Case Name: INTERNATIONAL HARVESTER CREDIT CORPORATION and Florida Truck and Tractor Company, Petitioners, v. AMERICAN NATIONAL BANK OF JACKSONVILLE, a National Banking Corporation, Respondent
Court: Florida Supreme Court
Jurisdiction: Florida
Decision Date: 1974-02-13
Citations: 296 So. 2d 32
Docket Number: No. 43222
Parties: INTERNATIONAL HARVESTER CREDIT CORPORATION and Florida Truck and Tractor Company, Petitioners, v. AMERICAN NATIONAL BANK OF JACKSONVILLE, a National Banking Corporation, Respondent.
Judges: ROBERTS, ERVIN and ADKINS, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 296
Pages: 32–46

Head Matter:
INTERNATIONAL HARVESTER CREDIT CORPORATION and Florida Truck and Tractor Company, Petitioners, v. AMERICAN NATIONAL BANK OF JACKSONVILLE, a National Banking Corporation, Respondent.
No. 43222.
Supreme Court of Florida.
Feb. 13, 1974.
Rehearing Denied May 22, 1974.
W. Sperry Lee, Ulmer, Murchison, Ash-by & Ball, and Chester Bedell, Bedell, Be-dell, Dittmar, Smith & Zehmer, Jacksonville, for petitioners.
Richard C. Stoddard, Bryant, Dickens, Rumph, Franson & Miller, Jacksonville, for respondent.
Edward I. Cutler, Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Tampa, and Otterbourg, Steindler, Houston & Rosen, New York City, for Chemical Bank, amicus curiae.

Opinion:
DEKLE, Justice.
This certiorari review is based upon two questions certified to us by the First District Court of Appeal as being ones of great public interest. The stipulated facts are succinctly set forth in the District opinion at 269 So.2d 726 (1972).
The questions certified involve the Uniform Commercial Code, as adopted in Florida, and are as follows:
1. Under Florida Statute 679.302(1) (c), must a seller of farm equipment file a financing statement to perfect his security interest in farm equipment sold under one contract when the purchase price of each item is less than $2,500.00, but the total amount of the contract for all items exceeds $2,500.00?
2. Under Florida Statute 679.312(4) and (5), does a party with a security interest in after acquired property take priority over a party with a purchase money security interest which was not perfected within ten days after the debtor took possession of the collateral ?
The district court answered both questions in the affirmative. We reverse and answer the first question in the negative and agree with the dissent of Rawls, Acting C. J., in modifying the district court's affirmative answer to the second question.
FIRST QUESTION
The first question deals only with farm equipment as one of the statutory exceptions to the otherwise required filing of a "financing statement" to perfect the seller's security interest. This exception is with respect to farm equipment which has "a purchase price not in excess of $2,500." The question is whether several separate farm items, each costing less than $2,500, but when totaled under one contract exceed $2,500, still fall within the exception. We think that they do and that no filing is required.
The statute, § 679.302(1)(c), speaks of "a purchase price" of the item. This statutory reference controls and not the lumping together of several purchase prices in a single contract. Such view is confirmed by the next clause in the statute which states: "but filing is required for a fixture under § 679.313:" The syntax is consistently in the singular. It is the purchase price of each item (each purchase) which controls, rather than the total "contract price" as used in the district opinion. There was a valid reason for the statute to set a ceiling on substantial items of equipment; apparently the Legislature fixed upon $2,500 as being a reasonable one. This purpose would be defeated by simply allowing the lumping together of various smaller items to arrive at such a minimum amount. It seems illogical that the exception in this statute was intended to cover a purchase contract on various miscellaneous farm items, each under $2,500 but totaling $2,500 in the aggregate, which could include harrows, rakes, discs, attachments and even shovels and hoes. The exception was plainly intended to cover farm items substantial enough to cost $2,500. The conclusion of the district court to the contrary perhaps emanated from the point of view taken in its opinion, namely, that of the seller in its dealings with its purchaser, as to whether he chooses to list the $2,500 items on separate contracts or to lump all items together in order to assure a continuing lien upon all equipment until the full debt is paid. This is immaterial to the relationship between an earlier creditor claiming a priority and a subsequent seller. The statute deals simply with $2,500 major items without regard to the manner of securing the purchase price between the immediate seller of the farm equipment and the purchaser, so that this is not controlling.
SECOND QUESTION
Concerning the second question regarding "after acquired property" as to security priorities, we are in agreement with the district's majority position in recognizing the earlier creditor's priority of security in after-acquired property (unless the required financing statement has been timely filed on such subsequent purchase). Fla.Stat. § 679.312(4), F.S.A. However, we differ with the district majority and agree with Acting Chief Justice Rawls that this priority security protection to the earlier creditor must be limited to the debtor's equity in the after-acquired property. This position is consistent .with contractual constitutional requirements and equitable principles. The new seller's contract rights with his purchaser and any ownership retained in the property sold must be respected; moreover, it would be an invidious preference to the* earlier creditor-bank without so much as a showing that there was a compelling public interest or purpose served by such arbitrary requirement of outright priority to the earlier creditor in the total after-acquired property.
The contention is made that to restrict the prior creditor's priority in the after-acquired property to the debtor's equity therein renders meaningless the requirement for filing a financing statement. We do not think so. There really are no conflicting security interests in this situation. That security interest retained by the subsequent seller in the after-acquired property never passes to the buyer-debtor and thus never becomes subject to the earlier creditor's claim of security interest in such after-acquired property. On the other hand, the earlier (perfected) creditor does have his security in that interest which is after-acquired by his debtor.
In this respect we note that the statute grants the priority in the debtor's after-acquired property; it refers to the respective security "interest" as being thereby affected. The debtor, while acquiring the physical property, only acquires an interest therein under a credit sales contract; it is this interest only then which is "after acquired" and thereby subject to the earlier security right. The remainder is upon credit from the new creditor who often also retains title thereto. It would be abhorrent to equity and justice that the earlier creditor should acquire the subsequent creditor's property or "interest" in this manner. Upon principles of equity and in the avoidance of unjust enrichment, the limitation to the debtor's equity in after-acquired property appears to be the better and more logical rule. We would accordingly agree with Acting Chief Judge Rawls in this respect.
The "new value" section of the code, § 679.108, urged by petitioners, is not invoked in the circumstances sub judiee. The earlier secured creditor, respondent, stands upon its original contract and not upon "new value."
Logical and traditional equitable reasons preclude a result which would allow the bank as mortgagee to subject the after-ac quired farm equipment as its collateral, while not changing its position and giving no "new value" because of the later sale of equipment; consequently, the bank was not misled by the failure of the seller of the equipment to record his purchase money security.
To give the prior creditor the seller's retained interest in such property simply because of such seller's failure to record and to permit the original creditor to replevin the sold equipment would be to give to such earlier creditor a windfall not favored by the code (see § 679.108 and U.C.C. Comment 19C F.S.A. 198) contrary to established principles. Compare County of Pinellas v. Clearwater Federal Savings & Loan Ass'n, 214 So.2d 525 (Fla.App.2d 1968).
Our viewpoint regarding a limitation (to the buyer's equity) of the security of the earlier creditor, allows a just result to such creditor and yet is consistent with constitutional requirements as to the subsequent seller. Our position acknowledges, yet modifies, the view expressed by Judge Wigginton and that of the other jurisdictions cited in his opinion.
We accordingly modify the district court holding as to question 2 to the extent of limiting the priority allowed by the commercial code to the first (perfected) creditor (absent timely filing) to the extent of that creditor's debtor's equity in the after-acquired property under whatever contract it was purchased, preserving to the new seller his retained interest in such after-acquired property.
It is so ordered.
ROBERTS, ERVIN and ADKINS, JJ., concur.
McCAIN, J., concurs in part and dissents in part with opinion.
CARLTON, C. J., dissents with opinion, in which BOYD, J., concurs.
. Fla.Const., Art. V, § 3(b)(3), F.S.A.
. Cf. Mammoth Cave Production Credit Assoc. v. York, 429 S.W.2d 26 (Ky.1968).
. Fla.Stat. § 679.312, F.S.A.