In re Hill, Bankruptcy No. Bk-79-02110
Decision Date | 03 December 1980 |
Docket Number | Bankruptcy No. Bk-79-02110,Adv. No. 80-0003. |
Citation | 7 BR 433 |
Parties | In re Edward Blackman HILL, Debtor. Kenneth L. McDONALD, Trustee, Plaintiff, v. NATIONAL BANK OF STIGLER, Defendant, Edward D. Hill, Intervener. |
Court | U.S. Bankruptcy Court — Western District of Oklahoma |
Richard R. Bailey, Oklahoma City, Okl., for Kenneth L. McDonald, trustee.
Albert W. Murry, Oklahoma City, Okl., for Edward D. Hill, intervener.
The trustee brought this action challenging a lien on a motorboat asserted by defendant National Bank of Stigler. Edward D. Hill then intervened and urged that both he and the bank had perfected security interests in said property under Oklahoma's Uniform Commercial Code by virtue of the intervener's physical possession of said boat prior to the Code petition filing.
In February of 1979 the debtor, Edward Blackman Hill, made arrangements with a credit union in Oklahoma City to finance the purchase of a motorboat. Later when the debtor left his Oklahoma City place of employment, he was asked by the credit union to refinance.
On September 6, 1979 the debtor executed a promissory note and security agreement with the First National Bank of Stigler, Oklahoma, granting the bank a security interest in the boat. Edward D. Hill, the debtor's father and intervener herein was co-maker on the note.
The debtor testified that the boat was stored at the intervener's home in Stigler, Oklahoma and was removed from time to time for use at a nearby lake; that the last time he used the boat was probably in July of 1979 and that he hasn't had possession of it since then; and that the boat was stored in his father's garage because he had "no other place to put it." The intervener did not testify. Moreover, there is no evidence that the debtor attempted to grant the intervener a security interest.
On November 27, 1979 the debtor filed his voluntary petition in bankruptcy. On November 30, 1979 the bank filed a financing statement in an effort to perfect its security interest under Oklahoma's Uniform Commercial Code. The trustee then brought this adversary proceeding challenging the bank's claim of lien. Thereafter, Edward Hill intervened and asserted a security interest in the boat by virtue of boat possession since July of 1979.
"Accommodation Party"
12A Okl.Stat. (1971) § 3-415 provides in part:
Thus, where a person's signature appears on a note as a co-maker, but it is signed as an accommodation for another, such person is an accommodation party-more specifically an accommodation maker. And where a bank takes the note for value before it is due, the accommodation party is liable on the note as that of a maker even though the bank knew of the accommodation status. As a maker, the accommodation party is jointly and severally liable on the note. See Vinick v. Fourth National Bank of Tulsa, 531 P.2d 327 (Okl.S.Ct.1974).
"Surety"
Accommodation parties are also accorded surety status. The Supreme Court of Oklahoma in King v. Finnell, 603 P.2d 754, 757 (Okl.1979) through Justice Barnes stated:
15 Okl.Stat. (1971) § 382 provides:
"A surety, upon satisfying the obligations of the principal, is entitled to enforce every remedy which the creditor then has against the principal, to the extent of reimbursing what he was expended; and also to require all his co-sureties to contribute thereto, without regard to the order of time in which they became such."
In addition, 15 Okl.Stat. (1971) § 383 provides:
Under 12A Okl.Stat. (1971) § 9-204:
Furthermore, as to when possession can perfect a security interest without filing, 12A Okl.Stat. (1971) § 9-305 provides:
(Emphasis added)
As to who must have possession, the court in Appeal of Copeland, 531 F.2d 1195, 1204 (CA 3 1976), observed:
"Where the Code requires perfection by possession of the secured party or his bailee, it is clear that possession by the debtor or an individual closely associated with the debtor is not sufficient to alert prospective creditors of the possibility that the debtor\'s property is encumbered. . . ." (authority cited) (Emphasis added)
The meaning of the word "possession" in this section is of special interest. The Court of Appeals in Transport Equipment Co. v. Guaranty State Bank, 518 F.2d 377, 381 (CA 10 1975), approved the following case language:
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