In re Drane

• Citation: 202 F. Supp. 221
• Decision Date: 24 January 1962
• Docket Number: No. 25099.,25099.
• Parties: In the Matter of Willard Lee DRANE, Bankrupt.
• Court: U.S. District Court — Western District of Kentucky

202 F. Supp. 221

In the Matter of Willard Lee DRANE, Bankrupt.

No. 25099.

United States District Court W. D. Kentucky, at Louisville.

January 24, 1962.

Thomas C. Mapother, Mapother, Morgan & Stansbury, Louisville, Ky., for creditor.

SHELBOURNE, District Judge.

On December 16, 1960, the bankrupt executed a "Note and Security Agreement" by which he mortgaged to Popular Finance Corporation (hereinafter called the creditor) certain items of personal property. This "Note and Security Agreement" was duly recorded in the Jefferson County Court Clerk's office on December 27, 1960.

The mortgagor was adjudged a bankrupt in this Court on March 18, 1961. The creditor filed its proof of secured claim on April 7, 1961. The trustee, being of the opinion that no equity existed in favor of the bankrupt's estate in the property secured by the mortgage, renounced interest in all but the following chattels:

1 — 2 pc. living room suite, wine

1 — 5 pc. chrome dinette set, yellow

1 — 3 pc. panel bedroom suite, lime oak, matt. & spgs.

The creditor filed its motion for a rule against the trustee to show cause why he should not disclaim interest in the chattels listed above. The referee overruled the motion on the ground that the description of the chattels was insufficient to put a member of the general public, other than one engaged in the furniture business, on notice of the existence of the lien. The creditor brings the referee's order before this Court on a petition for review.

The referee was of opinion that a member of the general public would not be able to determine what particular pieces of furniture composed the sets mentioned and held the description insufficient, stating:

"A three piece bedroom suite could be twin beds and a dresser, or chest, or a bed, dresser or mirror, and a chest. A two piece living room suite could be a couch to be used only as such or a couch converted into a bed and a chair or overstuffed stool, or some item commonly used in a living room, and a five piece dinette, in addition to being a table and four chairs, could be a table, cabinet for dishes, or some other dining or breakfast room piece and three chairs."

The sole question on review is whether the description of this property in the "Note and Security Agreement" is a sufficient description under the law of Kentucky.

Relying on the authority of Hauseman Motor Co. v. Napierella, 223 Ky. 433, 3 S.W.2d 1084; General Motors Acceptance Corp. v. Sharp Motor Sales Co., 233 Ky. 290, 25 S.W.2d 405, and Hart County Deposit Bank v. Hatfield, 236 Ky. 725, 33 S.W.2d 660, the referee held that a description must be sufficiently definite to enable a member of the general public to identify the mortgaged property as contrasted with other similar property.

The creditor relies on the Uniform Commercial Code, particularly Section 9-110 (KRS 355.9-110) which provides:

"For the purposes of this article any description of personal property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described."

The creditor insists that the description in the mortgage meets the test of the Uniform Commercial Code and also meets the test required by the Kentucky Court of Appeals before the adoption of the Code, as set forth in Liberty National Bank & Trust Co. v. Miles, Ky., 259 S.W.2d 474, and the cases relied on by the referee, supra. The creditor contends that a correct interpretation of these cases is that a general description of property is adequate if sufficiently intelligible to fix the lien; property need not be described with utmost particularity. A description is sufficient if the facts shown will enable a third party, assisted by external evidence to identify the property.

The general rule is stated in 10 Am.Jur. 753, Chattel Mortgages § 55:

"In nearly all cases, however, resort must be had to other evidence than that furnished by the mortgage itself to enable third persons to identify mortgaged property, and generally where there is a description of the property mortgaged and the description is true, and by the aid of such description and the surrounding circumstances the third person would in the ordinary course of things know the property that was mortgaged, the description will be held to be sufficient." (Emphasis added.)

and in 14 C.J.S. Chattel Mortgages § 57 (3), pp. 660-662:

"As against third persons the description in the mortgage must point out its subject matter so that such persons may identify the chattels covered, to the exclusion of all other like property. It is not essential, however, that the description be so specific that the property may be identified by it alone; but it is sufficient if it suggests inquiries or means of identification which, if pursued, will disclose the property conveyed. This rule is based on the maxim, That is certain, which is capable of being made certain. So, a description is sufficient if it may be aided by parol proof and the property covered by the mortgage identified." (Emphasis added.)

Fifty-nine years ago, in Sparks v. Deposit Bank of Paris, 115 Ky. 461, 74 S.W. 185, 78 S.W. 171, the Kentucky Court of Appeals set forth the rule concerning the sufficiency of the description of mortgaged chattels:

"The description need not be such as would enable a stranger to select the property. A description which will aid third persons, aided by inquiries which the instrument itself suggests, to identify the property, is sufficient."

The court's opinion was modified on rehearing but this principle remained unchanged. The court said:

"The original opinion holds, and is fully sustained by all the text-writers and cases, that the mortgage need not of itself identify the mortgaged property. It is enough if it puts the purchaser on inquiry which, if reasonably pursued, will result in his obtaining the exact information as to what property the mortgage incumbers."

The cases of Hauseman Motor Co. v. Napierella, supra, and Hart County Deposit Bank v. Hatfield, supra...