Peoples Bank v. Galliker Dairy Co.

542 A.2d 539, 374 Pa. Super. 147, 6 U.C.C. Rep. Serv. 2d (West) 1629, 1988 Pa. Super. LEXIS 1366
CourtSuperior Court of Pennsylvania
DecidedApril 28, 1988
DocketNo. 1031
StatusPublished

This text of 542 A.2d 539 (Peoples Bank v. Galliker Dairy Co.) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Peoples Bank v. Galliker Dairy Co., 542 A.2d 539, 374 Pa. Super. 147, 6 U.C.C. Rep. Serv. 2d (West) 1629, 1988 Pa. Super. LEXIS 1366 (Pa. Ct. App. 1988).

Opinion

BROSKY, Judge:

This is an appeal from an order granting appellee’s Motion for summary judgment and denying appellant’s Motion for summary judgment.

Appellant questions the propriety of the entry of summary judgment in favor of appellee instead of it in terms of (1) whether the law in effect at the time required the filing of amended financing statements when the debtor changes name or corporate structure or transfers the subject collateral to a newly created entity; and (2) whether the amended financing statements are sufficient to preserve a secured party’s lien against a subsequent purchaser of the subject collateral when the amended financing statements are unsigned by the debtor and misindexed by the Prothonotary.

We reverse the order granting appellee’s Motion for summary judgment and denying that of appellant’s and vacate and remand for entry of summary judgment in favor of appellant and against appellee.

The undisputed facts are as follows. In 1977, appellant loaned the sum of $38,500.00 to one Roger C. Eddy, doing [150]*150business as Marshall Manufacturing (hereinafter “Eddy”), located at One Shenango Street, New Castle, Pennsylvania. To secure the loan, Eddy executed a security agreement in the nature of a chattel mortgage granting appellant a security interest in all machinery, equipment, fixtures and parts owned or thereafter acquired by Eddy, including any proceeds. Appellant filed copies of the requisite financing statement with the Prothonotary of the Court of Common Pleas of Lawrence County and with the Secretary of the Commonwealth to perfect its interest in the said collateral.

In 1978, appellant again transacted a loan with Eddy in the amount of $130,000.00. Eddy conveyed to appellant a security interest in all accounts receivable, equipment, proceeds and stock then owned and thereafter acquired by Eddy as collateral for the said loan. Once again, appellant filed the requisite copies of a financing statement with the Prothonotary and the Commonwealth Secretary, as aforesaid, to perfect its interest in the stated collateral.

In 1980, Eddy participated as an incorporator in the incorporation of Shenango Enterprises, Inc. (hereinafter “Shenango”) located at One Shenango Street, New Castle, Pennsylvania, which is the same address given for Eddy on the subject security agreements and financing statements.

It was not until January 1981 that appellant discovered that Shenango was in possession of collateral which was the subject of the aforesaid security interests of appellant. As a result, appellant demanded that Shenango enter into assumption agreements for each of the two loans transacted between appellant and Eddy. In these agreements, Shenango, inter alia, acknowledged and assumed Eddy’s obligations to appellant and, in consideration for appellant’s consent to the transfer of the subject collateral from Eddy to Shenango, Shenango agreed to execute and file new financing statements. Shenango failed to execute and file the financing statements. Subsequently, in February and April 1981, appellant filed an amendment to the financing statements previously lodged with the Prothonotary and the [151]*151Commonwealth Secretary evidencing a change in the name of the debtor from Eddy to Shenango.

Appellant then learned that Shenango had sold to appellee a Uniloy Model No. 5710, Serial No. 2234, blow molding machine for $107,000.00 in March 1982. The said blow molding machine was part of the collateral subject to appellant’s security interests. Shenango had apparently defaulted on the loans for which it had become responsible under the assumption agreements entered into between it and appellant. Accordingly, on December 9, 1982, appellant demanded that appellee surrender to it the subject blow molding machine. When appellee refused appellant’s demand, the latter instituted an action in replevin against appellee for possession of the said machine or, alternatively, for damages in the amount of the value of the equipment to the extent of appellant’s security interests.

After the pleadings closed, both appellant and appellee filed their respective Motions for summary judgment and accompanying affidavits. The trial court, after argument and submission of briefs, entered an Order granting appellee’s Motion and denying appellant’s Motion premising its disposition on the failure to file new financing statements executed by Shenango, the lack of execution by Shenango of the amended financing statements which appellant did file, thus, according to the trial court, obviating perfection of any security interest of appellant in the collateral transferred to Shenango, and the failure of the Prothonotary of the Lawrence County Common Pleas Court to properly index the amended financing statements evidencing the change in the name of the debtor to Shenango. This timely appeal followed.

We state from the outset that we have no quarrel with the trial court’s determination of this matter as one properly calling for disposition by summary judgment. Rather, our disagreement lies with the trial court’s decision to grant appellee’s Motion instead of appellant’s. Both appellant and appellee filed Motions for summary judgment. Their respective motions were based upon the uncontroverted [152]*152pleadings and were supported by affidavits. Summary judgment may be had where the pleadings and supporting affidavits manifest the lack of a genuine issue of material fact, and the movant is therefore entitled to judgment as a matter of law. Rossi v. Pennsylvania State University, 340 Pa.Super. 39, 489 A.2d 828 (1985); Pa.R.C.P. 1035(a), (b).

Reduced to its most elemental components, appellant’s arguments may be summarized as follows: First, a new financing statement was not required when Shenango assumed the obligations of Eddy, or, in other words, the amended financing statements filed by appellant for the purpose of manifesting the change in name of the debtor, only, were sufficient to preserve the perfected security interests appellant already had in the subject collateral. Secondly, these amended financing statements filed by appellant did not also require execution by Shenango. Lastly, the misindexing or nonindexing of these amended financing statements by the Prothonotary did not fail to give notice to appellee of appellant’s perfected status in the collateral even though the former was unable, because of this misindexing or nonindexing by the Prothonotary, to ascertain the existence of any perfected interest against Shenango, as debtor. Our reading of the version of the Uniform Commercial Code in existence at the time of the subject transactions1 and the applicable case law satisfies us that the trial court erred in entering summary judgment in favor of appellee.

From our reading of the version of Article Nine of the Uniform Commercial Code (hereafter “the Code”) in effect at the time the assumption agreements were executed, the amended financing statements changing the [153]*153name of the debtor were filed by appellant and the sale of the machinery to appellee was effected, we are unable to glean any language therein requiring a secured creditor to amend, refile or rerecord a financing statement subsequent to a debtor’s change of trade name. This is so because the version of the Code then applicable imposed no such duty. In the Matter of Hemminger, 20 B.R. 357 (W.D.Pa.1982);

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542 A.2d 539, 374 Pa. Super. 147, 6 U.C.C. Rep. Serv. 2d (West) 1629, 1988 Pa. Super. LEXIS 1366, Counsel Stack Legal Research, https://law.counselstack.com/opinion/peoples-bank-v-galliker-dairy-co-pasuperct-1988.