In re Decker

10 B.R. 440, 31 U.C.C. Rep. Serv. (West) 663, 1981 Bankr. LEXIS 3923
CourtDistrict Court, W.D. Louisiana
DecidedApril 14, 1981
DocketBankruptcy No. 480-0037-LC
StatusPublished

This text of 10 B.R. 440 (In re Decker) is published on Counsel Stack Legal Research, covering District Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Decker, 10 B.R. 440, 31 U.C.C. Rep. Serv. (West) 663, 1981 Bankr. LEXIS 3923 (W.D. La. 1981).

Opinion

OPINION

RODNEY BERNARD, Jr., Bankruptcy Judge.

Hearing was held on January 8th on an opposition of Chrysler Credit Corporation to the trustee’s Objection to the Claim.

STATEMENT OF THE FACTS

James Decker, the debtor herein, purchased a 1977 Dodge Aspen in Birmingham, Alabama on about August 12,1978. At the time of the purchase Mr. Decker told the salesperson that he was in the service, assigned to Fort Polk, Louisiana; he was [441]*441home on leave and planned to go right back to Louisiana with his car. He also mentioned that his assignment in Louisiana was to be a fairly lengthy one. Mr. Decker gave his permanent address in Alabama. After the purchase of the automobile he returned to Louisiana with his wife and newly purchased automobile. From Louisiana Mr. Decker made payments on the car. The address on the payment book shows Mr. and Mrs. Decker’s Fort Polk, Louisiana address. All the checks to Chrysler showed Mr. and Mrs. Decker’s Fort Polk address. An extension agreement for one of the debtors’ monthly payments was made to and from the debtors’ Fort Polk address. Mr. Decker has not physically lived in Alabama since 1970, neither Mr. nor Mrs. Decker own any property in Alabama.

Mr. and Mrs. Decker filed a voluntary petition in bankruptcy on July 25, 1980. The trustee Mr. William G. McClanahan objects to the claim filed by Chrysler Credit Corporation and asks that the claim be reclassified as unsecured. The trustee contends that for Chrysler’s claim to be secured it must have perfected it’s lien in Louisiana. The trustee further contends the creditor had knowledge of the continuous presence of the automobile in Louisiana since 1978 but has taken no steps to file its lien in accordance with Louisiana law.

Chrysler Credit Corporation, the creditor herein, contends that Mr. Decker is still a domiciliary of Alabama and is only present in Louisiana because of military compulsion. The creditor thus insists the state of the debtor’s domicile should control and only recordation in Alabama is necessary to perfect the lien as against third parties.

CONCLUSIONS OF LAW

The outstanding issue in this case is whether Chrysler’s lien has to be recorded in Louisiana in order to be effective as to the trustee. In order to reach this question, the questions of whether Alabama law or Louisiana law should be applied and the recordation requirements of these two jurisdictions must be considered. Lastly, the analysis must consider whether the fact that the debtor’s presence in Louisiana due to military compulsion would alter the choice of law considerations.

The mere fact that chattels are taken across state lines does not change property interests which already exists in the goods. The authorities on conflicts of law do not disagree on this principle. Generally, whenever a state does not recognize an interest created under the law of another state, it is because the new interest which is recognized arose out of a new transaction involving the chattel after its removal. American Conflicts Law 3rd, Robert A. Laflar.

If merely bringing a chattel across state lines operated to invalidate a lien it would be a violation of the due process clause of the Federal Constitution. To deprive an owner of an interest in property valid in the original state, without a judicial proceeding, a consensual or other transaction to which the law would attach, would deprive the interest holder of his property. The principle of comity would also prevent the second state from arbitrarily refusing to recognize an interest created by the laws of a sister state. American Conflicts Law, 3rd; supra.

Alabama, has adopted the Uniform Commercial Code. The U.C.C. provides for third party claimants by requiring that a security interest which is valid at the time the collateral is removed to another state, will continue to be valid and subject to the law of the state where the security interest was created for four months after removal. The four month period is allowed so that the creditor has an opportunity to refile or perfect the interest according to the laws of the second state. After this four month period the laws of that state to which the collateral has been removed then govern the interests of the creditor, debtor and third parties. “Conflict of Laws: Security Interests in Movables”. 39 Louisiana Law Review 913 (1975).

Considering the conflicts of laws rules as well as the Alabama U.C.C. principles, it appears that Chrysler’s interest in the chat[442]*442tel is valid and recognized in other states as between the parties themselves. As to transactions between third parties in the state of removal, Alabama law would protect the creditor’s interest for four months. As to transactions which arise in the state of removal Louisiana law could clearly apply-

The Vehicle Certificate of Title Law, Louisiana Revised Statutes 32:710, rather than the Chattel Mortgage Act, Louisiana Revised Statutes 9:5351 through 9:5365, applies to vehicles. This is reflected in La R.S. 32:701 which reads as follows:

On and after December 15, 1950, the sole and exclusive method of executing and recording chattel mortgages and the priority of such mortgages which are subject to this Chapter, shall be through compliance with the provisions of this Chapter. All other chattel mortgages do not come within the provisions of the Chapter and shall continue to be governed exclusively by existing laws, particularly R.S. 9:5351-9:5365.

Under the Louisiana Vehicle Certificate of Title Act, La R.S. 32:701 through 32:734, Louisiana requires recordation of a title certificate in order to affect third parties when a vehicle is housed in Louisiana, or present in Louisiana for purposes other than transportation through Louisiana. Recordation is also required if the mortgagee has consented to a sale or other disposition of the property in Louisiana. These principles are reflected in La R.S. 32:710(B) and (C), which are as follows:

B. In order to affect third persons the chattel mortgage must be by authentic act or by private act duly authenticated in any manner provided by law, except as to a mortgage given by a dealer to secure a floor plan loan. Every such mortgage other than one securing a floor plan shall be effective as against third persons as of the time of its execution by the parties if the chattel mortgage is received and such receipt is validated by the office of the commissioner within fifteen days after such date of execution. Provided that in the case of an authentic act the time of execution shall be the date of execution before a notary public or other duly authorized officer and if by duly acknowledged private act the date of signing by the parties shall be the time of execution. If the chattel mortgage is not received and such receipt is not validated by the office of the commissioner within fifteen days after such date of execution it shall be effective as to all persons from the date such chattel mortgage is delivered to the commissioner, and the claim shall be superior in rank to any privilege or preference arising subsequently thereto. The commissioner shall, upon request of any person, issue a certification whenever the chattel mortgage is delivered to his office.
[[Image here]]
C.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Pacific Finance Loans v. Guidry
69 So. 2d 56 (Louisiana Court of Appeal, 1953)
GFC CORPORATION v. Rollins
59 So. 2d 108 (Supreme Court of Louisiana, 1952)

Cite This Page — Counsel Stack

Bluebook (online)
10 B.R. 440, 31 U.C.C. Rep. Serv. (West) 663, 1981 Bankr. LEXIS 3923, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-decker-lawd-1981.