Opinion ID: 760170
Heading Depth: 3
Heading Rank: 2

Heading: Security Agreement Between Paulman and Filtercorp

Text: 52 Applying the foregoing analysis to the security agreement between Paulman and Filtercorp, we reach different results with respect to accounts receivable and inventory. The note (which serves as the security agreement) states that it was secured by the accounts receivable and inventory of Filter Corp. [sic] (see UCC-1 filing and attached inventory listing.). While the presumption that after-acquired property is included stands unrebutted as to accounts receivable, it is rebutted for inventory by the reference to the attached inventory listing. 53 Under the approach we adopt, the reference to accounts receivable presumptively includes after-acquired accounts receivable. The bankruptcy court found the opposing declarations of Paulman and Filtercorp, Inc.'s President as to their contemporaneous intent to be inconclusive. That finding of fact is not clearly erroneous. There is no other evidence of intent in the record. Therefore, we hold that Paulman has a security interest in after-acquired accounts receivable of Filtercorp. That security interest was perfected when Paulman filed a UCC-1 financing statement before other creditors and before Filtercorp filed for bankruptcy. 6 54 With respect to the security interest in inventory, the note referenced an attached inventory listing which, however, was never attached to either the note or the financing statement. Paulman claims that he did not attach the listing because he agreed with Filtercorp, Inc.'s President Bernard to create a security interest in inventory in general, including after-acquired inventory. Bernard, in contrast, claims that after-acquired inventory was never discussed by the parties prior to entering into the loan agreement and that he did not intend to attach after-acquired property given the short term nature of the loans. The bankruptcy court's finding that this conflicting evidence is inconclusive is not clearly erroneous. Thus, we are left with the language of the note itself. 55 When, as in this case, a security interest in inventory is described by reference to a list, it suggests an intent to limit the collateral rather than cover inventory as a floating mass including after-acquired inventory. See Chrysler Credit, 976 F.2d at 1014-15 (financing statement identifying collateral as Used Car Inventory; See Attachment 'A'  evidenced an intent to limit inventory rather than include after-acquired inventory). Yet, reference to an attached list does not preclude securing after-acquired collateral when the agreement or the listing demonstrate an intent to do so. See Coats State Bank v. Grey (In re Grey), 902 F.2d 1479, 1481 (10th Cir.1990) (security agreement granting interest in all debtor's livestock, hog equipment, farm machinery, and farm equipment as listed, to be updated monthly created an interest in after-acquired property because the requirement of monthly updating, in addition to other facts, evidenced an intent to attach after-acquired property); John Deere Co. v. Butler County Implement, Inc., 232 Kan. 273, 655 P.2d 124, 129-30 (Kan.1982) (security agreement covering inventory per ... Exhibit 'B'  did not create interest in after-acquired inventory, whereas security agreement in inventory and accounts receivable now owned and hereafter acquired by Borrower.... SEE ATTACHED EXHIBIT 'A'  did create interest in after-acquired property by the inclusion of an explicit after-acquired property clause). 56 Here, the Paulman-Filtercorp note referenced an inventory listing, which rebuts the presumption that after-acquired inventory is attached, and failed to demonstrate any particular intent to cover after-acquired inventory. The note's ambiguity regarding the security interest in inventory must be construed against Paulman, the drafter of the note. See McMahan & Baker, Inc. v. Continental Cas. Co., 68 Wash.App. 573, 843 P.2d 1133, 1136 (Wash.Ct.App.1993) (ambiguous contract language is construed against the drafter). We conclude that Paulman does not have a security interest in after-acquired inventory of Filtercorp. 7 57 Accordingly, we reverse the summary judgment with respect to Paulman's lien on accounts receivable, including after-acquired accounts receivable, of Filtercorp, and affirm with respect to his lien on inventory. 58