Dutch American Mercantile Corporation, a Creditor, Itemlab, Inc., as Debtor-In-Possession, and Isidore Cherno, Trustee v. Eighteenth Avenue Land Co.

MARSHALL, Circuit Judge.

Itemlab, Inc., petitioned for an arrangement under Chapter XI of the Bankruptcy Act. It then moved, as debtor-in-possession, for a declaration that a certain chattel mortgage executed jointly by the debtor, Itemlab, Inc., and Itemco, Inc. in favor of Eighteenth Avenue Land Co., appellant herein, is not a valid lien. The challenge was premised on the failure of two-thirds of the debt- or’s stockholders to consent to the execution of the mortgage under § 16 of the New York Stock Corporation Law. The referee denied the motion on the grounds that certain papers annexed to…