Court Opinion

ID: 9565095
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:14:53.441401+00
Date Added: 2024-06-11T09:19:23.949168
License: Public Domain

Neely, Justice,

dissenting-.

I respectfully dissent from the ruling of the majority of the Court, particularly with regard to the holding of syllabus point 4 which provides that the unreasonable impairment of collateral under Code, 1931, 46-3-606 releases only secondary and accommodation parties. With due deference to the learned discussion of the official commentator and precedent to the contrary from foreign jurisdictions, it appears that the statute is clear when it says: “The holder discharges any party to the instrument ....” (emphasis supplied.) When the statute provides “any party” logic demands that it mean “any party” and its application not be limited to secondary or accommodation parties. Unreasonable impairment of collateral should discharge a maker who is also adversely affected by a holder’s impairment of the collateral, as *182the maker no longer has available the potential proceeds of a sale of the collateral for the purpose of reducing his out-of-pocket expenses to satisfy the note.
Furthermore, proper public policy dictates this result. In many parts of West Virginia borrowers are not regularly advised by legal counsel and are ignorant of the commercial law and the complex requirements set forth in the Commercial Code for perfecting security interests. Many well-qualified lawyers who do not specialize in commercial law are similarly uninformed. Banks, on the other hand, perform numerous secured transactions every day and have the capability of developing expertise in the requirements for perfecting security interests. It is the responsibility of the bank to perfect its security interest for its own protection, and I would infer from a plain reading of the statute that it was the intent of the Legislature in adopting Code, 46-3-606 that the risk of loss by virtue of impairment of collateral be sustained by the party with the greatest expertise and who is responsible for the perfection of the security interest.
Accordingly, I would reverse the case and remand it for a new trial exclusively on the issues of whether the defendant, Sayre, breached the fiduciary duty to the bank and whether the bank’s failure to record a financing statement in the office of the Secretary of State constituted an unreasonable impairment of collateral.