Opinion ID: 491041
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 2 On August 2, 1982, debtor and Freightliner entered into a lease agreement (the lease) by which debtor leased certain tractors from Freightliner. The security agreement, securing debtor's performance under the lease, gave as collateral for amounts due under the lease ($3.5 million): (1) a security interest in all of debtor's vehicles and rolling stock encumbered by prior security interests, (2) accounts receivable except to the extent they were subject to the interests of Tradex Inc., and (3) general intangibles. 3 Prior to the lease transaction between debtor and Freightliner, Fruehauf Corporation (Fruehauf) and Transport Acceptance Corporation (TAC) had acquired perfected security interests in some of debtor's vehicle collateral. These security interests had been perfected by notation of the interests on the certificates of title covering the collateral pursuant to ORS 481.413(2) (1983). 1 4 In May 1982, in anticipation of the lease transaction, TAC and Fruehauf agreed to release to Freightliner the certificates of title to the vehicle collateral for notation of Freightliner's security interest. After the lease was executed, however, both TAC and Fruehauf refused to release the certificates of title until the balance due them from debtor was fully paid because of an intervening default by debtor under the loan agreements with TAC and Fruehauf. 5 On November 4, 1982, debtor filed a voluntary Chapter 11 petition in bankruptcy. Debtor continued to operate as a debtor-in-possession until June, 1983, when Everette H. Williams (Trustee) was appointed as an operating trustee. The case was converted to a Chapter 7 liquidation on July 1, 1983. 6 On December 16, 1982, Fruehauf and TAC assigned their rights under the loans and in the vehicle collateral to Freightliner in consideration of Freightliner's payment of the outstanding balance due them from debtor of $40,689.67. On December 21, 1982, TAC and Fruehauf delivered the pertinent certificates of title to Freightliner. Between January 24 and 27, 1983, Freightliner received from the Oregon Motor Vehicles Division (MVD) certificates of title to the vehicle collateral with Freightliner's security interest noted thereon. 7 Freightliner initiated an adversary proceeding on July 6, 1983, by filing a complaint for relief from the automatic stay. Freightliner sought to foreclose its security interest in property of debtor's bankruptcy estate and to recover funds received by the Trustee from the transfer of debtor's transportation operating authorities. The Trustee defended against the complaint, contending that Freightliner did not hold a perfected security interest in particular vehicles and rolling stock of the estate and that Freightliner was not entitled to proceeds derived from the transfer of the operating authorities. 8 The Bankruptcy Court conducted an evidentiary hearing and heard oral argument on July 11, 1984. On January 8, 1985, it entered a judgment based on separately entered Findings of Fact. The judgment avoided Freightliner's security interest in the proceeds of the vehicles and rolling stock, except for $40,689.67, and awarded Freightliner the proceeds of all debtor's accounts receivable and the proceeds derived from the transfer of the transportation operating authorities. The district court affirmed the bankruptcy court's judgment in all respects.