National Cash Register Co. v. Firestone & Co.

• Decision Date: 21 June 1963
• Citation: 346 Mass. 255,191 N.E.2d 471
• Parties: , 1 UCC Rep.Serv. 460 NATIONAL CASH REGISTER COMPANY v. FIRESTONE & CO., Inc.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 471

191 N.E.2d 471

346 Mass. 255, 1 UCC Rep.Serv. 460

NATIONAL CASH REGISTER COMPANY v. FIRESTONE & CO., Inc.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 7, 1963.

Decided June 21, 1963.

Louis Karp, Boston, for defendant.

Alan L. Lefkowitz, Boston, for plaintiff.

Robert Braucher, Cambridge, Walter D. Malcolm and Edward L. Schwartz, Boston, Massachusetts Commissioners on Uniform State Laws, as amici curiae, submitted a brief.

Before WILKINS, C. J., and WHITTEMORE, CUTTER, KIRK and REARDON, JJ.

WILKINS, Chief Justice.

In this action of tort for conversion of a cash register there was a finding for the plaintiff. The Appellate Division dismissed a report, and the defendant appealed.

The case was heard on a case stated. The underlying question is the relative standing of two security interests. ¹ On June 15, 1960, the plaintiff, a manufacturer of cash registers, and one Edmund Carroll, doing business in Canton as Kozy Kitchen, entered into a conditional sale contract for a cash register. On November 18, 1960, the defendant, which was in the financing business, made a loan to Carroll, who conveyed certain personal property to the defendant as collateral under a security agreement. The defendant filed a financing statement with the Town Clerk of Canton on November 18, 1960, and with the Secretary of State on November 22, 1960. Between November 19 and November 25 the plaintiff delivered a cash register to Carroll in Canton. On November 25, the contract of June 15 was canceled and superseded by a new contract for the same cash register but providing for different terms of payment. The plaintiff filed a financing statement with respect to this contract with the Town Clerk of Canton on December 20 and with the Secretary of State on December 21. Carroll subsequently became in default both on the contract with the plaintiff and on the security agreement with the defendant. In December the defendant took possession of the cash register, and although notified on January 17, 1961, of the plaintiff's asserted right sold it at auction on the following day.

The defendant's security agreement recites that Carroll in consideration of $1,911 paid by it does 'hereby grant, sell, assign, transfer and deliver to Grantee the following goods, chattels, and automobiles, namely: The business located at and numbered 574 Washington Street, Canton Mass. together with all its good-will, fixtures, equipment and merchandise. The fixtures specifically consist of the following: All contents of luncheonette including equipment such as: booths and tables; stand and counter; tables; chairs; booths; steam tables; salad unit; potato peeler; U. S. Slicer; range; case; fryer; compressor; bobtail; milk dispenser; silex; 100 Class air conditioner; signs; pastry case; mixer; dishes; silverware; tables; hot fudge; Haven Ex.; 2 door stationwagon 1957 Ford A57R107215 together with all property and articles now, and which may hereafter be, used or mixed with, added or attached to, and/or substituted for, any of the foregoing described property.'

In the defendant's financing statement the detailed description of the 'types (or items) of property' is the same as the words in supplied italics in the security agreement. There is no specific reference to a cash register in either document, and no mention in the defendant's financing statement of property to be acquired thereafter.

Under the Uniform Commercial Code, enacted by St.1957, c. 765, § 1, after-acquired property, such as this cash register, might become subject to the defendant's security agreement when delivered, G.L. c. 106, § 9-204(3); ² and likewise its delivery under a conditional sale agreement with retention of title in the plaintiff would not, in and of itself, affect the rights of the defendant. G.L. c. 106, § 9-202. ³ Although the plaintiff could have completely protected itself by perfecting its interest before or within ten days of the delivery of the cash register to Carroll, ⁴ it did not try to do so until more than ten days after delivery. Thus the principal issue is whether the defendant's earlier security interest effectively covers the cash register.

The trial judge gave no reasons for his ruling. The Appellate Division rested its decision upon the mere statement of the omission of the defendant's financing statement to refer to after-acquired property or to the cash register specifically. The Massachusetts Commissioners on Uniform State Laws in their brief as amici curiae argue that there need be no reference to after-acquired property in the financing statement. Before we reach that question, however, we must consider several matters raised by the plaintiff.

First, the plaintiff argues that the debtor could not have intended to grant a security interest to the defendant because the purchase was five months earlier, delivery was about to be made, and the cash register could be repossessed by the plaintiff for default within the period of twenty-one months provided for instalment payments. It is also urged that, without the cash register, the defendant was well secured for its loan, a fact which cannot be inferred and which, in any event, would not be conclusive. The debtor's intent must be judged by the language of the security agreement.

In G.L. c. 106, § 9-110, it is provided: '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.' In § 9-203 it is provided: (1) '* * * a security interest is not enforceable against the debtor or third parties unless * * * (b) the debtor has signed a security agreement which contains a description of the collateral * * *.'

Contrary to the plaintiff's contention, we are of opinion that the security agreement is broad enough to include the cash register, which concededly did not have to be specifically described. The agreement covers 'All contents of luncheonette including equipment such as,' which we think covers all those contents and does not mean 'equipment, to wit.' There is a reference to 'all property and articles now, and which may hereafter be, used * * * with, [or] added * * * to * * * any of the foregoing described property.' We infer that the cash register was used with some of the other equipment even though the case stated does not expressly state that the luncheonette was operated.

The plaintiff's next argument is that the financing statement is insufficient because it incorrectly describes the debtor as 'Carroll, Edmund d/b/a Cozy Kitchen 574 Wash. St. Canton, Mass.' The specific objection is that 'Cozy' should be 'Kozy.' This word, however, is merely part of the name and style under which the debtor, an individual, did business. The Uniform Commercial Code, § 9-402(5), reads: 'A financing statement substantially complying with the requirements of this section is effective even though it contains minor errors which are not seriously misleading.' The name of the debtor, Carroll, is correctly given. It should have been and, for aught that appears, was correctly indexed under 'C.' With the name of the debtor accurately stated, the spelling of 'Cozy' is, at most, a minor error which is not 'seriously misleading.'

We now come to the question whether the defendant's financing statement should have mentioned property to be acquired thereafter before a security interest in the cash register could attach. The Code, G.L. c. 106, § 9-402(1), reads in part: '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.'

In the official comment to this section appears the following: '2. This Section adopts the system of 'notice filing' which has proved successful under the Uniform Trust Receipts Act. What is required to be filed is not, as under chattel mortgage and conditional sales acts, the security agreement itself, but only a simple notice which may be filed before the security interest attaches or thereafter. The notice itself indicates merely that the...