The opinion of the court was delivered by: MEANEY
This matter comes before the Court on a petition brought on for hearing by an order to show cause by Matson Navigation Company to impress a first, prior and paramount lien upon certain aircraft purchased by the debtor, Veterans' Air Express Company, Inc., from the United States of America, acting by and through War Assets Administration, subject to chattel mortgages in favor of the United States recorded in the Civil Aeronautics Administration at its central office at Washington, D.C.
Briefly summarized, the facts of the care are that Veterans' Air Express Company, Inc., purchased two 4-engine Douglas Aircraft from the United States in April and May 1946. Each of the aircraft carried a Registration number issued by Civil Aeronautics Administration to Veterans' Air Express Company, Inc. The sale of aircraft bearing Registration No. NC 58003 was recorded on April 10, 1946, the bill of sale having been recorded as Document No. 185684 and the chattel mortgages in favor of the United States as Document No. 185685. The sale of aircraft bearing Registration No. NC 5777 was recorded on May 24, 1946, the bill of sale having been recorded as Document No. 196041 and the chattel mortgage in favor of the United States as Document No. 196042. There was no other recordation of the bills of sale or of chattel mortgages.
After delivery of the aircraft to Veterans' Air Express Company, Inc., it turned over the airplanes to the petitioner, Matson Navigation Company for repairing, overhauling, reconditioning and conversion. The consent of the United States was not sought or obtained. Prior to the filing of the petition for reorganization of Veterans' Air Express Company, Inc., charges in favor of Matson Navigation Company in the sum of approximately $ 116,898.10 had accrued. After the filing of the petition for reorganization, the petitioner, Matson Navigation Company, incurred additional charges of $ 30,722.19 for the account of the debtor and of the Trustees in Reorganization.
The chattel mortgages of the United States represent an unpaid obligation due upon the aircraft of approximately $ 122,187.51.
The United States appears in opposition to the petition, contending that upon recordation of the chattel mortgages in favor of the Government with the Civil Aeronautics Administration a lien superior to any lien which might be created by State Law was effected.
In the field of air transportation Congress early undertook to preempt the field of regulation and to deal with the entire field of activity by enactment of the Civil Aeronautics Act, Act of June 23, 1938, c. 601, 52 Stat. 977, 49 U.S.C.A. § 401 et seq., as amended. Section 3 of the Act, 49 U.S.C.A. § 403, states that 'There is hereby recognized and declared to exist in behalf of any citizen of the United States a public right of freedom of transit in air commerce through the navigable air space of the United States.' The declaration of policy stated by Congress in Section 2 of the Act, 49 U.S.C.A. § 402, recites that among its purposes is the encouragement and development of civil aeronautics and 'of an air-transportation system properly adapted to the present and future needs of the foreign and domestic commerce of the United States, of the Postal Service, and of the national defense.' Under the provisions of Section 1 of the Act, 49 U.S.C.A. § 401, 'operation of aircraft' or 'operate aircraft' is defined in subsection (26) as 'the use of aircraft, for the purpose of air navigation and includes the navigation of aircraft. * * * ' Subsection (15) defines 'civil aircraft of the United States' as any aircraft 'registered as provided in this Act.'
Section 501 of the Civil Aeronautics Act, 49 U.S.C.A. § 521, so far as may be pertinent here, is as follows:
'(a) It shall be unlawful for any person to operate or navigate any aircraft eligible for registration if such aircraft is not registered by its owner as provided in this section, or * * * to operate or navigate within the United States any aircraft not eligible for registration: Provided, That aircraft of the national defense forces of the United States may be operated an navigated without being so registered if such aircraft are identified, by the agency having jurisdiction over them, in a manner satisfactory to the Administration of Civil Aeronautics. The Administration of Civil Aeronautics may, by regulation, permit the operation and navigation of aircraft without registration by the owner for such reasonable periods after transfer of ownership thereof as the Administrator of Civil Aeronautics may prescribe.
'(b) An aircraft shall be eligible for registration if, but only if --
'(1) It is owned by a citizen of the United States and is not registered under the laws of any foreign country; or
'(c) Upon request of the owner of any aircraft eligible for registration, such aircraft shall be registered by the Administrator of Civil Aeronautics and the Administrator of Civil Aeronautics shall issue to the owner thereof a certificate of registration.
'(d) Applications for such certificates shall be in such form, be filed in such manner, and contain such information as the Administrator of Civil Aeronautics may require.'
Finally, Section 503 of the Act, 49 U.S.C.A. § 523, provides as follows:
'(a) The Board shall establish and maintain a system for recording all conveyances affecting the title to, or interest in, any civil aircraft of the United States.
'(b) No conveyance made or given on or after the effective date of this section, which affects the title to, or interest in, any civil aircraft of the United States, or any portion thereof, shall be valid in respect of such aircraft or portion thereof against any person other than the person by whom the conveyance is made or given, his heir or devisee, and any person having actual notice thereof, until such conveyance is recorded in the office of the secretary of the Board. Every such conveyance so recorded in the office of the secretary of the Board shall be valid as to all persons without further recordation. Any instrument, recordation of which is required by the provisions of this section, shall take effect from the date of its recordation, and not from the date of its execution.
'(c) No conveyance shall be recorded unless it states the interest in the aircraft of the person by whom such conveyance is made or given or, in the case of a contract of conditional sale, the interest of the vendor, and states the interest transferred by the conveyance, and unless it shall have been acknowledged before a notary public or other officer authorized by law of the United States, or of a ...