ACG Credit Co. v. Gill
| Decision Date | 23 May 2005 |
| Docket Number | No. 2004–525.,2004–525. |
| Citation | 876 A.2d 188,152 N.H. 260 |
| Court | New Hampshire Supreme Court |
| Parties | ACG CREDIT COMPANY, LLC, v. Melanie GILL and another. |
Nixon Peabody LLP, of Manchester (Jamie N. Hage and Gordon J. MacDonald on the brief, and Mr. Hage orally), for the plaintiff.
Wadleigh, Starr & Peters, P.L.L.C., of Manchester (Richard Thorner on the brief), and Ropes & Gray LLP, of Boston, Massachusetts (Kevin M. Cuddy & a. on the brief, and Mr. Cuddy orally), for the trustee defendant.
Northeast Auctions by Ronald Bourgeault, LLC (Northeast Auctions), the trustee defendant, appeals an order of the Superior Court (T. Nadeau , J.) upholding an attachment by the plaintiff, ACG Credit Company (ACG Credit), of certain antiques in the possession of Northeast Auctions. We affirm.
The following facts were uncontested by ACG Credit. On or about October 18, 2003, Northeast Auctions and defendant Melanie Gill entered into an agreement by which Northeast Auctions would take possession of various antiques belonging to Gill. Northeast Auctions agreed to auction the antiques and give the proceeds to Gill. Northeast Auctions waived its seller's commission, but would earn a "buyer's premium" on each item sold, payable by the purchaser at auction. Northeast Auctions gave Gill an advance of $500,000 of the anticipated auction proceeds, and agreed to pay Gill any proceeds exceeding that amount. In addition, Northeast Auctions assumed the risk of loss in the case that the auction failed to generate the amount of the advance.
On March 3, 2004, ACG Credit obtained an ex parte attachment on the antiques, belonging to Gill, which were in the possession of Northeast Auctions. Northeast Auctions was consequently enjoined from selling any of the items owned by Gill. Northeast Auctions objected to the attachment and temporary restraining order. In its response to interrogatories in its trustee disclosure form, Northeast Auctions asserted that it possessed a security interest in the antiques. In support of its position, Northeast Auctions submitted affidavits from Gill and Ronald Bourgeault, the principal of Northeast Auctions.
ACG Credit objected to the disclosure form and moved to strike Northeast Auctions' objection to the attachment on the grounds that Northeast Auctions lacked standing, and had not created a valid security interest in the antiques. Gill never objected to the attachment, and has not entered an appearance in this matter.
After a hearing, the trial court found that Northeast Auctions, as trustee defendant, lacked standing to object to the attachment. Notwithstanding that finding, the trial court addressed the merits of the claim, and found that the transaction between Gill and Northeast Auctions had not created a valid security interest. The court found, instead, that the agreement was a consignment agreement, Northeast Auctions having taken the goods to sell them at auction on Gill's behalf and not to secure a loan to Gill. The court stated: "Finally ... the Uniform Commercial Code requires a security agreement to be in writing and express the parties' intention to create a security interest in the property before the agreement can be enforceable against third parties."
On appeal, Northeast Auctions argues that the trial court erred by finding it lacked standing to contest the attachment. Northeast Auctions also argues that the trial court erred in holding that the Uniform Commercial Code (UCC) requires security agreements to be in writing. In addition Northeast Auctions makes several arguments about the validity and perfection of its security interest.
We begin by addressing the trial court's holding that Northeast Auctions lacked standing to object to the attachment. The material facts are not in dispute; only their legal effect is in dispute. Coyle v. Battles, 147 N.H. 98, 102, 782 A.2d 902 (2001). The issue of standing is, therefore, a question of law, which we review de novo . In re 1994 Chevrolet Cavalier, 142 N.H. 705, 707, 708 A.2d 397 (1998).
ACG Credit argues that only the plaintiff and defendant may object to a trustee disclosure, according to the Trustee Process statute, RSA chapter 512. See RSA 512:18–a (Supp.2004). Ordinarily, ACG Credit would be correct, because the trustee would have no independent interest in the subject property. In this case, however, Northeast Auctions is more than a mere trustee defendant; it claims an interest in the property at stake.
Trustee defendants receive a trustee disclosure form when they receive the writ of attachment and summons from the plaintiff. RSA 512:3 (Supp.2004). Trustee defendants must answer the interrogatories on the trustee disclosure form and return it to the plaintiff, or else face default, the effect of which may render them chargeable for a sum up to the amount of the judgment. Id.; RSA 512:10 – :11 (Supp.2004). "Return of the trustee disclosure form shall operate as an answer and an appearance on behalf of the trustee." RSA 512:3.
Northeast Auctions returned the trustee disclosure form, and, thus, entered an appearance in this matter. In answering the interrogatories on the trustee disclosure form, Northeast Auctions claimed its rights in the antiques and asserted that Gill was not the sole owner.
The interrogatories on the trustee process form are clearly designed to reveal the interests of third parties in the defendant's goods.
The distinctive factor in this case is that the third party asserting an interest in Gill's goods is the trustee defendant in possession of them. Northeast Auctions has already entered an appearance by virtue of its return of the trustee disclosure form. RSA 512:3. We see no reason to require a separate motion to intervene simply because Northeast Auctions' current presence in this case is as a trustee defendant. We hold, therefore, that Northeast Auctions by its appearance, and its asserted interest in the goods in question, has standing to object to the attachment.
Next, we address the issues surrounding the transaction. Northeast Auctions argues: (1) that the trial court erred in holding that the UCC requires security agreements to be in writing; (2) that it had a valid security agreement...
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