Court Opinion

ID: 9469526
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:42:56.038824+00
Date Added: 2024-06-11T17:41:26.064636
License: Public Domain

LOGAN, Circuit Judge,
concurring.
Because I believe the Pontchartrain State Bank (Bank) and D & D Mining Corporation (D & D) entered into a security agreement that meets the requirements of 12A Okla.Stat.Ann. § 9-203(l)(a), I would decide this case on an alternative ground.
*708I agree with the majority that no single document in this record meets the requirements of section 9-203(l)(a): (i) a security agreement, (ii) signed by the debtor, (iii) containing a description of the collateral. However, two or more writings that, taken together, establish that a security interest was agreed upon, carry the signature of the debtor, and adequately describe the collateral, satisfy section 9-203. In re Numeric Corp., 485 F.2d 1328, 1331 (1st Cir. 1973). In the instant case the March 2 letter from D & D’s attorney, Richard T. Sonberg, to the Bank, and the financing statement, taken together, comprise a valid security agreement. Both Sonberg and Dale E. Johnston, President of D & D, testified that Johnston directed Sonberg to write a letter advising the Bank “that they [the Bank] do have the mortgage that we are trying to give to them.” R. XI, 120; R. XI, 22. Sonberg’s letter states that D & D had vested the Bank with “a security interest in certain business equipment and machinery described and identified on the financing statement,” and, by referencing the financing statement, adequately describes the collateral. Because D & D’s president gave attorney Sonberg actual authority to inform the Bank of its security interest, I believe an Oklahoma court would find that Sonberg acted as D & D’s agent.1 His signature bound the corporation, see East Cent. Okla. Elec. Coop. v. Oklahoma Gas & Elec. Co., 505 P.2d 1324, 1328 (Okla.1973), and therefore constituted the signature of the debtor for purposes of section 9-203. See 12A Okla. Stat.Ann. § 1-103 (unless displaced by particular provisions of the UCC, agency law “shall supplement its provisions”).
Nevertheless, I would still affirm because the financing statement given here is defective. With exceptions not here applicable, the UCC requires that the secured party, to perfect all security interests, must file a valid financing statement, id. § 9-302(1), signed by the debtor. Id. § 9-402(1). When the debtor and the owner of the collateral are not the same person, “the term ‘debtor’ means the owner of the collateral in any provision of the Article dealing with the collateral, the obligor in any provision dealing with the obligation, and may include both where the context so requires.” Id. § 9-105(l)(d).
The main purpose in filing a financing statement is to guarantee that third parties will have notice of existing security interests in collateral. See id. § 9-402, comment 2, 3; In re Thomas, 466 F.2d 51, 52 (9th Cir. 1972); K. N. C. Wholesale, Inc. v. AWMCO, Inc., 56 Cal.App.3d 315, 318, 319, 128 Cal. Rptr. 345, 348 (1976).2 When the party granting the security interest is not the owner of the collateral but only has rights in the collateral given by the true owner, a financing statement in the name of the grantor of the security interest fails to give notice to subsequent creditors of the true owner or to prospective purchasers of the owner’s property. Therefore, to prevent fraud or misrepresentation, when the party granting the security interest in the collateral and the owner of the collateral are not the same person, the owner, and perhaps the party granting the security interest, must sign the financing statement. See K. N. C. Wholesale, Inc. v. AWMCO, Inc., 56 Cal.App.3d at 319-20, 128 Cal.Rptr. at 348-49 (construing identical sections of California’s UCC); General Motors Acceptance Corp. v. Washington Trust Co., 386 A.2d 1096, 1099 (R.I.1978) (construing identical sections of Rhode Island’s UCC).
In the instant case although D & D may have had sufficient rights in the collateral to grant a security interest, see 12A Okla. Stat.Ann. § 9-204; Morton Booth Co. v. *709Tiara Furniture, Inc., 564 P.2d 210, 214 (Okla.1977), it was not the owner of the collateral. Dale E. Johnston, president of both D & D and Dale E. Johnston Construction Co., testified that the construction company owned the caterpillars, that it had loaned them to D & D with an option to purchase, and that D & D had never exercised its option. R. VI, 14-15. The trial court implicitly accepted Johnston’s testimony, by finding that “D & D Mining Corporation did not have such property rights in the equipment to have granted to [Bank] a security interest in said collateral.” R. I, 154. Because D & D did not own the collateral, the Bank should have obtained on the financing statement the signature of the owner of the collateral, Dale E. Johnston Construction Co. By not doing so, the Bank failed to perfect its security interest. See 12A Okla.Stat.Ann. § 9-302(l).3

. The trial court did not find that Sonberg acted as D & D’s agent, but neither did it find that Sonberg was not an agent of D & D.

. J. White & R. Summers, Uniform Commercial Code 956 (2d ed. 1980), explains why it is so important that the debtor’s name appear in the financing statement:
“The filing officer uses the debtor’s name to compose his index and subsequent parties use the index in order to find the filing. If the debtor’s name is wrong, the index may be wrong and subsequent parties thus misled.”

. This reasoning accords with one of the trial court’s grounds for decision. The trial court found that “[p]rior to purchasing the caterpillars, [Poulson] made an examination of the records of the County Clerk of Oklahoma County and found no liens or encumbrances under the name of Dale E. Johnston Construction Company,” and therefore, that Poulson “had no notice of [Bank’s] claim to the property as collateral for the loan made to D & D Mining Corporation.” R. I, 150. The court then found that “[although [the Bank] filed a Standard Form U.C.C. 1 Financing Statement on March 2, 1976, properly describing the subject property, the same does not impart notice to [Poulson] of [the Bank’s] claim.” R. I, 151.