American Nat. Bank & Trust Co. of Sapulpa v. National Cash Register Co.

• Decision Date: 21 July 1970
• Docket Number: No. 42634,42634
• Citation: American Nat. Bank & Trust Co. of Sapulpa v. National Cash Register Co., 473 P.2d 234, 7 U.C.C.Rep. 1097 (Okla. 1970)
• Parties: 7 UCC Rep.Serv. 1097 AMERICAN NATIONAL BANK & TRUST COMPANY OF SAPULPA, Oklahoma, Plaintiff in Error, v. NATIONAL CASH REGISTER COMPANY and Security National Bank of Sapulpa, Oklahoma, Defendants in Error.
• Court: Oklahoma Supreme Court

Page 234

473 P.2d 234

7 UCC Rep.Serv. 1097

AMERICAN NATIONAL BANK & TRUST COMPANY OF SAPULPA, Oklahoma Plaintiff in Error, v. NATIONAL CASH REGISTER COMPANY and Security National Bank of Sapulpa, Oklahoma, Defendants in Error.

No. 42634.

Supreme Court of Oklahoma.

July 21, 1970.

Syllabus by the Court

1. The intention of a debtor to grant a security interest in after-acquired property should be determined by the language of the security agreement.

2. The framers of Uniform Commercial Code, by adopting 'notice filing' system, had purpose to recommend a method of protecting security interests which at the same time would give subsequent potential creditors and other interested persons information and procedures adequate to enable ascertainment of facts they needed to know. 12A O.S.1961, § 9--402(1).

3. In view of broad purposes of Uniform Commercial Code, the Supreme Court does not give a restrictive construction to the provision which sets forth what constitutes a 'sufficient' financing statement. 12A O.S.1961, § 9--402(1).

Appeal from the District Court of Creek County; Kenneth Hughes, Judge.

American National Bank and Trust Company of Sapulpa, Oklahoma, appeals from a judgment rendered in an action involving provisions of Uniform Commercial Code, 12A O.S.1961, § 1--101 et seq., in which the trial court held that its security interest in a cash register and adding machine were inferior to the lien of National Cash Register Company and Security National Bank of Sapulpa, Oklahoma. Reversed.

Loeffler & Allen, by Sam T. Allen, III, Sapulpa, for plaintiff in error.

Houston, Klein & Davidson, by L. Michael Hager, Tulsa, for defendant in error National Cash Register Co.

DAVISON, Justice.

This is an appeal by American National Bank and Trust Company of Sapulpa, Oklahoma (plaintiff in the trial court, herein referred to as American), from a judgment rendered against it and in favor of National Cash Register Company (National) and Security National Bank of Sapulpa (Security), whereby National was adjudged to have a superior security interest in a cash register, and Security was awarded a superior interest in an adding machine.

There appears to be no dispute as to the facts. A partnership, Thompson & Son (Thompson) either owned or operated with its own equipment, four service stations located in Okmulgee, Henryetta, east of Henryetta, and in Sapulpa, Oklahoma. All of the stations were in operation in December, 1965, except the station in Sapulpa, which was still in process of construction.

On November 19, 1965, Thompson had placed an order with National for future delivery of a cash register for use in the Sapulpa station.

On December 13, 1965, pursuant to the Uniform Commercial Code of Oklahoma, 12A O.S.1961, § 1--101 et seq., Thompson and American executed a security agreement to secure a loan from American to Thompson, in which Thompson granted to American as follows:

'* * * a security interest pursuant to the Uniform Commercial Code (Oklahoma) in and to the following described property, together with all replacements thereof and all accessories, parts and equipment now or hereafter affixed thereto or used in connection therewith, and if livestock or farm crops, said security interest includes all natural increase thereof, and whenever acquired:

'All equipment, cash registers, machinery, and tools used in operations of service stations at the following locations

6th and Wood Drive Okmulgee Okla 10th and West Main Henryetta Okla

Highway 75 East of Henryetta Okla 900 Block South Main Sapulpa Okla Partial list attached and made a part of this agreement.'

Included in the above list were 2 NCR Adding Machines and 2 National Cash Registers, with no statement of identifying numbers.

On December 27, 1965, American filed with the Oklahoma County Clerk a financing statement with respect to the above security agreement reciting as follows:

'3. This financing statement covers the following types (or items) of property.

'All equipment, cash registers, machinery & tools used in operating of service stations at the following locations:

6th and Wood Drive, Okmulgee, Okla 10th & West Main, Henryetta, Oklahoma

Highway 75 East of Henryetta, Oklahoma

900 Block South Main, Sapulpa, Oklahoma'

The Sapulpa station commenced operations on or about January 16, 1966, and on that date National loaned and delivered a cash register to Thompson at the location for use until the prior ordered cash register was available for delivery.

In March, 1966, Security checked the equipment at the Sapulpa station, and thereafter, on March 9, 1966, Thompson and Security executed a security agreement to secure a loan from Security wherein Security was granted a security interest in personal property, located at the Sapulpa service station, consisting of:

'1957 Chevrolet Pickup 1/2 t. Ser. #3A57L119921

1--New adding Machine 2--951609 NCR' and other described equipment.

Security then filed of record a financing statement on March 11, 1966, in which the property description portion thereof consisted of the following language:

'1957 Chevrolet PU Ser. #3A57L119921 equipment'

On April 20, 1966, National delivered the previously ordered cash register to Thompson at the Sapulpa station and picked up the loaned machine. They entered into a purchase agreement on that date. This contract was filed of record as a financing statement on August 12, 1966.

In the meantime a Henryetta bank had challenged the priority of American's security interest in the personal property at the stations located in Okmulgee, Henryetta and east of Henryetta. This controversy was apparently settled when American, after examining the public records in early June, 1966, released its security interest in the personal property at the named stations on June 20, 1966, leaving in effect only the security interest it held in the personal property at the Sapulpa station.

Thompson defaulted with the situation in this condition. American's appeal presents two questions, (1) as between it and National, which has the prior security interest in the new cash register delivered to the Sapulpa station on April 20, 1966, and (2) as between it and Security, which has the prior security interest in the adding machine described in Security's security agreement. The trial court held against American in both instances.

American contends that under the provisions of the Uniform Commercial Code the lien of its security agreement upon the cash register was superior to the lien of National.

The record, supra, reflects that American's security agreement was executed December 13, 1965, and filed December 27, 1965, and that National's security agreement was executed April 20, 1966, being the day the cash register was delivered, and was filed more than 10 days thereafter, on August 12, 1966.

National's security agreement was for the purchase price of the cash register and National could have perfected a prior lien thereon over any claim of American by filing its financing statement within the time required by the Commercial Code. Title 12A O.S.1961, § 9--302, requires that a financing statement must be filed to Perfect all security interests except in certain instances that are not applicable in the present case. Title 12A O.S.1961, § 9--312(4) provides that a purchase money security interest in collateral other than inventory has priority over a conflicting security interest in the same collateral if the purchase money security interest is Perfected at the time the debtor receives possession of the collateral or Within 10 days thereafter.

National did not perfect its purchase money security interest in the above manner. Under these circumstances, where both American and National had perfected their security interests by filing (but National had failed to qualify for the special priority given purchase money security interests), the Code, 12A O.S.1961, § 9--312(5)(a), provides the priority between such conflicting security interests in the same collateral shall be in the order of filing.

American filed first, but there is the proposition of whether its security agreement may and does cover the cash register subsequently acquired by Thompson, and whether the financing statement filed by American is sufficient in this respect.

The Commercial Code, 12A O.S.1961, § 9--204(3), specifically states that 'a security agreement may provide that collateral, Whenever acquired, shall secure all obligations covered by the security agreement.' (emphasis added) except in situations not present in the instant case.

American's security agreement, supra, in pertinent part grants a security interest 'pursuant to the Uniform Commercial Code (Oklahoma) in and to the following described property together with all replacements thereof and all * * * equipment now or hereafter * * * used in connection therewith, * * * and whenever acquired:

All equipment, cash registers * * * used in operation of service stations at * * * 900 Block South Main Sapulpa, Oklahoma.'

It is our conclusion that...