Title: McRae v. SECURITY PACIFIC HOUSING SERV.

State: alabama

Issuer: Alabama Supreme Court

Document:

628 So. 2d 429 (1993)
Joan G. McRAE and C. Michael Stilson, as trustee, intervenor,
v.
SECURITY PACIFIC HOUSING SERVICES, INC.
Virginia W. JOHNSON and C. Michael Stilson, as trustee, intervenor,
v.
SECURITY PACIFIC HOUSING SERVICES, INC.
Charlie DEGRAFFENRIED and C. Michael Stilson, as trustee, intervenor,
v.
SECURITY PACIFIC HOUSING SERVICES, INC.
1921108.

Supreme Court of Alabama.
August 27, 1993.
Jesse P. Evans III and Marvin E. Franklin of Najjar Denaburg, P.C., Birmingham, for C. Michael Stilson as trustee, intervenor.
Richard C. Duell III, Paul J. Spina III, and Edith Jane Schauble of Duell & Spina, P.C., Birmingham, for appellee.
Robert E. Sasser and Dorothy W. Littleton of Sasser & Littleon, P.C., Montgomery, for amicus curiae The Alabama Manufactured Housing Institute.
SHORES, Justice.
The United States Bankruptcy Court for the Northern District of Alabama, Western Division, certified the following question of law to us:
The question of law presented is deemed determinative of three consolidated actions before the United States bankruptcy court for which there is no clear controlling precedent in the decisions of this Court. All three cases are adversary proceedings within the three debtor's reorganization cases under Chapter 13. Security Pacific Housing Services, Inc., is the creditor in all three cases. The Alabama Manufactured Housing Institute has filed a brief in support of the creditor.
The following pertinent facts were also provided by the bankruptcy court for our consideration.
(Emphasis added.)
Section 7-9-403(6) reads as follows:
(Emphasis added.)
In resolving the question before the Court, we look to the historical perspective of § 7-9-403(6). The reason and necessity for a statute are relevant to its interpretation. Ex parte Birmingham Board of Education, 601 So. 2d 93 (Ala.1992). As originally enacted, § 7-9-403 (Ala.Acts 1965, Act No. 549) made no mention of any special durational periods associated with financing statements. Neither were durational periods added by amendment or by the recodification in 1975. However, an amendment adopted in 1981 (Ala.Acts 1981, Act No. 81-311), provided for extending the duration for financing statements when the debtor is a utility "and a filed financing statement so states." The 1981 amendment also changed the language of § 7-9-302 from "motor vehicle required to be licensed" to "motor vehicle required to be registered."
The section was further amended in 1984 to allow for extended durational periods for mobile home financing statements. This amendment was apparently in response to three cases that were consolidated in In re Sewell, 32 B.R. 116 (Bankr.N.D.Ala.1983), in which the United States Bankruptcy Court for the Northern District of Alabama concluded that purchase money security interests in each of the three creditor cases were not perfected because UCC-1 financing statements were not filed. That Court concluded:
The creditor argues that under § 7-9-403(6) a financing statement on a mobile home sold to a consumer that states it is covering a mobile home, remains effective until a termination statement is filed. Simply put, the creditor contends that, if the financing statement recites that the collateral is a mobile home, it is not subject to the five-year limitation of § 7-9-403(2). The debtors and trustee respond with the argument that § 7-9-403(6) requires that, in order for the financing statement to remain perfected after five years, it must explicitly state that it remains effective until a termination statement is filed or else must list a maturity date.
We cannot agree with the creditor that the mere mention of a mobile home in the description of the property on a financing statement would allow for an extended duration of the financing statement until a termination statement is filed. Such a holding would render the five-year search requirement of § 7-9-403(2) meaningless and would create a special class of lenders in this State. We do not believe it was the intent of the legislature in passing this amendment that all other nonpurchase money consumer lenders in the State of Alabama should be subject to the five-year automatic termination rule of § 7-9-403(2), but mobile home manufacturers would not.
Under the creditor's position, the UCC's general rule regarding the duration of financing statements, § 7-9-403(2), would no longer have any application, because a person receiving notice by a filed financing statement would have to search the records for a period in excess of five years. And, if the mere use of the words "mobile home" were enough to extend the duration of the financing statement, a filed statement could constitute a lien on property other than the mobile home for a period in excess of five years. This would frustrate the UCC's general rule and provide unjust consequences. An example would be the financing statement in the case of debtor Degraffenreid, which states:
Under the creditor's interpretation, a lien of unlimited duration would be imposed on the furniture and accessories in the mobile home merely because the financing statement recited the term "mobile home."
Under the rules of statutory construction, we must consider the statute as a whole and must construe the statute reasonably so as to harmonize the provisions of the statute. Alabama Farm Bureau Mut. Cas. Ins. Co. v. City of Hartselle, 460 So. 2d 1219, 1225 (Ala. 1984); Tate v. Teague, 431 So. 2d 1222, 1225 (Ala.1983); Eagerton v. Terra Resources, Inc., 426 So. 2d 807, 808 (Ala.1982).
We therefore answer the question in the affirmative. The last sentence of Ala. Code 1975, § 7-9-403(6), means that a financing statement perfecting a security interest in a pre-1990 mobile home lapses after five years under § 7-9-403(2), if the financing statement does not state specifically that it will remain effective until a termination statement is filed or contain other indicia of the maturity date of the obligation beyond the five-year period.
QUESTION ANSWERED.
HORNSBY, C.J., and MADDOX, ALMON, ADAMS, HOUSTON, STEAGALL, KENNEDY and INGRAM, JJ., concur.
[1]  First National Bank of Wetumpka, Ala. v. Sewell, 79 B.R. 36 (N.D.Ala.1984), reversed the judgment In re Sewell.
[2]  Although subsequent amendments were passed in 1987 (Ala.Acts 1987, Act No. 87-410) and 1991 (Ala.Acts 1991, Act. No. 91-593), they are inconsequential to this case.