General Electric Credit Corp. v. Shoup (In re Shoup)

34 B.R. 851, 37 U.C.C. Rep. Serv. (West) 604, 1983 Bankr. LEXIS 5191
CourtDistrict Court, W.D. Pennsylvania
DecidedOctober 24, 1983
DocketBankruptcy No. 82-00329; Adv. No. 82-0228
StatusPublished

This text of 34 B.R. 851 (General Electric Credit Corp. v. Shoup (In re Shoup)) is published on Counsel Stack Legal Research, covering District Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
General Electric Credit Corp. v. Shoup (In re Shoup), 34 B.R. 851, 37 U.C.C. Rep. Serv. (West) 604, 1983 Bankr. LEXIS 5191 (W.D. Pa. 1983).

Opinion

MEMORANDUM AND ORDER

WILLIAM B. WASHABAUGH, Jr., Bankruptcy Judge:

The debtor purchased a 1979 Kenworth tractor on November 19, 1979 for use in his trucking business and financed the transaction by means of a security agreement assigned to G.E. Credit Corporation in the sum of $77,693.28 payable in monthly installments of $1,618.61 beginning January 1,1980 which was duly perfected as a security interest by notation on the certificate of title for said tractor. Engine trouble developed sometime thereafter and in March, 1982 the tractor was towed to the Great Lakes Energy Systems which reported the engine was beyond repair and would have to be removed and replaced. The period of the warranty of the manufacturer expired the preceding November and the truck had been operated 64,000 miles further than the covered mileage of 200,000, but the manufacturer offered a compromise allowance of $5,371.33 which was accepted and which reduced the additional amount payable for the installation of the required new motor to $8,500.

Great Lakes installed the new motor in the truck, but removed it therefrom when it learned the debtor had filed the instant proceeding in voluntary bankruptcy June 7, 1982, and the testimony that the vehicle has a wholesale value of $26,000 and liquidation value of $20,000 with the motor installed therein, and a wholesale value of $13,000 and liquidation value of $10,000 without such motor was not contradicted.

Great Lakes Energy Systems removed the motor it had installed in the truck when it learned of the bankruptcy filing, and retains its possession under its asserted artisan’s lien. The question before us in this action of G.E. Credit Corporation for reclamation of the truck, adequate protection and/or relief from stay, is whether it can retain such possession as against the secured claim of G.E.

Section 9310 of the Pa.U.C.C. (13 Pa.C. S.A. § 9310) is as follows:

“When a person in the ordinary course of his business furnishes services or materials with respect to goods subject to a security interest, a lien upon goods in the possession of such person given by statute or rule of law for such materials or services takes priority over a perfected security interest unless the lien is statutory and the statute expressly provides otherwise.”

The law of Pennsylvania on this subject as enunciated in an opinion of Chief Justice Roberts in Associates Financial Services Co., Inc., v. Odell, at 491 Pa. 1, 417 A.2d 604 (1980) in affirming a similar holding by the Superior Court of Pennsylvania which reversed a contrary holding of the Court of Common Pleas of Butler County, is clearly that an artisan’s common law lien for services performed on property subject to a security interest is enforcible in priority to an underlying secured claim only if [853]*853the holder thereof consents thereto. See also Associates Commercial Corp. v. Bergey’s G.M.G. Inc., 19 B.R. 6 (Bkrtcy.E.D.Pa. 1982, Goldhaber, J.) reaching the conclusion that the Chief Justice’s opinion concurred in by a majority of the Supreme Court is binding on the federal courts.

The law of Ohio in which the plaintiff’s garage to which the vehicle was towed for the necessary repairs similarly recognizes priority rights of the underlying lien- or: Commonwealth Loan Co. v. Berry, 2 Ohio St.2d 169, 207 N.E.2d 545 (1965); Commonwealth Loan Co. v. Downtown Lincoln Mercury Co., 4 Ohio App.2d 4, 211 N.E.2d 57 (1964).

The record is clear that a representative of G.E.C.C. called Great Lakes Energy Systems on the telephone to ascertain whether the vehicle was in its possession without mentioning the existence of its security interest thereagainst before the making of the repairs, but it is equally clear that Mr. Duke, the service manager of Great Lakes who responded to the call, made no inquiry as to the reason it was made, or whether G.E.C.C. had a lien on the vehicle or desired or consented to the ordered repairs being made. It is also clear that the debtor had frequently had extensive repairs made by Great Lakes to its vehicles in the past and that they were uniformly paid for in due course; that said Great Lakes was content to look to said debtor for payment for the instant repairs and in the alternative to rely on its claimed right to retain possession of the vehicle under its possessory lien until payment was obtained; that it was wholly indifferent and unconcerned as to whether there was an underlying lien of G.E.C.C. or any other financing institution thereagainst under the testimony of its service manager, Richard L. Duke (from pages 56 & 57):

“Q. All right. Did Mr. Shoup at that point tell you anything about General Electric?
“A. No. I knew he had it financed, but—
“Q. You did know he had it financed?
“A. Yes.
“Q. So, at the time you planned to make the repairs you were aware that the truck had been financed, is that correct?
“A. Yes.”

(from page 58):

“Q. And you assumed that the value you could get for the truck was far in excess of what he owed you?
“A. I did not want the truck.
“Q. I know.
“A. The only thing that I was interested in, even if I repaired or put the engine in, was the engine. We are a distributor for Detroit Diesel and we do not deal in trucks. We have no—
“Q. All right. Now, when you received the call from General Electric, did he identify — did you ask him his interest, why he was interested in Mr. Shoup’s truck?
“A. No. He just indicated to me that he wanted to know when the truck left.”

(from page 59):

“Q. And did he ask you what repairs were being made?
“A. He asked me what we were doing to it and I said we were installing a new engine.
“Q. All right. Now, at that point did you ask him if it was all right to make these repairs?
“A. I didn’t know he had the loan on the truck.
“Q. All right. So, during that conversation on the 23rd you asked for no consent from General Electric, is that your testimony?
“A. At this point I knew Mr.

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Related

Associates Financial Services Co. v. O'Dell
417 A.2d 604 (Supreme Court of Pennsylvania, 1980)
Bigelow-Sanford, Inc. v. Security-Peoples Trust Co.
450 A.2d 154 (Superior Court of Pennsylvania, 1982)
Commonwealth Loan Co. v. Downtown Lincoln Mercury Co.
211 N.E.2d 57 (Ohio Court of Appeals, 1964)
Commonwealth Loan Co. v. Berry
207 N.E.2d 545 (Ohio Supreme Court, 1965)

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Bluebook (online)
34 B.R. 851, 37 U.C.C. Rep. Serv. (West) 604, 1983 Bankr. LEXIS 5191, Counsel Stack Legal Research, https://law.counselstack.com/opinion/general-electric-credit-corp-v-shoup-in-re-shoup-pawd-1983.