In re Cleary Brothers Construction Co., Inc., Bankruptcy No. 79-01390-BKC-TCB

• Decision Date: 23 October 1980
• Docket Number: Adv. No. 80-0189-BKC-TCB-A.,Bankruptcy No. 79-01390-BKC-TCB
• Citation: 9 BR 40
• Parties: In re CLEARY BROTHERS CONSTRUCTION CO., INC., Debtor. GENERAL ELECTRIC CREDIT CORP., Plaintiff, v. CLEARY BROTHERS CONSTRUCTION CO., INC., et al., Defendants.
• Court: U.S. Bankruptcy Court — Southern District of Florida

9 B.R. 40 (1980)

In re CLEARY BROTHERS CONSTRUCTION CO., INC., Debtor GENERAL ELECTRIC CREDIT CORP., Plaintiff, v. CLEARY BROTHERS CONSTRUCTION CO., INC., et al., Defendants.

Bankruptcy No. 79-01390-BKC-TCB, Adv. No. 80-0189-BKC-TCB-A.

United States Bankruptcy Court, S.D. Florida.

October 23, 1980.

James E. Foster, Fishback, Davis, Dominick & Bennett, Orlando, Fla., for Westinghouse Credit Corp.

Gregory B. Dickenson, Watterson & Dickenson, P.A., West Palm Beach, Fla., for Cleary Brothers Construction Co.

Edward A. Gross, Renick, Zwickel & Gross, Lake Worth, Fla., for Associates Capital Services Corp.

Charles H. Warwick, III, Warwick, Campbell & Hewitt, Palm Beach, Fla., Welbaum, Zook, Jones & Williams, Miami, Fla., for INA.

L. Louis Mrachek, Gunster, Yoakley, Criser & Stewart, Palm Beach, Fla., for W.L. Sly Machinery Co.

Daniel Lloyd Bakst, West Palm Beach, Fla., for C. Toppino & Sons.

Robert A. Freyer, Batchelor, Brodnax, Guthrie & Primm, Miami, Fla., for GECC.

Robert A. Freyer, Batchelor Brodnax, Guthrie Armstrong & Freyer, Miami, Fla., for G.E.C.C.

Paul Thibadeau, Palm Beach, Fla., for John B. Cleary.

Ira Gropper, Miami, Fla. for IRS.

MEMORANDUM DECISION

THOMAS C. BRITTON, Bankruptcy Judge.

Plaintiff, a secured creditor, seeks judgment for $10,668 presently held by the Examiner in this chapter 11 case (C.P. No. 1). The four defendants have answered, all but one opposing plaintiff's claim (C.P. Nos. 5, 6, 7 and 9). The matter was tried on October 7.

The facts are simple and undisputed. The money represents rent paid for the use of a crane for ten days during February 1980. The crane was owned by and in the possession of the debtor who bought it in 1978. The crane was leased by the debtor in possession without plaintiff's consent after this bankruptcy was filed. The agreed rental was paid. The money was turned over to the Examiner because he has been given certain of the duties of a trustee under 11 U.S.C. § 1106(b).

Plaintiff holds a perfected first lien against the crane and has repossessed and sold the crane since the lease in question. (Adversary proceeding 80-0009) There presently remains a balance due on plaintiff's lien of $52,169.

It is plaintiff's contention that it is entitled to the rent as "proceeds" under U.C.C. § 9-306 (§ 679.306, Florida Statutes). I disagree, although I agree with plaintiff that it has a lien as to the "proceeds" of the crane.

Plaintiff's financing statement, a U.C.C.-1 form, contained the words: "proceeds of collateral are also covered" and it was duly filed. Although the original security agreement did not include either rents or proceeds as collateral, the subsequent financing statement expanded that security interest. After the filing of the financing statement involved in this case, Florida amended § 679.203 to eliminate any doubt as to the effect of a financing statement which broadens the effect of the original agreement as stated in the Sponsors' Notes:

"The former reference to proceeds in subsection (1) has been eliminated and new subsection (3) added to make clear that claims to proceeds under s. 679.306 do not require a statement in the security agreement, for it is assumed that the parties so intend unless otherwise agreed."

Since this amendment is merely declarative of existing law, it should be given a retroactive effect. State ex rel. Szabo Food Serv., Inc. of N.C. v. Dickinson, Fla.1973, 286 So.2d 529, 531.

However, the term "proceeds" does...