In re Office Design, Inc.

George Tilzer, J.

The assignee for the benefit of creditors moves for an order to proceed with a sale of assets located in the former showroom of the assignor or to direct the sale and hold the proceeds pending further order of the court with regard to any lien or claim of Reed Trading Corporation. By cross motion the said corporation moves to compel the assignee to turn over to it the said assets. This dispute arises out of the following facts: The assignment herein was executed on September 12,1962 and filed the next day. It appears that the assignor entered into a mortgage of the said assets with the movant corporation on February 21,1962 and since that time a substantial amount has been paid on account thereof. At that time the assignor presented evidence of its solvency. This mortgage was duly filed on February 23, 1962. Prior to September 7, 1962 the assignor defaulted, the unpaid balance came due, the mortgagee took possession and sold the assets. The money received is being held by the auctioneer. The assignee contends that the mortgage was invalid pursuant to section 230-a of the Lien Law, and that the sale by the mortgagee was not made in good faith. Section 230-a holds in part that a mortgage on merchandise and fixtures is void against creditors if the section is not complied with. The section was not complied with. However, a reading of the items with which the abated mortgage is concerned indicates that none of them was merchandise, they were all fixtures and as such that section does not apply. The assignee, therefore, had no rights with relation thereto and hence cannot object to the sale. Accordingly, the motion is denied and the cross motion granted.