

cisions, to frown upon the mortgaging of chattels in Penn-

sylvania”; First National Bank of Jamestown v. Sheldon,

161 Pa. Superior Ct. 265; Roberts’ and Pyne’s Appeal, 60 Pa. ;

400; Klaus v. Majestic Apartment House Company, 250 Pa.

6

194, 95 A. 451; Kaufmann & Baer v. Monroe Motor Line, 124

Pa. Superior Ct. 27, 187 A. 296.

Further, it has been repeatedly held under the Pennsyl-

vania common law that it is essential to the validity of a

pledge of personal property that either actual or construc-

tive possession of the pledged property be delivered to the

pledgees. Ambler National Bank v. Maryland Credit Fi-

nance Co., 147 Pa. Superior Ct. 496, p. 502, 24 A. 2d 123.

Since the Chattel Mortgage Act is in derogation of the

common law of Pennsylvania, it must be strictly construed,

-and the rights, duties and remedies of the parties to a chat-

tel mortgage are only as specifically set forth in the statute

and may not be inferred. Accordingly, the Pennsylvania

courts have consistently held that the common law lien of

the landlord is superior to the lien of the chattel mortgagee.

Goods in the leased premises are subject to the landlord’s

distraint when the tenant is in arrears in rent, and it is im-

material that they are held by the tenant under a bailment

lease, conditional sale or subject to a chattel mortgage.

Ferbro Trading Corp. v. Jo-Mar Dress Corp., et al., 78 Pa.

District & County Reports, 337.

In Commercial Credit Plan v. Mahoney, et al., 67 Pa. Dis-

trict & County Reports, 577, it was held that a landlord’s

distraint for unpaid rent is entitled to a priority over the

claim of a chattel mortgagee, even though the levy of the

distraint was made subsequent to the recording of the chat-

tel mortgage. (Emphasis suppic 2.)

It has been generally true that the validity and effect of

a security agreement are determined by the law of the state

in which the chattel is located, at the time the agreement is

executed. In re Industrial Sapphire Manufacturing Co., 182

F. 2d 589; Personal Finance Co. v. General Finance Co., 133

Pa. Superior Ct. 582, 3 A. 2d 174; Restatement Conflict of

Laws, Sections 265, 272, 279.

The District Court and the Court of Appeals both recog-

nized the superior right of the landlord over the chattel

mortgagee. In his Opinion, Chief Judge Kirkpatrick stated:

RE ea ey ee

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“If bankruptcy had not intervened, the controversy

could hardly have arisen, because the law of Pennsyl-

vania clearly subjects the interest of the chattel mort-

gage to the lien of the landlord’s levy. The chattel

mortgagee concedes as much but argues that the Bank-

ruptcy Act nullifies the landlord’s preferred status as

against him.” In the Matter of Quaker City Uniform

Co., Inc., Bankrupt, 134 F. Supp. 596.

The Learned Chief Judge then fell into error by holding

that while the landlord had a priority in the fund over the

chattel mortgagees, the wage claimants were not entitled to

prior distribution. This ignored the clear provisions of the

Pennsylvania law, as well as the provisions of the Bank-

ruptcy Act granting wage claimants priority over rent

claims.

The Court of Appeals, in this case, held that except in

certain situations, where federal law has spoken, priority

among liens is determined by the law of the state, citing

Seymour v. Wildgen, 137 F. 2d 160; 4 Collier on Bankruptcy,

296, 1347 (14th ed.). The court then held that by settled

Pennsylvania law the landlord’s lien by way of distraint

takes precedence over a chattel mortgage, when the chattel

mortgagee has failed to obtain a landlord’s waiver. It was

the opinion of the court that the interpretation requested

by the chattel mortgagees would ascribe to Congress the

intent that a chattel mortgagee should benefit from the

event of bankruptcy, before which his lien was inferior to

the landlord, and after which it became the superior lien.

As the court pointed out, this proposition contains the un-

desirable feature of needlessly upsetting state lien priority

rules.

EI OR AER GEER OR OMEN a IE TL LN

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B. THE DECISION BELOW IS CORRECT, AND DOES

NOT CONFLICT WITH ANY DECISION OF THIS

COURT OR ANY OTHER COURT.

The Court of Appeals concluded that since the Bank-

J ruptcy Act does not establish a system of liens, but merely

* gives effect to the relative standing of liens under applicable

state law, it must necessarily follow that under the Penn-

sylvania law, the lien of the landlord on distraint, is supe-

rior to the lien of the chattel mortgagees. The court then

applied the clear language of the Chandler Act of 1938,

which introduced Section 67, sub. c. 11 U. S. C. A. Section

107, sub. c, the pertinent provisions of which read:

“c. Where not enforced by sale before the filing of a

petition initiating a proceeding under this Act * * * (1)

though valid against the trustee under sub-division (b)

of this section, statutory liens * * * on personal prop-

erty not accompanied by possession of such property,

and liens, whether statutory or not, of distress for rent

shall be postponed in payment to the debts specified in

clauses (1) and (2) of subdivision (a) of section 64 of

onan?"

The expenses of administration and wage claims, while

ordinarily merely unsecured claims given first and second

priority as such under Section 64, sub. a, became payable

before the lien of the landlord under the specific language

quoted above.

The holding of the Court of Appeals is clearly correct

under the factual situation in this case. When a Pennsyl-

vania landlord has distrained for rent, and acquired a supe-

rior lien over chattel mortgagees, and thereafter bankruptcy

intervenes before the sale under the distraint, he is subject

to the provisions of the Bankruptcy Act postponing his lien

to the payment of administration expenses and wage claims.

In such a situation, he may not be paid until after the ad-

ministration expenses and wage claims are paid to the ex-

ll

Sod EINE RETR NN.

tent that they have priority under Section 64 of the Bank-

ruptcy Act. Thereafter, the landlord’s claim is to be paid

to the extent that he had acquired a lien under applicable

Pennsylvania law, and only then may the chattel mort-

gagees be preferred over other secured and unsecured credi-

tors.

The priority of payment accorded to the wage claimants

over the landlord under the Bankruptcy Act, is likewise ac-

corded the wage claimants under Pennsylvania law. The

Act of Assembly of June 12, 1878, P. L. 207, Section 1, 43

P. S. 230, provides:

“It is the true intent and meaning of the provisions of

the Act of Assembly, entitled ‘An act for the better pro-

tection of the wages of mechanics, miners, laborers and

others,’ passed the 9th day of April, 1872, that the sev-

eral classes of laborers in said act mentioned shall have

a preference over landlords, in all claims for rent * * *

where the lessee or lessees are the parties employing

the miners, mechanics, laborers or clerks: Provided

That any person or persons claiming a preference as

above provided, shall give notice of the nature and the

amount of his claim to the landlord or his bailiff, before

the actual sale of the property levied upon.”

Thus, it can be seen that both under the Bankruptcy Act

and the applicable Pennsylvania law, the wage claimants

have a priority of payment over the landlord.

The decision of the court of appeals does not presume to

decide the effect of chattel mortgages in jurisdictions other

than Pennsylvania, and in factual situations different from

the case at bar. Its decision is manifestly correct under the

facts and the law in this case.

Petitioners urge that the instant case conflicts in prin-

ciple with the decision of the United States Circuit Court

of Appeals for the Fifth Circuit, in City of New Orleans v.

Harrell, 134 F. 2d 399. That case is readily distinguishable

from the case at bar. In that case the court held that a tax

10

lien, which the City of New Orleans claimed was a superior

lien, was ineffectual because it had not been properly per-

fected. The court there reached the conclusion that the

City’s claim for unpaid taxes was a statutory lien within the

meaning of the Bankruptcy Act, and that since it was not

accompanied by possession it did not take precedence over

a chattel mortgage which had been recorded prior thereto.

In the instant case, the landlord’s lien had been perfected

by the distraint and levy for rent, and his lien was superior

to the lien of the chattel mortgagees.

C. THE DECISION BELOW RAISES NO IMPORTANT

QUESTION OF FEDERAL LAW.

The Petitioners do not seriously urge thut an important

question of federal law has been raised by the decision in

this case. Instead, they assign as reasons for granting the

petition for a writ of certiorari that the issue is of tremen-

dous importance both legally and economically; that the ad-

verse effect of the lower court’s decision is critical; and that

the decision defeats the purpose of the Bankruptcy Act and

the intention of Congress. An examination of these reasons

will reveal that they are basically without merit, and that

they do not afford any compelling reason why certiorari

should be granted. The instant case has decided an issue

of fact and law arising under the peculiar facts of this case,

and the application of the Pennsylvania law with respect to

the relative priority of liens between a landlord and a chat-

tel mortgagee. Security transactions under the Uniform

Commercial Code are not at all affected by the decision of

the court of appeals. The chattel mortgages here in ques-

tion arose before the adoption of the Uniform Com-nercial

Code, and were given pursuant to the provisions of the

Pennsylvania Chattel Mortgage Act, supra. Every lender

who took a chattel mortgage under the Pennsylvania Chat-

tel Mortgage Act knew that in order to have a lien on the

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chattels which would be superior to a landlord’s lien in the ’

event of a distraint for rent, it must first obtain a landlord’s

waiver of the landlord’s right to distrain on the mortgaged

chattels. The Petitioners in this action failed to obtain such

a waiver. It is inconceivable that they were unaware of

this requirement of the Pennsylvania law. It is suggested

that the real reason for not obtaining the landlord’s waiver

was the refusal of the landlord to execute such a waiver.

The petitioners therefore assumed the risk of having their

security impaired if the landlord distrained for rent.

The briefs filed in the court below by the amici curiae on

behalf of certain banks, and the National Commercial Fi-

nance Conference, Inc. concerned themselves with the first

opinion of the court of appeals, which held that in Pennsyl-

vania a chattel mortgage was a “statutory lien” within the

meaning of the Bankruptcy Act. This holding of the court

of appeals has been cured by its action in withdrawing its

first opinion, and writing a second opinion, which, although

it reached the same conclusion as to priority of distribution

of the funds, held,

“It is not necessary to decide whether or not a Penn-

sylvania chattel mortgage is a ‘statutory lien’ within

the meaning of Section 67, sub. c * * *. For the pur-

poses of this opinion, however, we shall assume that it

is not a ‘statutory lien’ within the purview of Section

67. * %

Oe De vee

The amici curiae have thus accomplished their purpose. We ‘

are not here concerned with the law of other states, insofar &

as it relates to the priority of liens as between landlords

and chattel mortgagees. In Pennsylvania, a chattel mort-

gagee can assure its superiority over the landlord, and

thereby avoid the problem presented by the instant case by

the simple expedient of being selective in its lending, and

insisting upon obtaining a landlord’s waiver of his right to

distrain on mortgaged chattels.

The petitioners also argue that the holding of the court

12

below has already been extended in a Referee’s unreported

opinion in the matter of in re George Townsend Co., Inc.

(reprinted in petitioners’ appendix, p. 47). Petitioners ad-

mit that the facts in that case are substantially different

from the facts in the case at bar. There, the landlord had

not distrained and therefore had not perfected his lien on

the goods pledged under the chattel mortgage and condi-

tional sale. Petitioners state, “The Referee felt that the in-

stant case compelled the result that under state law the

landlord’s claim, though not a lien, was entitled to priority

over the security interests,” and ordered distribution ac-

cordingly. It is obvious that if the landlord’s claim was

not, in effect, a lien superior to the lien of the security inter-

ests, then the decision in the case at bar does not apply. A

reading of the referee’s opinion discloses that he was incon-

sistent in his reasoning and decision. At page 48 of peti-

tioners’ appendix the referee says:

“(2) Does the fact that the landlord did not distrain

before bankruptcy in this case, change the order of dis-

tribution as promulgated in the Quaker City case,

where there was such a distraint? I think it does. * * *”

The referee then proceeds to enter an order inconsistent

with his own reasoning. If the Referee in the Townsend

case was in error, the remedy lies in correcting that error

and not in upsetting the clearly correct decision of the court

of appeals in the instant case.

The petitioners’ final argument for the granting of a writ

of certiorari is that the decision in the instant case defeats

the purpose of the Bankruptcy Act and the intention of Con-

gress. Quite the contrary is true. The intention of Con-

gress, as clearly expressed in the Bankruptcy Act, is to ac-

cord administration expenses and wage claimants a priority

of payment over the landlord, whether the lien arising from

the distraint for rent is statutory or not. The Congress, in

its wisdom, has seen fit to grant priority to administration

expenses and wage claimants over the landlord, in spite of

13

any state law to the contrary. The court of appeals in this

case has given effect to the clear mandate of the Congress

by holding that administration expenses and the wage

claimants are to be paid before the landlord is paid. The

petitioners’ real position is that although they have failed to

properly protect themselves in accordance with the estab-

lished law of Pennsylvania, the state wherein their lien

arises, by not obtaining a landlord’s waiver of his right to

distrain on the mortgaged chattels, this court, for extrane-

ous reasons not connected with the issue herein presented,

should issue a writ of certiorari, and thereby advance their

interests. It is obvious that such a result is unwarranted.

Fee Pa wa

eT ee Tene eee P

VII. CONCLUSION.

The petitioners have conceded throughout this case, be-

fore the referee, before the district court, before the court

of appeals, and ever: before this court, that under the law

of Pennsylvania the landlord’s lien is superior to their lien.

On Page 13 of their petition, they state:

“It is manifestly clear from a reading of the Bank-

ruptcy Act that contractual or consensual liens valid ;

under state law were to be so recognized and treated in ;

the administration of a bankrupt’s estate”. (Emphasis

supplied. )

This is the crux of the matter. What they have failed to

say, however, is that the priority of the valid liens is estab- :

lished by the state law. Since they have conceded that :

under the state law their lien is subordinate to the landlord’s :

lien, it becomes increasingly obvious that the decision of the

court of appeals is correct. The Bankruptcy Act specifically

postpones payment of the landlord’s lien to payment of ad-

ministration expenses and wage claims. The real position 7

of the petitioners is that the mere act of bankruptcy has :

defeated the priority of liens established by the state law,

even though the state law is the basis for their lien. The

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court of appeals rightfully rejected this contention. The

Congress did not intend, nor does the Bankruptcy Act pro-

vide that a petition in bankruptcy should create a superior

lien where there was none under the state law before the

petition was filed.

For the reasons herein set forth, the petition for a writ of

certiorari should be denied.

Respectfully submitted,

DAVID GOLDBERG,

VERLIN & GOLDBERG,

Attorneys for Respondents,

1011 Finance Building,

Philadelphia 2, Penna.

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15

VIII. APPENDIX.

Section 1, Act of Assembly (Pa.), June 12, 1878,

(43 Purdon’s Penna. Statutes 230).

It is the true intent and meaning of the provisions of the .

act of assembly, entitled “An act for the better protection

of the wages of mechanics, miners, laborers and other,”

passed the ninth day of April, 1872, that the several classes

of laborers in said act mentioned shall have a preference

over landlords, in all claims for rent of any mines, manu-

factories or other real estate, held under lease, where the

lessee or lessees are the parties employing the miners, me-

chanics, laborers or clerks: Provided, That any person or

persons claiming a preference as above provided, shall give

notice of the nature and amount of his claim to the land-

lord or his bailiff, before the actual sale of the property

levied upon.

Title and Section 1 of the Pennsylvania Chattel Mortgage

Act, (21 Purdon’s Penna. Statutes 940.1 et seq.).

Relating to chattel mortgages on any chattel or chattels

of any kind or description, including, but not limited to,

livestock, poultry, farm machinery, farm equipment and

crops, grown, growing or to be grown; designating the oper-

ation and effect of the lien of such mortgages; providing for

the filing, indexing and docketing of such mortgages and

related instruments in prothonotaries’ offices; and prescrib-

ing prothonotaries’ fees; providing for the filing in Pennsyl-

vania of similar lien instruments originally filed or recorded

in other states; regulating the assignment, release, satisfac-

tion and extension of the lien of such mortgages; prescrib-

ing methods of foreclosure; defining defaults and violations;

and fixing penalties.

Sa i AEE VEN LOL,

16

Section 1. Any person, association, partnership or cor-

poration may give as security for any funds borrowed or

to be borrowed or any pre-existing indebtedenss, a bond or

note, with or without a confession of judgment clause, se-

cured by a chattel mortgage upon any chattel or chattels of

any kind or description, including, but not limited to, live-

stock, poultry, farm machinery, farm equipment and crops,

including annual or perennial crops, and other plant prod-

ucts, either grown or growing at the time of the execution

of such chattel mortgage, or to be planted or grown within

one year thereafter. For the purposes of this act all such

chattels and crops shall be deemed to be personal property

and mortgageable as such. The indebtedness secured by

any such chattel mortgage shall not bear interest in excess

of the rate which the creditor is permitted by law to charge

at the time of the execution of such mortgage. (Emphasis

supplied.) (Repealed by the Uniform Commercial Code—

Secured Transactions, Act of Assembly (Pa.) of April 6,

1953, Public Law 3, 12A Purdon’s Penna. Statutes, Section

10-102.)