Opinion ID: 2041464
Heading Depth: 1
Heading Rank: 1

Heading: We will discuss first whether equitable estoppel or estoppel in pais will bar plaintiff from asserting its security interest in the disputed goods.

Text: Law and equity have concurrent jurisdiction of the affirmative defense of estoppel. The defense rests on equitable principles which courts of law recognize. The defense may be urged in either forum. Grandon v. Ellingson, 259 Iowa 514, 518, 144 N.W.2d 898, 901 and authorities cited. It is claimed that in March 1970 defendants Diamond and Wilson with others discussed the financing of accounts receivable with E. W. Youell, president of Manson State Bank. Youell informed them that while plaintiff had financed accounts receivable on earlier occasions, it had subordinated its rights to Park Investment due to the fact rates were insufficient to pay plaintiff to continue such financing and suggested Union Trust be contacted about such financing. Upon being questioned, Youell stated plaintiff had a security interest in the furniture, fixtures, equipment and inventory of Continental Corporation, but did not inform them of any security interest in accounts receivable held by plaintiff. Defendants contend this is a misrepresentation which estops plaintiff from relying on any security interest in accounts receivable, since it was relied upon when accounts receivable financing was arranged with Union Trust. It is further contended that while at the scene of the loading of the goods onto a truck, Youell acquiesced to the taking of the goods, but this is under some dispute. Defendants point out Youell was aware of Union Trust's financing of accounts receivable but said nothing about it except once when plaintiff received a check on which payment was stopped. Youell apparently threatened Union Trust with the security interest held by plaintiff. At the outset, it should be pointed out plaintiff's financing statement on the accounts receivable was on file with the Iowa Secretary of State at the time Union Trust agreed to finance these accounts. And, the Uniform Commercial Code (UCC) provides:    2. Upon request of any person, the filing officer shall issue his certificate showing whether there is on file on the date and hour stated therein, any presently effective financing statement naming a particular debtor and any statement of assignment thereof and if there is, giving the date and hour of filing of each such statement and the names and addresses of each secured party therein.   . Section 554.9407, The Code, 1971. Such filing provides notice to all.    [W]hen the holder of a security interest properly perfects the same, subsequent purchasers and encumbrancers are charged with `notice' of such perfected security interest. National Trail Con. Co. v. Mount Vernon Nat. B. & T. Co., 420 P.2d 889, 893 (Okl.1966). A security interest in receivables is `perfected' in the Code sense (Sections 9-204, 9-303) at the time the last of four steps has been taken (in any order) with respect to the particular receivable or receivables in question: (1) there is `agreement' (which could be oral) between the parties that a security interest is attached to; (2) the secured party gives value; (3) the parties file a financing statement   ; (4) the assignor `acquires rights' in the particular receivables, which cannot happen as to a particular receivable until that receivable comes into existence (Section 9-204). (Emphasis in the original). 2 Bender's Uniform Commercial Code Service, Secured Transactions, section 15.08(2), p. 1600. Bramble Transportation, Inc. v. Sam Senter Sales, Inc., 294 A.2d 97, 103, (Del.Super. 1971), aff'd., 294 A.2d 104 (Del.1972) has this statement:    The purpose of a financing statement is to put a searcher on notice that an underlying security agreement may be outstanding. A properly filed financing statement would thus serve its intended purpose if a subsequent party would have been put on notice of an outstanding security agreement.    [citing authorities]. See also South County Sand & G. Co. v. Bituminous Pavers Co., 106 R.I. 178, 256 A.2d 514, 516-517; Mid-Eastern Electronics, Inc. v. First Nat. Bank of So. Md., 455 F.2d 141, 146 (4 Cir. 1970); In re Colorado Mercantile Co., 299 F.Supp. 55, 58-59 (D.C.Colo.1969); In re Grandmont, 310 F.Supp. 968, 971 (D.C.Conn.1970); Owen v. McKesson and Robbins Drug Company, 349 F.Supp. 1327, 1334 (N.D.Fla.1972). The foregoing principle is recognized in Kaiser Aluminum & Chemical Sales, Inc. v. Hurst, 176 N.W.2d 166, 167-168 (Iowa 1970). The filing herein thus provided notice. Based on this fact and on the foregoing decisions or decisions stating similar principles in somewhat different language plaintiff contended it is entitled to priority by virtue of having filed its financing statement before the defendants or Union Trust & Savings Bank filed any financing statement. However, the present problem requires a determination whether Youell's statements or nonstatements will prevent plaintiff from asserting its security interest is entitled to priority. `The essential elements of equitable estoppel or estoppel in pais are: `(1) a false representation or concealment of material facts; (2) lack of knowledge of true facts on part of actor; (3) intention that it be acted upon; and (4) reliance thereon by the party to whom made, to his prejudice and injury.' Walters v. Walters, 203 N.W.2d 376, 379 (Iowa 1973), quoted in DeWall v. Prentice, 224 N.W.2d 428, 430 (Iowa 1974). `   A party asserting this defense has the burden to establish all essential elements thereof by clear, convincing and satisfactory proof. Nothing less will suffice.    [citing authorities].' DeWall v. Prentice, 224 N.W.2d at 430-431. In general, the doctrine of equitable estoppel is based upon the grounds of public policy, fair dealing, good faith, and justice, and its purpose is to forbid one to speak against his own act, representations, or commitments, to the injury of one to whom they were directed and who reasonably relied thereon. Such a doctrine is neither odious nor in disfavor, in either law or equity. Smith v. Coutant, 232 Iowa 887, 891, 6 N.W.2d 421, 424. See also Holsteen v. Thompson, 169 N.W.2d 554, 558 (Iowa 1969) and Mizer v. State Automobile & Casualty Underwriters, 195 N.W.2d 367, 371 (Iowa 1972). In considering the application of this doctrine each case must be considered in the light of its surrounding facts and circumstances; estoppel must in the nature of things stand on its merits.    [citing authorities]. Sioux City v. Johnson, 165 N.W.2d 762, 768 (Iowa 1969).