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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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FI LED 

United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit 

FOR THE TENTH CIRCUIT FEB 6 1991 

SECURITY NATIONAL BANK OF ENID, 

OKLAHOMA, 

Plaintiff-Appellant, 

v. 

JOHN DEERE COMPANY, a corporation, 

Defendant-Appellee. 

ROBERT L. HOECKER 

) Clerk 

) 

) 

) 

) 

) No. 89-6024 

) (D.C. No. 88-15-T) 

) (W.D. Okla.) 

) 

) 

ORDER AND JUDGMENT* 

Before MOORE, BARRETT, Circuit Judges, and SPARR,** District 

Judge. 

**Honorable Daniel 

District Court for 

designation. 

B. Sparr, District Judge, 

the District of Colorado, 

United States 

sitting by 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

* 

The case is therefore ordered 

This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 1 
The ultimate issue in this case is which of two security 

interests in certain farming equipment is superior under Oklahoma 

law: that of Security National Bank (SNB) or that of John Deere 

Company. Following cross-motions for summary judgment, the 

district court granted summary judgment to Deere in an order dated 

November 22, 1988. SNB filed a motion for new trial. The 

district court denied the motion, affirming and clarifying its 

summary judgment ruling in an order dated December 21, 1988. SNB 

appeals the district court's denial of new trial. We reverse and 

remand. 

In its November 22 order, the district court listed the 

following as undisputed facts: 

1. On or about September 22, 1982, May 13, 1983, and 

September 22, 1983, Mike Benda, a resident of Garfield County, 

Oklahoma, granted SNB a security interest in and to the following 

described equipment: 

All equipment and machinery; farm and ranch machinery of 

every kind and description used in the operation of the 

Debtor's farm and ranch located at, but not limited to 

said farms or ranch whether new or used, whether now 

owned or hereafter acquired and all replacements, 

substitutes, additions, listed as the following, but not 

limited to .... 

2. The security interests were duly perfected no later than 

October 27, 1983, by virtue of SNB's filing its UCC-1 Financing 

Statements with the County Clerks of Oklahoma and Garfield 

Counties, Oklahoma. 

3. The aforementioned security interests by their terms were 

given to secure all indebtedness of Mike Benda to SNB, including 

2 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 2 
Renewal Promissory Note No. 124469 dated November 9, 1983, and 

Renewal Promissory Note No. 122176, dated September 22, 1983. 

4. As of December 1, 1987, there was due and owing to SNB 

upon Note No. 124469 the sum of $10,906.37 including accrued 

interest _·of $9,514.11, with interest continuing to accrue at the 

per diem rate of $0.46 until paid. 

5. As of December 1, 1987, there was due and owing to SNB 

upon Note No. 122176 the sum of $364,157.28, including accrued 

interest of $114,157.28, plus interest accruing thereafter at the 

per diem rate of $78.77 until paid. 

6. On July 31, 1984, Mike Benda purchased from Kiowa Service 

Company, 126 S. 7th, Kiowa, Kansas, one 8820 Combine, serial No. 

600514, and one 230 Platform, Serial No. 537297. 

7. On July 31, 1984, Mike Benda purchased from Kiowa Service 

Company, 126 S. 7th, Kiowa, Kansas, one 8520 Combine, Serial No. 

515894, and one 230 Platform, Serial No. 539941. 

8. Mike Benda took possession of this equipment either on 

July 27 or July 31, 1984. 

9. Deere (not Kiowa Service Company) filed its UCC-1 upon the 

equipment referenced herein on August 8 and September 7, 1984, in 

Garfield County, State of Oklahoma. Deere filed its UCC-1 in 

Oklahoma County on Serial Nos. 515894 and 539941 September 11, 

1982, and August 8, 1982, on Serial No. 537297. 

10. The Variable Rate Loan Contracts and Security Agreements 

executed by Mike Benda for the equipment were submitted to Deere 

by seller, Kiowa Service Company, for purchase. 

3 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 3 
11. Thereafter, over two and one-half months later, on 

October 22, 1984, Deere "accepted" the two Variable Rate Loan 

Contracts and Security Agreements. 

12. On September 8, 1986, the decision was made by Deere to 

repossess the equipment. 

13. On October 9, 1986, notice of Deere's decision was sent 

to Mike Benda. 

14. On or about November 19, 1986, the 8820 Combine, Serial 

No. 515894, and 230 Platform, Serial No. 539941, were sold, and 

Deere realized the sum of $56,920.53. 

15. On or about November 19, 1986, the 8820 Combine, Serial 

No. 600514, and 230 Platform, Serial No. 537297, were sold, and 

Deere realized the sum of $76,566.39. 

Because we are, in essence, reviewing the district court's 

summary judgment ruling and clarification of that ruling, our 

standard of review in this case is de nova, applying the same 

standard as the district court: whether any genuine issue of 

material fact is in dispute and, if not, whether the moving party 

is entitled to judgment as a matter of law. Applied Genetics 

Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 

(10th Cir. 1990). Under this standard, the facts are construed in 

a light most favorable to the nonmoving party, here SNB. Id. We 

reject Deere's argument that, because SNB's appeal is formally 

from a denial of a motion for new trial, the standard of review 

should be abuse of discretion. The appellate cases Deere cites in 

support of this contention involve challenges to the weight or 

sufficiency of evidence supporting a judgment. Our review of the 

4 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 4 
district court's grant, clarification and affirmance of its 

summary judgment ruling calls for a review of legal determinations 

as well as evidentiary sufficiency. Mixed questions involving 

"primarily a consideration of legal principles" require a de novo 

review. In Re Tri-State Equip., Inc., 792 F.2d 967, 970 (10th 

Cir. 1986). The court does not have discretion to state or apply 

the law incorrectly. See Luckett v. Bethlehem Steel Corp., 618 

F.2d 1373, 1377 (10th Cir. 1980)(trial court has no discretion in 

making summary judgment ruling). 

Deere also argues that the 

1984, executed by Benda and Kiowa, is 

purchase order dated July 26, 

not properly before this 

court because it was not introduced until after the district 

court's initial summary judgment ruling. SNB first mentioned the 

purchase order in its objections to Deere's summary judgment 

motion, filed one day after the November 22 order. SNB introduced 

the purchase order in arguing its motion for new trial. Despite 

Deere's objections to both the purchase order and SNB's arguments 

relevant to it, the district court addressed the purchase order in 

its December 22 order, quoting from it in support of its ruling. 

Thus, the purchase order was before the district court for 

consideration, was considered and relied upon by the court in its 

December 22 order, and is, therefore, properly before us on appeal 

of that order. See Buchanan v. Stanships, Inc., 744 F.2d 1070, 

1074 (5th Cir. 1984)(appellate court considered affidavits filed 

one day after summary judgment ruling, in part because district 

court had considered them in denying a motion for new trial). See 

also Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 697-98 

5 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 5 
(1984)(where district court had laid factual framework and parties 

had briefed and argued issue, no reason to refrain from addressing 

question). The cases Deere cites regarding issues and documents 

presented for the first time on appeal are inapposite. 

Initially, the following district court findings are 

supported by the record and will not be disturbed here: 

1. Both parties have a perfected security interest in the 

farming equipment. 

2. Deere had not "accepted" the Variable Loan Contract in 

July of 1984. 

We part company with the district court in its finding that 

the sale between Benda and Kiowa was conditional. While Deere's 

financing may have been conditioned on approval of Benda's credit, 

the record does not support a finding that the sale between Benda 

and Kiowa was conditioned on Deere's acceptance of Benda's 

financing request. Regardless of Kiowa's motive in entering into 

the contract with Benda, it is an undisputed fact, as noted by the 

district court in its November 22 order, and included by both 

parties in their briefs 

equipment on July 31, 1984. 

on appeal, that Benda "purchased" the 

This conclusion is supported by the 

language of the purchase order as well as by the undisputed facts. 

In the purchase order, Benda promised to 1) pay cash, 

2) execute an installment contract, or 3) execute a loan contract. 

Benda executed installment contracts (the Variable Loan 

Contracts), which were submitted to Deere for approval. Deere was 

under no obligation to accept Benda's credit. Were Deere to have 

rejected Benda's financing offer, no evidence in the record 

6 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 6 
suggests that either Benda or Kiowa would have considered the sale 

voided, although, presumably, Benda would have had to satisfy his 

obligations under the purchase order in one of the remaining 

methods stipulated therein. The existence of an unconditional 

sale is also supported by Benda's possession of the equipment from 

July 31, 1984, to October 22, 1984, without an intervening lease 

agreement or other arrangement. Under the evidence before us on 

appeal, the sale of the equipment from Kiowa to Benda on July 31, 

1984, was unconditional. 

The next question is whether a security interest attached to 

the equipment at the time of the sale. Under Oklahoma's version 

of the Uniform Commercial Code (the Code), a security interest 

attaches when 

a) the collateral is in the possession of the secured 

party . . . ; 

b) value has been given; and 

c) the debtor has rights in the collateral. 

Okla. Stat. Ann. tit. 12A, § 9-203(1). 

Benda took delivery of the equipment no later than July 31, 

1984, satisfying the first requirement. Skipping to the third 

requirement, we hold that Benda also had rights in the collateral. 

In Morton Booth Co. v. Tiara Furniture, Inc., 564 P.2d 210 (Okla. 

1977), the Oklahoma Supreme Court said: "where a debtor gains 

possession of collateral pursuant to an agreement endowing him 

with any interests other than naked possession, the debtor has 

acquired such rights as would allow the security interest to 

attach." Id. at 214. Benda took delivery of the equipment 

7 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 7 
pursuant to an unconditional sales agreement, under which he 

acquired more than "naked possession;" he acquired title, subject 

only to any preserved security interests. Cf. Kinetics Technology 

Int'l Corp. v. Fourth Nat'l Bank, 705 F.2d 396, 399 (10th Cir. 

1983)(applying Oklahoma law)(possession with contingent ownership 

rights sufficient for security interest to attach, "with or 

without payment on the contract")(citing Amfac Mortgage Corp. v. 

Arizona Mall of Tempe, Inc., 618 P.2d 240 (Ariz. Ct. App. 1980)). 

Returning to the second requirement, it is sufficient to note 

here that Deere gave no value to Benda until its acceptance of the 

Variable Loan Contracts. Therefore, as to Deere, no security 

interests attached to the equipment until October of 1984. 

Nonetheless, a security interest did attach to the equipment at 

the time of the sale. Language in the purchase order purported to 

retain 1 title in Kiowa until certain conditions were met, namely, 

payment by one of the three methods mentioned above. As SNB 

correctly notes, this attempt to retain title is void under the 

Code and results in the retention of a security interest by Kiowa. 

Okla. Stat. Ann. tit. 12A, § 2-401(1); Morton Booth, 564 P.2d at 

212. Therefore, on July 31, 1984, upon sale of the equipment to 

Benda, Kiowa's security interest in the collateral attached, 2 

SNB's previously-perfected "blanket" security interest attached by 

1 In its December 22 order, the district court erroneously 

relied on this language in support of its ruling that a 

conditional sale had taken place. 

2 Kiowa did not, at any time, perfect its security interest by 

filing a UCC Financing Statement, as required by section 9-302 of 

the Code. 

8 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 8 
virtue of its "after-acquired" clause, but Deere's security 

interest had not yet attached. 

Under the Code, there is only one way that Deere could have a 

security interest superior to SNB's perfected security rights in 

the equipment: to hold a purchase money security interest which 

has been perfected within the time period provided in section 

9-312(4). During the period pertinent to this transaction, the 

Code required that a purchase money security interest must be 

perfected within ten days of the time "the debtor receives 

possession of the collateral" before it can take precedence over 

other perfected security interests. Okla. Stat. Ann. tit. 12A, 

§ 9-312(4). 3 A purchase money security interest is one that is 

taken by either a seller or a lender "to enable the debtor to 

acquire rights in collateral . II Id.§ 9-107(b). In 

this instance, Deere qualifies as a purchase money security 

interest holder. 

Perfection requires two steps in this case: 1) attachment of 

a security interest and 2) filing of a UCC Financing Statement. 

Id.§§ 9-302(1), 9-303(1). Although Deere filed its UCC Financing 

Statement on August 8, 1984, presumably within ten days of 

delivery of the equipment, its security interest did not attach 

until it gave value in October of 1984. Because Deere's purchase 

money security interest did not attach within 10 days of July 31, 

1984, it could not have perfected its interest within that 

required time period. 

3 The statute now provides for a twenty-day window. 

9 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 9 
Deere would have us extend the ten-day window to begin at the 

time its security interest attached, contending that, until that 

time, Benda was not a "debtor." The district court agreed with 

this reasoning, relying primarily on Ninth Circuit authority. 

However, those cases are distinguishable. 

In both In Re Ultra Precision Industries, Inc., 503 F.2d 414 

(9th Cir. 1974), and Brodie Hotel Supply, Inc. v. United States, 

431 F.2d 1316 (9th Cir. 1970), buyers of certain equipment had 

taken possession of that equipment months before their lenders' 

purchase money security interests attached. The Ninth Circuit 

extended the ten-day window for perfection of the purchase money 

security interests, holding that the buyers could not be "debtors 

in possession of collateral" until the creation of the security 

interests covering the equipment. However, and significantly, the 

buyers in those cases were not obligated to purchase the equipment 

in question until such times as they entered into agreements which 

created their lenders' purchase money security interests. In 

Brodie, the buyer signed a bill of sale on the same date as he 

executed a chattel mortgage to his seller. In Ultra, the sale was 

expressly conditioned upon the financing, which was in place on 

the same date the buyer signed an agreement creating his lender's 

security interest. In other words, no sale had occurred between 

the buyers and sellers in those cases until such time as the 

security interests attached. 

We have already determined in this case that an unconditional 

sale occurred on July 31, 1984, creating an obligation secured by 

10 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 10 
the equipment as of that date. The ten-day window began to run on 

July 31, 1984. 4 

The focus of the attachment analysis is not, as Deere argues, 

on when the lender's security attaches. Under that analysis, the 

ten-day window provided in the Code would be meaningless. The 

focus is on the date the debtor assumed an obligation secured by 

the collateral. We hold that, as a result of Benda's purchase of 

the equipment from Kiowa on July 31, 1984, and by virtue of the 

attachment of Kiowa's security interest to the collateral 

resulting from its attempt to retain title, Benda became a 

"debtor" for purposes of the Code on that date. 

Therefore, although Deere's security interest was eventually 

perfected, it was not perfected within the time frame required by 

the Code to give it priority over other perfected interests. 

Without the special status of a purchase money security interest 

perfected within the time frame required by section 9-312(4), 

Deere's security interest is on equal footing with SNB's perfected 

interest, and subject to the "first in time, first in right" 

provisions of the Code. Okla. Stat. Ann. tit. 12A, § 9-312(5). 

SNB's security interest takes priority as first filed. 

Article 9 of the UCC was enacted to provide certainty to 

parties engaged in transactions involving security interests. As 

the Sixth Circuit noted in James Talcott, Inc. v. Associates 

Capital Co., 491 F.2d 879, 882-83 (6th Cir. 1974), quoting from 

the district court's opinion in that case: 

4 

the 

July 

In light of our ruling, we agree with the district court that 

dispute about whether Benda took delivery of the equipment on 

27, 1984, or July 31, 1984, is immaterial. 

11 

Appellate Case: 89-6024 Document: 010110098468 Date Filed: 02/06/1991 Page: 11 
"It would be a frustration of this purpose ... to hold 

that a purchase money secured party can deliver goods to 

his debtor, delay indefinitely before entering into a 

security agreement which binds the debtor ... and 

still obtain a perfected security interest by filing 

within ten days of the agreement." 

The judgment of the United States District Court for the 

Western District of Oklahoma is REVERSED and REMANDED for further 

proceedings consistent with this opinion. 

ENTERED FOR THE COURT 

PER CURIAM 

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