Opinion ID: 358075
Heading Depth: 2
Heading Rank: 2

Heading: The property-in-existence requirement.

Text: 24 It is not enough, however, that the mortgagee has a U.C.C. security interest in the disputed insurance fund. The federal tax lien statute defines security interest to require that the security property be in existence when the federal tax lien is filed. 25 A security interest exists at any time (A) if, at such time, the property is in existence and the interest has become protected under local law against a subsequent judgment lien arising out of an unsecured obligation, and (B) to the extent that, at such time, the holder has parted with money or money's worth. 26 26 U.S.C. § 6323(h)(1). In this case the property, the disputed insurance fund, arguably did not come into existence until the time of loss or perhaps not until the insurance company admitted its liability under the policy. However, we agree with the Second Circuit in PPG Industries, supra, 531 F.2d at 62, that the insurance fund is merely the collateral in another form. Accordingly, we regard the insurance fund and the original collateral as one and the same property for the purpose of determining when the property came into existence. 14 27 Thus although the federal tax lien can attach to the disputed insurance fund because the fund is property belonging to the mortgagor, the mortgagee has a security interest in the fund that is valid against the federal tax lien. 28 The judgment of the district court is AFFIRMED.