Opinion ID: 1180370
Heading Depth: 1
Heading Rank: 1

Heading: Colorado Springs National Bank's Interest

Text: After Mark III delivered its check to Guy Martin Buick, but before the certificates of title were transferred to the bank, as Mark III's agent, Mark III executed a security agreement with the Colorado Springs National Bank. The security agreement was intended to create a security interest in the automobiles to secure repayment of the bank's financing loan. [2] C. R.S.1963, XXX-X-XXX. However, as has been stated above, until the certificates of title were properly transferred to Mark III's agent, no right, title or interest was created in Mark III which would enable Mark III to legally convey or encumber the automobiles. Therefore, although the bank and Mark III fully intended that the security interest attach to the automobiles at the time the loan funds were deposited in Mark III's account, the absence of any legal right, title or interest by Mark III in the automobiles prevented the bank's security interest from attaching prior to the time that the certificates of title were delivered. C.R.S.1963, XXX-X-XXX(1). Whether the bank's security interest attached when the certificates of title were finally delivered to the bank depends upon other provisions of the Colorado Uniform Commercial Code. C.R.S.1963, XXX-X-XXX(1) provides, in part: A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase, the purchaser has such power even though: . . . . . . (b) The delivery was in exchange for a check which is later dishonored. . . . Moreover, purchase and purchaser are defined as: `Purchase' includes taking by sale, discount, negotiation, mortgage, pledge, lien, issue or reissue, gift, or any other voluntary transaction creating an interest in property. [Emphasis added.] C.R.S.1963, XXX-X-XXX(32). `Purchaser' means a person who takes by purchase. C.R.S.1963, XXX-X-XXX(33). See C.R.S.1963, XXX-X-XXX(3). In our view, the definition of purchase and purchaser, as set forth in the Colorado Uniform Commercial Code, are sufficiently broad to encompass a lender who takes a security interest in goods as security for its loan. In re Hayward Woolen Co., 3 U. C.C.Rptr. 1107 (United States District Court, Mass.1967); First-Citizens Bank & Trust Co. v. Academic Archives, Inc., 10 N.C.App. 619, 179 S.E.2d 850 (1971); Stumbo v. Paul B. Hult Lumber Co., 251 Or. 20, 444 P.2d 564 (1968); Jordan v. Butler, 182 Neb. 626, 156 N.W.2d 778 (1968); Anderson, 1 Uniform Commercial Code §§ 1-201; 99 and 101 (2d ed. 1970). Unless there is some showing of conduct amounting to bad faith, a lender receives an enforceable right to its security interest as a purchaser, even though the seller of the security interest has only a voidable title to the underlying goods. C.R.S.1963, XXX-X-XXX(1). Thus, after the certificates of title were delivered to the bank, Mark III acquired a voidable title and could convey an enforceable right in the automobiles to the lending bank as a good faith purchaser for value, even though Mark III's check to Guy Martin Buick was later dishonored. Therefore, under the facts of this case, the bank's security interest attached to the automobiles at the same instant that the titles were delivered to the bank. C.R.S. 1963, XXX-X-XXX(1). Since there is no evidence in the record which indicates that the bank filed a financing statement with the proper authorities to perfect its security interest, it held an unperfected security interest in the automobiles under the Colorado Uniform Commercial Code at the time Guy Martin Buick reclaimed the automobiles. C.R.S.1963, XXX-X-XXX-XXX-X-XXX.