William O. Douglas

“ Security transactions entered into in good faith years before the bankruptcy could be upset if the trustee were ingenious enough to conjure up a hypothetical situation in which a hypothetical creditor might have had such a right. The rule pressed upon us would deprive a mortgagee of his rights in States like Michigan, if the mortgage had been executed months or even years previously and there had been a delay of a day or two in recording without any creditor having been injured during the period when the mortgage was unrecorded. ”

“ Section 70, sub. e enables the trustee to set aside fraudulent transfers which creditors having provable claims could void. The construction of § 70, sub. c which petitioner urges would give the trustee power to set aside transactions which no creditor could void and which injured no creditor. That construction would enrich unsecured creditors at the expense of secured creditors, creating a windfall merely by reason of the happenstance of bankruptcy.
It is true that in some instances the trustee has rights which existing creditors may not have. ”

“ The bankrupt borrowed money from respondent on November 4, 1957, giving as security a chattel mortgage on an automobile. In Michigan, where the transaction took place, mortgages were void as against creditors of the mortgagor unless filed with the Register of Deeds [1] with a special dispensation to purchasemoney mortgages if filed within 14 days of the execution of the mortgage. This mortgage, however, was not a purchasemoney mortgage ”