Opinion ID: 1762262
Heading Depth: 1
Heading Rank: 3

Heading: Eighteen identified head of cattle.

Text: Eighteen head of cattle were identified by ear tags as being sold by Strauss to Fleming on conditional sales agreements. Since these conditional sales agreements were taken by Strauss to secure the sale price, he has a purchase money security interest in the cattle. Sec. 409.107(1), Stats. [7] Where there is a conflict between a purchase money security interest and another security interest, the priority is governed not by sec. 409.312(5), as was the case with the grinder mixer, but by sec. 409.312(3) and (4). If the subject of the security interest or collateral constitutes inventory of the debtor, the priority of the security interest is determined by sec. 409.312(3). If the collateral is other than inventory, sub. (4) governs. [8] Livestock whether it makes sense to a dairy farmer or not, is classified as farm products and not as inventory by sec. 409.109(3). [9] Consequently, Strauss is protected if he has perfected his security interest by filing financing statements within ten days after Fleming received the cattle. We think Strauss did not perfect his security interest by filing the conditional sales notes and is not entitled to the priority protection of sec. 409.312(4), Stats., against the after-acquired clause of the bank's security instrument. To perfect a purchase money security interest, sec. 409.302(1) requires the filing of a financing statement. There are enumerated exceptions to this requirement but none are applicable to this case. Although Strauss filed copies of his conditional sales notes for financing statements, they bore only the signature of Fleming, the debtor, and sec. 409.402(1)(a) [10] requires the document filed, if it is to qualify as a financing statement, to be signed by both parties, give the debtor's mailing address and the address of the secured party, from which information concerning the security interest may be obtained. Strauss argues his signature does appear in the body of the conditional sales notes and since sec. 401.102, Stats., requires a liberal construction of the code to promote its underlying purposes and policies, he has substantially complied with sec. 409.312(4). We think Strauss' conditional sales notes are deficient in two respects, in signatures and in lack of address. Only one note (Exhibit 16) bears both a name and an address of Strauss and none of the 18 head of cattle is secured by that note. If only the question of Strauss' signature were involved, his argument finds support in an Annot., Construction and Effect of UCC Art. 9, Dealing With Secured Transactions, Sales of Accounts, Contract Rights, and Chattel Paper, 30 A. L. R. 3d 9, 57-62. The gist of this annotation is that a signature in the body of the instrument substantially complies with the signature requirement of sec. 409.402(1)(a), Stats. But substantial compliance with this section presupposes the signature fulfills two purposes: (1) Authenticates the existence of the security agreement, and (2) enables subsequent creditors to identify the secured party. Since Strauss' name in the body of the note is in his own handwriting, this might be evidence of his intention to authenticate the conditional sales notes. This view was taken in Benedict v. Lebowitz (2d Cir. 1965), 346 Fed. 2d 120. See also: Alloway v. Stuart (Ky. 1964), 385 S. W. 2d 41, and Strevell-Paterson Finance Co. v. May (1967), 77 N. M. 331, 422 Pac. 2d 366. However, we do not think that Strauss' name without an address fulfills the second purpose of identification. In Strevell the lack of signature was held not to be a fatal defect but the lack of an address was because the filing system provided by the code could not perform its intended function of identifying the secured debtor. It is true, three of the notes had the word Harvard after Strauss' name and were dated in Harvard, Illinois. However, unless Harvard, Illinois, is sufficiently small or Strauss is sufficiently well known, two points not covered by the record, a creditor located outside of Harvard, Illinois, would have a difficult task trying to contact Strauss for information concerning his security interest. Strauss in fact did not live in Harvard but on rural route two. An address must be sufficiently complete to enable a prudent man using reasonable care to locate the secured party. We hold the information contained in the conditional sales notes is not sufficient to substantially comply with sec. 409.402(1)(a), Stats., because it does not fulfill the purposes of the information and notice contemplated by that section. It is immaterial that the bank may have, in fact, known of Strauss, his identity and residence and was not misled; the financing statements are deficient. Strauss argues that a conditional sales contract for the purchase price taken by a seller has priority over an after-acquired-property clause of a general mortgage even though there is a failure to file and cites language to that effect in Annot., MortgageAfter-Acquired Property (1960), 86 A. L. R. 2d 1152, 1166. This annotation deals with the law prior to the adoption of the Uniform Commercial Code which substantially changed and replaced Wisconsin chattel mortgage law. See Synopsis of Chapter 409, 40c W. S. A. 119.