Kaiser Aluminum & Chemical Sales, Inc. v. Hurst, 53896

• Decision Date: 07 April 1970
• Docket Number: No. 53896,53896
• Citation: 176 N.W.2d 166
• Parties: 7 UCC Rep.Serv. 730 KAISER ALUMINUM & CHEMICAL SALES, INC., Appellant, v. Frank R. HURST, Evelyn M. Hurst, Huntting Elevator Company and Rendahl& Highum, Inc., Appellees.
• Court: Iowa Supreme Court

Page 166

176 N.W.2d 166

7 UCC Rep.Serv. 730

KAISER ALUMINUM & CHEMICAL SALES, INC., Appellant, v. Frank R. HURST, Evelyn M. Hurst, Huntting Elevator Company and Rendahl& Highum, Inc., Appellees.

No. 53896.

Supreme Court of Iowa.

April 7, 1970.

Livingston, Day, Kehoe, Meeker & Bates, Washington, for appellant.

Elwood & Anderson, Cresco, for Frank R. Hurst.

Morrison, Morrison & Morrison, Washington, for Rendahl & Highum, Inc.

George R. Laub, Cresco, for Huntting Elevator Co.

LeGRAND, Justice.

This was tried as a law action without a jury. It requires a determination of only one issue: was certain corn owned by Frank R. Hurst and sold by him to Huntting Elevator Company and Rendahl & Highum, Inc. impressed with a security interest in favor of plaintiff, Kaiser Aluminum & Chemical Sales, Inc. The trial court found against plaintiff on this issue and we affirm.

Prior to trial plaintiff dismissed its action against Evelyn M. Hurst, named as one of the defendants, and she is not involved in this appeal.

Plaintiff, and its predecessor in interest, sold fertilizer and other supplies to defendant Frank R. Hurst in 1966. On March 9, 1967, he executed a promissory note in the amount of $5901.91 in payment of this account. The note contained the following handwritten notation: 'This note covered by security agreement dated March 9, '67.' A financing statement was executed by Frank R. Hurst and Evelyn M. Hurst and by plaintiff. This financing statement was filed in the recorder's office in Howard County, Iowa, on March 15, 1967. No security agreement was signed, either then or later.

Thereafter Frank R. Hurst sold some of his corn to Huntting Elevator Company for $2729.61. He also sold corn to Rendahl & Highum for more than $14,000.00.

Defendant Hurst did not pay his note, and plaintiff started this action to collect the amount thereof. Plaintiff also asked judgment against Huntting Elevator Company and Rendahl & Highum, Inc. under an allegation that each of said companies 'took possession of crops in which plaintiff had a security interest and converted said crops to its own use.'

Plaintiff relies upon the claim that execution of the promissory note and financing statement, together with the filing thereof, created a security interest in the property.

The Uniform Commercial Code was adopted in this state by the Sixty-first General Assembly in 1965. We have not heretofore been called upon to decide the question now presented. However, where the issue has arisen, it has invariably been resolved against the position taken by plaintiff. The cases uniformly hold that a financing statement does not ordinarily Create a security interest. It merely gives notice that one is or may be claimed. These same authorities hold a financing statement May double as a security agreement if it contains appropriate language which grants a security interest. The financing statement now before us contains no language which can be interpreted as granting such an interest.

It is apparent a financing statement was not intended under the Uniform Commercial Code to serve as a security agreement. Section 554.9402, Code of Iowa, provides in part:

'(1) A financing statement is sufficient if it is signed by the debtor and the secured party, gives an address of the secured party from which information concerning the security interest may be obtained, gives a mailing address of the debtor and contains a statement indicating the types, or describing the items, of collateral. A financing statement may be filed before a security agreement is made or a security interest otherwise attaches. * * *' (Emphasis supplied.)

Quite obviously if the security interest may come into existence After the financing statement is filed, such statement does not Create the lien.

We hold that the financing statement signed by the parties and filed with the recorder of Howard County afforded plaintiff no security interest in the corn sold by defendant Hurst. Plaintiff's rights here are governed by the provisions of sections 554.9105(1)(h) and 554.9203(1)(b), Code of Iowa. The first of these sections provides:

"Security agreement' means an agreement which creates or provides for a security interest. * * *'

The second of these sections provides in part:

'* * * a security interest is not enforceable against the debtor or third parties unless (a) the collateral is in the possession of the secured party; or (b) the debtor has signed a security agreement which contains a description of the collateral and in addition, when the security interest covers crops or oil, gas or minerals to be extracted or timber to be cut, a description of the land concerned. * * *'

The Iowa Code Comment contained in Iowa Code Annotated under this section is interesting in a consideration of this matter:

'This provision is in accord with former I.C.A. #556.3 and #556.4, which required chattel mortgages and conditional sale contracts to be in writing in order to be effective against third parties. * *...