Platte Valley Bank of Brighton v. B & J Const., Inc.

• Decision Date: 17 January 1980
• Docket Number: No. 79CA0465,79CA0465
• Parties: , 28 UCC Rep.Serv. 872 PLATTE VALLEY BANK OF BRIGHTON, a Colorado Banking Corporation, Plaintiff-Appellant, v. B & J CONSTRUCTION, INC., a Colorado Corporation; Ft. Lupton Modular Builders, Inc., a Colorado Corporation; Ft. Lupton State Bank, a Colorado Banking Corporation; Robert E. Knight; and Terry L. Eisenman, Defendants-Appellees. . II
• Court: Colorado Court of Appeals

Page 455

606 P.2d 455

44 Colo.App. 21, 28 UCC Rep.Serv. 872

PLATTE VALLEY BANK OF BRIGHTON, a Colorado Banking Corporation, Plaintiff-Appellant, v. B & J CONSTRUCTION, INC., a Colorado Corporation; Ft. Lupton Modular Builders, Inc., a Colorado Corporation; Ft. Lupton State Bank, a Colorado Banking Corporation; Robert E Knight; and Terry L. Eisenman, Defendants-Appellees.

No. 79CA0465.

Colorado Court of Appeals, Div. II.

Jan. 17, 1980.

Dawson, Nagel, Sherman & Howard, John W. Low, Stuart H. Pack, Denver, for plaintiff-appellant.

Houtchens, Houtchens & Daniel, Thomas A. Houtchens, Rodger I. Houtchens, Greeley, for defendant-appellee Ft. Lupton State Bank.

RULAND, Judge.

Plaintiff, Platte Valley Bank, appeals from the judgment of the district court determining that Ft. Lupton State Bank has a security interest in two mobile homes. We reverse and remand for further proceedings.

The relevant facts are not in dispute. Defendant Ft. Lupton Modular Builders, Inc., manufactured mobile homes and defendant B & J Construction, Inc., was incorporated to sell those homes to consumers. Two individuals who were the officers of both of these corporations defrauded both banks by purporting to grant each a superior security interest in two mobile homes as security for loans. The fraud was accomplished by assigning one set of identification numbers to the mobile homes at the time of manufacture for the purpose of securing loans from Ft. Lupton. The numbers were then changed at the time the units were purportedly transferred to B & J so that additional loans could be secured from Platte Valley.

The first issue on appeal is whether the description of collateral in the prior financing statement granted to Ft. Lupton was sufficient under the Uniform Commercial Code. That description was: "Floor plans of Modular Homes being constructed by Ft. Lupton Builders, 1500 Factory Circle, Ft. Lupton, Colorado 80621."

Section 4-9-402(1), C.R.S.1973 (1978 Cum.Supp.), provides that the description may include, Inter alia, the "type" of collateral. The legal test for determining the sufficiency of that description is set forth in Mountain Credit v. Michiana Lumber & Supply, Inc., 31 Colo.App. 112, 498 P.2d 967 (1972), as follows:

"Collateral need not be described with utmost particularity. Rather, the general rule is that the filing need only put other Creditors on notice of a possible security interest in the collateral in question. It is sufficient if the facts of a case show that a third party, assisted by external evidence, could identify the object as being covered by the agreement." (emphasis supplied)

Applying that test here, we agree with the trial court that the description was sufficient. Use of the words "floor plans" without other descriptive phrases is not sufficiently specific to describe mobile homes as collateral....