In re Jarmulowsky

FEARNFD HAND, District Judge (after stating the facts as above). This question depends entirely upon the law of the state of New York as to whether a mortgagee’s title to rents of realty after default is good' against the creditors of the mortgagor, where the mortgage contains an assignment of rents to become effective on default. As between the-bankrupt and the mortgagee the agreement would, of course, be valid, and it would seem that the creditors should stand in no better position than the bankrupt, except by virtue of some statute or rule forbidding secret liens. No such rule exists so far'as I know, nor any reason why the agreement should not bé carried out. It must be admitted that the law is in some doubt upon the question when it arises between successive mortgagees. The last case is Sullivan v. Rosson, 166 App. Div. 68, 151 N. Y. Supp. 613, in which the Appellate Division for the First Department decided by a vote of three-to two that an agreement like that at bar prevailed over the right of a junior mortgagee, who had secured a receiver in a foreclosure suit. Harris v. Taylor, 35 App. Div. 462, 54 N. Y. Supp. 864, also by a.di [143] vided court, held the same thing when the agreement authorized the mortgagee to collect the rents from the outset. Thomson v. Erskine, 36 Misc. Rep. 202, 73 N. Y. Supp. 166, a decision of Justice McAdam for the Appellate Term, held the same thing as Sullivan v. Rosson, supra. Judge Hough, in Re Banner (D. C.) 149 Fed. 936, made a contrary ruling in a bankruptcy case; but he distinguished Harris v. Taylor, supra, because the condition in that case applied from the outset. This decision was before Sullivan v. Rosson, supra, which, though not authoritative, is as near an exposition of the state law as is available. It does not seem to me that the same question is presented here as in cases between a mortgagee in possession and a mortgagee with an assignment in his mortgage; but, if it be, then I think I should follow the last decision of the state court. The amount at stake does not justify an action in the state court. The petitioner may take his order.