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IN RE PARK CORRUGATED BOX CORP.

January 6, 1966

In the Matter of PARK CORRUGATED BOX CORP., Bankrupt


The opinion of the court was delivered by: AUGELLI

 This matter is before the Court on petition of Manufacturers Leasing Corporation (Manufacturers) for review of an order of the Referee in Bankruptcy (Referee), made on March 25, 1965, which denied Manufacturers' petition for reclamation of a certain machine from the Bankrupt herein, Park Corrugated Box Corp. (Park).

 On February 8, 1965 Park filed a petition for an arrangement under Chapter XI of the Bankruptcy Act. Manufacturers was listed in Park's schedules as a security-holding creditor in the amount of $34,952.60. On March 8, Manufacturers filed its petition to reclaim from Park the machine above mentioned, which was used in the manufacture of corrugated boxes, and known as a "Hooper Combined Printer Slotter, Model WSG2P-200-E, size 50 X 103 1/2 inches". On that date the Referee signed an order directed to James J. Murner, Jr., Receiver for Park, to show cause why that relief should not be granted.

 On March 18, the Referee held a hearing on said order to show cause, and denied the petition for reclamation on the ground that the security agreement covering the machine was not properly filed with the Secretary of State, and that therefore Manufacturers was not a secured creditor entitled to reclamation. An order to this effect was entered on March 25, 1965. In the meantime, also on March 18, Park was adjudicated a bankrupt, and the Receiver, Murner, was thereafter appointed Trustee.

 The Referee filed his opinion in this matter on June 14, 1965, and Manufacturers' petition for review was filed on June 28. The following are the facts disclosed by the record in this case.

 On September 4, 1963, Manufacturers and Park entered into a "Conditional Sale and Security Agreement", whereby Park purchased the subject machine from Manufacturers for the sum of $47,405.00. The agreement stated that Manufacturers was to have a purchase money security interest in the collateral to secure the balance due, that Manufacturers was to have all the rights of a secured party under applicable state law, and that Manufacturers was to retain title to the collateral until the balance was paid in full.

 The agreement between Manufacturers and Park was filed twice with the Register of Deeds of Passaic County, on September 10, 1963 and again on October 10, 1963. It had not been filed with the Secretary of State in Trenton, New Jersey.

 Under the Uniform Commercial Code as adopted in New Jersey, N.J.S.A. 12A:9-401(1) provides that:

 
"The proper place to file in order to perfect a security interest is as follows:
 
(a) * * * (not applicable);
 
(c) In all other cases, in the office of the Secretary of State."

 Manufacturers contends that the machine was a fixture, that under N.J.S.A. 12A:9-401(1)(b), the agreement was properly filed in the County Register's Office, and that therefore Manufacturers has a perfected security interest in the machine prior to the rights of the Trustee. The Trustee argues, as the Referee has found, that the machine was not a fixture, that under N.J.S.A. 12A:9-401(1)(c), the agreement should have been filed in the office of the Secretary of State, and that therefore Manufacturers' security interest was not perfected. The issue in this case is thus simply whether the machine in question is or is not a fixture within the meaning of N.J.S.A. 12A:9-401(1)(b).

 N.J.S.A. 12A:9-313(1) provides that the law of New Jersey determines whether and when goods become fixtures. The law in New Jersey concerning fixtures has most recently been reviewed in the case of Fahmie v. Nyman, 70 N.J.Super. 313, 175 A.2d 438 (App.Div.1961). In that case, the court discussed the two tests used in New Jersey to determine whether and when a chattel ...


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