Reisdorf Bros. v. Clinton Corn Processing Co.

130 A.D.2d 951, 516 N.Y.S.2d 375, 3 U.C.C. Rep. Serv. 2d (West) 1956, 1987 N.Y. App. Div. LEXIS 46931

Opinion

Order and judgment unanimously reversed, on the law, without costs, and motion denied. Memorandum: Between 1980 and 1981, plaintiff made operating advances to Peter Dragan, doing business as Dragan Grain Farms. In return, Dragan granted a security interest in his 1981 corn crops to the plaintiff. Plaintiff’s UCC-1 financing statement, filed in the Orleans County Clerk’s office, listed the debtors as "Dragon Grain Farms and Peter Dragon, individually”. Special Term correctly held that the misspelling of the debtors’ names was so seriously misleading as to render plaintiff’s security interest in the corn crops unperfected (Deere Co. v Phal Constr. Co., 34 AD2d 85; UCC 9-402 [1], [8]).

Although plaintiff’s security interest was unperfected, plaintiff’s rights would be superior to those of a buyer who purchased Dragan’s corn with actual knowledge of plaintiff’s security interest (UCC 9-301 [1] [c]). In our view, this record presents a question of fact concerning defendants’ actual knowledge of plaintiff’s security interest, and, therefore, summary judgment was improperly granted. In opposition to defendants’ motion for summary judgment, plaintiff’s treasurer asserted in an affidavit that, when she learned of Dragan’s violation of plaintiff’s security interest, she sent two letters and made two telephone calls to defendants objecting to their purchase of corn from Peter Dragan; however, defendants continued to purchase corn from Dragan. This evidence of defendants’ actual knowledge of plaintiff’s securing interest was sufficient to preclude a grant of summary judgment. (Appeal from order and judgment of Supreme Court, Wyoming County, Easier, J.—summary judgment.) Present—Doerr, J. P., Denman, Green, Balio and Davis, JJ.