Source: https://m.openjurist.org/624/f2d/562/personal-jet-inc-v-n-d-callihan-n-d-callihan
Timestamp: 2019-11-12 01:08:10
Document Index: 364741629

Matched Legal Cases: ['§ 9302', '§ 9302', '§ 1301', '§ 9303', '§ 1201', 'art, 52', '§ 9302']

624 F2d 562 Personal Jet Inc v. N D Callihan N D Callihan | OpenJurist
624 F. 2d 562 - Personal Jet Inc v. N D Callihan N D Callihan
624 F2d 562 Personal Jet Inc v. N D Callihan N D Callihan
624 F.2d 562
29 UCC Rep.Serv. 1012
PERSONAL JET, INC., et al., Plaintiffs-Appellees,
N. D. CALLIHAN, Defendant-Appellant.
N. D. CALLIHAN, Plaintiff-Appellant,
PARIS JET, INC., et al., Defendants-Appellees.
No. 78-2907.
While a security agreement is always enforceable between the parties, superior rights may be acquired against secured third parties by perfecting the security interest. Though there are several methods available to perfect a security interest, the most common method requires the filing of a financing statement. Id. § 9302(1). But the filing of a financing statement is not required if a United States statute provides a system of national registration. Id. § 9302(3)(4). Compliance with the statute will perfect the security interest in property. The Federal Aviation Act, 49 U.S.C. § 1301 et seq., and the FAA regulations provide for the registration of aircraft. A security interest is finally perfected when it has attached and all the applicable steps required for perfection have taken place. § 9303(1).
It is clear that this letter constitutes a security agreement granting Bank a security interest in the plane and after-acquired property to the extent the letter indicated that additional aircraft would be included as collateral. While the letter was not in the form required by the FAA to perfect a security interest, it was still sufficient to grant a security interest to Bank. No special form is necessary to create a security interest. Komas v. Small Business Administration, 71 Cal.App.3d 809, 139 Cal.Rptr. 669 (1977). It is sufficient if the parties use language that indicates the parties intended to create a security interest, id., and if the security agreement reasonably identifies the property subject to the agreement. Matter of California Pump & Mfg. Co., Inc., 588 F.2d 717 (9th Cir. 1973); see also In re Amex-Protein Development Corp., 504 F.2d 1056 (9th Cir. 1974). The letter was signed by the debtor and reasonably described the collateral as Paris jets and gave the proper registration number of the planes. Value was given in the form of a $250,000.00 loan. Therefore, Bank possessed a security interest enforceable against the debtor and third parties, such as Callihan, as of November 7, 1974.
Instead of exercising its rights under Article 9 and foreclosing on the collateral, Bank entered into negotiations with ARC to try to salvage the business. As a result, ARC executed a security agreement on June 6, 1975, granting Bank a security interest in certain described collateral. All of the requirements of a security interest were satisfied, including the giving of value, since the UCC states that a person gives value for rights if he acquires them as security for or in total or partial satisfaction of a pre-existing claim. § 1201(44)(b). The pre-existing debt of $250,000.00 coupled with the forebearance of a foreclosure suit constituted value. Western Decor & Furnishings Industries, Inc. v. Bank of America National Trust and Savings Association, 91 Cal.App.3d 293, 154 Cal.Rptr. 287 (1979); see also Copeland v. Stewart, 52 Cal.App.3d 217, 124 Cal.Rptr. 860 (1975). The security interests were perfected pursuant to § 9302(3) when the formal security agreements executed by ARC were filed with the FAA on June 27, 1975.
A sale is commercially reasonable where it is done in public, during business hours, upon adequate notice within a reasonable time of repossession, and under conditions reasonably calculated to bring a fair market price. General Electric Corp. v. Bo-Mar Construction Co., 72 Cal.App.3d 887, 140 Cal.Rptr. 417 (1977). The sale by Bank satisfies these requirements. After Bank took over the collateral, a professional appraiser and auctioneer was retained to inventory, advertise, and display the collateral before sale at a public auction. Notice was given as prescribed by California law and the auctioneer distributed brochures on the sale. The auction was held at a county airport with 70 people in attendance, of whom 28 were registered bidders. IMA submitted a bid of $276,000.00, some $100,000.00 in excess of the other bids, and it was accepted. This public sale satisfied the requirements of Article 9 and will not be set aside. IMA obtained good title and it could transfer good title to its transferee, Personal Jet. Therefore, when Callihan finally received his judgment in 1977, he could not enforce his judgment against Paris Jet against this collateral owned by Personal Jet.