United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 07-3948

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ProGrowth Bank, Inc., *

*

Plaintiff-Appellee, *

* Appeal from the United States

v. * District Court for the District 

* of Minnesota.

Wells Fargo Bank, N.A.; and *

Global One Financial, Inc., *

*

Defendants-Appellants. *

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Submitted: December 10, 2008

Filed: February 20, 2009

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Before WOLLMAN, BYE, and RILEY, Circuit Judges.

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BYE, Circuit Judge.

Wells Fargo Bank, N.A. (“Wells Fargo”) and Global One Financial, Inc.

(“Global One”) (collectively, the “Defendants”) appeal from the district court’s grant

of summary judgment in favor of ProGrowth Bank, Inc. (“ProGrowth”) on its claim

for a declaratory judgment. We reverse.

I

This case concerns separate and unrelated loans made by Global One and

ProGrowth to Christopher Hanson (“Hanson”) and/or the Christopher Hanson
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Insurance Agency (the “Agency”). On September 8, 2005, Global One and the

Agency entered into a Promissory Note and a Security Agreement, pursuant to which

Global One loaned the Agency one million dollars. As security for the loan, Hanson

assigned his interests in two separate annuity contracts, both issued by Fidelity &

Guaranty Life Insurance Company (“Fidelity & Guaranty”). The two annuity

contracts were valued at one million dollars, and they were identified as “L9E00015"

and “L9E00016,” respectively.

That same day, Wells Fargo, acting as a collateral agent for Global One, filed

a financing statement with the Secretary of State of Missouri. The financing statement

identifies the “Debtor” as “Christopher J. Hanson,” and it describes the collateral as

follows:

All of Debtor’s right, title, and interest in and to, assets and rights of

Debtor, wherever located and whether now owned or hereafter acquired

or arising, and all proceeds and products in that certain Annuity Contract

No.: LE900015 issued by Lincoln Benefit Life in the name of Debtor

. . . .

Of importance in the instant appeal, the financing statement identifies the contract

number as “LE900015" instead of “L9E00015,” and it identifies the issuer as “Lincoln

Benefit Life” instead of Fidelity & Guaranty. On September 16, 2005, Wells Fargo,

again acting as a collateral agent for Global One, filed an additional financing

statement. This statement identifies the “Debtor” as “Christopher J. Hanson” and

provides the following description of collateral:

All of Debtor’s right, title, and interest in and to, assets and rights of

Debtor, wherever located and whether now owned or hereafter acquired

or arising, and all proceeds and products in that certain Annuity Contract

No.: L9E00016 issued by Lincoln Benefit Life in the name of Debtor

. . . .
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Although this financing statement correctly identifies the contract number, it once

again mistakenly refers to the issuer of this contract as “Lincoln Benefit Life” instead

of Fidelity & Guaranty. During this same time period, Wells Fargo filed financing

statements regarding at least two other annuity contracts, which are not involved in

this lawsuit, owned by Hanson and issued by Lincoln Benefit Life.

On February 9, 2006, Hanson obtained a loan from ProGrowth. As security for

the loan, Hanson assigned his interests in the Fidelity & Guaranty annuity contracts

to ProGrowth. On February 14, 2006, ProGrowth filed two financing statements with

the Secretary of State of Missouri. They identify Hanson and the Agency as the

debtor, and they accurately describe the collateral as: “Fidelity and Guaranty Life

Insurance Annuity Contracts Number L9E00015 and Number L9E00016[.]”

ProGrowth then filed this lawsuit against Global One and Wells Fargo asserting

a claim for a declaratory judgment decreeing that its perfected security interests in the

Fidelity & Guaranty annuity contracts are prior to and superior to any perfected

security interests claimed by the Defendants. ProGrowth also asserted a claim for

conversion. ProGrowth argued that the Defendants’ security interests are not

perfected because the financing statements filed with respect to those interests are

seriously misleading. The district court granted ProGrowth’s motion for summary

judgment. The Defendants then filed a motion to alter or amend the judgment,

arguing the district court erred in granting summary judgment in favor of ProGrowth

without requiring ProGrowth to satisfy its burden of showing its own perfected

security interests in the annuity contracts. The district court denied the Defendants'

motion because they never asserted that in opposition to the motion for summary

judgment that ProGrowth’s security interests in the annuity contracts are not

perfected. This appeal followed.
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II

We review de novo the district court’s grant of summary judgment in favor of

ProGrowth. Fitzgerald v. Action, Inc., 521 F.3d 867, 871 (8th Cir. 2008). “When the

evidence, viewed in the light most favorable to the nonmoving party, presents no

genuine issue of material fact and the moving party is entitled to judgment as a matter

of law, summary judgment is appropriate.” Id. The parties agree Missouri law

governs this diversity action.

Both ProGrowth and the Defendants have security interests in the Fidelity &

Guaranty annuity contracts. The parties agree the priority of the Defendants’ security

interests is dependent upon whether their interests are perfected in accordance with

Article 9 of the Missouri Uniform Commercial Code (“Missouri UCC”), Missouri

Revised Statute § 400.9-101-400.9-710. Under the circumstances involved in this

case, Defendants’ security interests in the annuity contracts are perfected only if the

financing statements they filed with respect to those interests are sufficient under

Missouri law. See id. § 400.9-310. “[A] financing statement is sufficient only if it:

(1) [p]rovides the name of the debtor; (2) [p]rovides the name of the secured party or

a representative of the secured party; and (3) [i]ndicates the collateral covered by the

financing statement.” Id. § 400.9-502(a). The parties dispute whether the

Defendants’ financing statements satisfy the third requirement.

A financing statement “sufficiently indicates the collateral that it covers if the

financing statement provides: (1) [a] description of the collateral pursuant to section

400.9-108; or (2) [a]n indication that the financing statement covers all assets or all

personal property.” Id. § 400.9-504. Under section 400.9-108, a “description of

personal or real property is sufficient, whether or not it is specific, if it reasonably

identifies what is described.” Finally, “[a] financing statement substantially satisfying

the requirements of this part is effective, even if it has minor errors or omissions,
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unless the errors or omissions make the financing statement seriously misleading.”

Id. § 400.9-506(a).

“The requirements of the UCC concerning filing, notice and perfection all are

intended to provide to those dealing with commercial activities knowledge of the

status of the commodity with which they are dealing so that they may protect their

interests and act in a commercially prudent manner.” First Nat. Bank of Steeleville,

N.A. v. ERB Equip. Co., 921 S.W.2d 57, 62 (Mo. Ct. App. 1996). To that end, the

financing statement “serves the purpose of putting subsequent creditors on notice that

the debtor’s property is encumbered.” Thorp Commercial Corp. v. Northgate Indus.,

Inc., 654 F.2d 1245, 1248 (8th Cir. 1981). Its function is not to “identify the collateral

and define property which the creditor may claim, but rather to warn other subsequent

creditors of the prior interest.” Id. Thus, we view the validity of the financing

statement in terms of whether “it provides notice that a person may have a security

interest in the collateral claimed.” Mo. Rev. Stat. § 400.9-504 (UCC cmt. 2)

(emphasis added). The UCC allows for imperfect financing statements, and it

recognizes that sometimes “[f]urther inquiry from the parties concerned will be

necessary to disclose the complete state of affairs.” Id. Therefore, errors or omissions

in the description of collateral do not render financing statements ineffective unless

they are seriously misleading, which “is designed to discourage the fanatical and

impossibly refined reading of statutory requirements in which courts have

occasionally indulged themselves.” Id. § 400.9-506 (UCC cmt. 2).

ProGrowth argues the Defendants’ financing statements are seriously

misleading because they identify the annuity contracts as issued by Lincoln Benefit

Life instead of Fidelity & Guaranty, and because contract no. L9E00015 is identified

as no. LE900015. Were this the only language contained in the Defendants’ financing

statements, we may be inclined to agree. These provisions of the financing

statements, however, cannot be read in isolation. The financing statements describe

the collateral as:
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All of Debtor’s right, title, and interest in and to, assets and rights of

Debtor, wherever located and whether now owned or hereafter acquired

or arising, and all proceeds and products in that certain Annuity Contract

No.: LE900015 [or L9E00016] issued by Lincoln Benefit Life in the

name of Debtor . . . .

(Emphasis added).

It is necessary to analyze the financing statements in their entirety because,

under the Missouri UCC, a financing statement sufficiently identifies the collateral it

covers if it provides an “indication that the financing statement covers all assets or all

personal property.” Mo. Rev. Stat. § 400.9-504. By identifying the collateral as all

assets or all personal property, the filer ensures that if “the property in question

belongs to the debtor and is personal property, any searcher will know that the

property is covered by the financing statement.” Id. § 400.9-504 (UCC cmt. 2).

While such a broad, generic description is insufficient to describe collateral in a

security agreement, it is sufficient to describe collateral in a financing statement

because it puts subsequent searchers on notice that any item of collateral owned by the

debtor may be encumbered, which is the purpose of the filing system. When faced

with a financing statement purporting to cover “all assets” of a debtor, it is then

incumbent upon the subsequent creditor to investigate whether the collateral at issue

is in fact covered by a security agreement. See id. § 400.9-502 (UCC cmt. 2)

(“Further inquiry from the parties concerned will be necessary to disclose the

complete state of affairs.”).

We conclude the Defendants’ financing statements satisfy the filing provisions

of the Missouri UCC because they indicate coverage over all of Hanson’s assets. The

first clause of the financing statements identify the collateral as “[a]ll of Debtor’s

right, title, and interest in and to, assets and rights of Debtor, wherever located and

whether now owned or hereafter acquired or arising . . . .” This language sufficiently

describes the collateral under section 400.9-504(2) because it gives an indication that
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all of Hanson’s assets may be covered. Thus, any inaccuracies in describing the

specific annuity contracts at issue are immaterial and do not render the statements

seriously misleading.

ProGrowth argues – and the district court agreed – the financing agreements

should be interpreted to cover only “assets and rights of Debtor” “acquired or arising”

in the “certain Annuity Contract[s].” The district court construed the “all assets”

clause as simply referring to rights contained in, or derived from, the annuity

contracts. We think this interpretation, however, is unduly restrictive and ignores the

plain language of the statements. The statements contain two distinct phrases

separated by the word “and,” which indicates the descriptive clauses are independent

from each other. See United States v. Ron Pair Enters, 489 U.S. 235, 241 (1989)

(“The phrase ‘interest on such a claim’ is set aside by commas, and separated from the

reference to fees, costs, and charges by the conjunctive words ‘and any.’ As a result,

the phrase ‘interest on such a claim’ stands independent of the language that

follows.”). The first part covers all “assets and rights of Debtor,” while the second

part covers “proceeds and products in that certain Annuity Contract[s].” Because the

two phrases are separated by a comma and the word “and,” the most natural reading

of the financing statements is that the statements' identification of the collateral as

“[a]ll of Debtor’s right, title, and interest in and to, assets and rights of Debtor” is in

addition to the identification of the collateral as “all proceeds and products in the

Annuity Contract[s].” See id.

Moreover, even if it is reasonable to construe the “all assets” language as

simply referring to rights contained in the annuity contracts, it is equally reasonable

to construe it as a separate, independent phrase covering all of Hanson’s assets.

Where a description can reasonably be interpreted in one of two ways – one of which

may cover the collateral at issue and one of which does not – notice filing has served

its purpose of alerting subsequent creditors to the possibility that a piece of collateral

may be covered; the burden is then on the subsequent creditor to inquire further. See
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The district court noted that it was unable to find a single case in which a

seriously misleading description of a specific item of collateral was “cured” by a

generic reference in a financing statement to all of a debtor’s assets. While true,

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Thorp, 654 F.2d at 1252-53 (“Even assuming the words ‘assignment accounts

receivable’ could be interpreted narrowly . . . the words also have an obvious broader

meaning; in the present case notice filing has served its purpose of alerting subsequent

creditors to the need for further inquiry. The UCC puts the burden on the subsequent

creditor to seek clarification.”). Additionally, the UCC does not require a perfect

description that the financing statement covers all of a debtor’s assets, but simply an

“indication” of such coverage.

ProGrowth makes two final arguments in support of its contention that the

financing statements do not sufficiently indicate coverage over all of Hanson’s assets.

First, it argues Defendants must not have intended the financing statements to cover

all of Hanson’s assets because doing so would render the subsequent descriptions of

the annuity contracts superfluous. Additionally, ProGrowth argues, it would have

been redundant for Defendants to have filed multiple other financing statements

asserting security interests in other property owned by Hanson. This is immaterial,

however, because nothing in the UCC prevents a creditor from filing redundant or

precautionary financing statements, nor does the UCC prevent financing statements

from setting forth alternative means of describing collateral. Further, we have

previously rejected an attempt to impugn a filer’s intent in filing one financing

statement based on the fact that subsequently filed statements would have been

redundant, holding the “standard for evaluating intent is the notice given to

subsequent creditors . . . .” Id. at 1248 n.5.

Second, ProGrowth argues – and the district court again agreed – that even if

the financing statements do sufficiently identify the collateral as all of Hanson’s

assets, such a broad statement cannot cure the seriously misleading descriptions given

for the specific annuity contracts at issue.1

 We think this fails to comprehend the
neither is there a case holding that a valid identification of collateral under the “all

assets” provision is rendered invalid because a financing statement subsequently

provides a description of a specific item that is deemed seriously misleading. 

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structure of the UCC. The UCC gives two methods for identifying collateral in a

financing statement: a description of the collateral, or an indication that the financing

statement covers all of the debtor’s assets. It then provides that errors or omissions

do not render the statements ineffective unless they are seriously misleading. The

relevant question is whether the statements – judged in their entirety – are seriously

misleading, not whether one alternative, and ultimately unnecessary, means of

describing the collateral contained therein is seriously misleading. While Defendants’

specific descriptions of the annuity contracts contain errors, the statements themselves

are not seriously misleading because a subsequent creditor should reasonably

understand that the financing statements may cover all of Hanson’s assets. It was then

incumbent upon subsequent creditors to inquire whether specific collateral owned by

Hanson is the subject of a prior security agreement. Therefore, we hold the

Defendants’ financing statements are not seriously misleading, and, as such, they are

sufficient to perfect Defendants’ security interests. The district court erred in granting

summary judgment in favor of ProGrowth on its claim for a declaratory judgment.

III

Accordingly, the decision of the district court granting summary judgment in

favor of ProGrowth is reversed, and the case is remanded to the district court for

further proceedings consistent with this opinion.

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