The opinion of the court was delivered by: WOOD
Both Finance Company of America (F.C.A.) reclaimant and the trustee have petitioned this court for review of the Referee's order of February 3, 1966 in which he upheld the security interest of the First National Bank (Bank). All three parties have made claim to the proceeds of the account receivables of the debtor. The trustee and Bank both contend they are entitled to the proceeds of the inventory.
Debtor granted to the Bank a security interest in April, 1960 in his inventory and accounts receivable currently owned and thereafter to be acquired together with their proceeds, to secure thenexisting indebtedness, a present advance of $6,000 and future advances. The Bank filed financing statements with the Secretary of the Commonwealth and the Prothonotary of Lehigh County. The collateral was described as "Inventory and Accounts Receivable." Proceeds of the collateral were not claimed in the statement.
In September, 1960, the bankrupt entered into a written agreement with Finance Company of America, the reclaimant (F.C.A.) providing for the sale by Platt to F.C.A. of specific accounts receivable, for which the bankrupt was to receive 70% in cash at the time of purchase and the remainder (less interest and charges) at the time the accounts were paid. F.C.A. filed financing statements both centrally and locally in Lehigh County in which the collateral was described as "accounts receivable, notes, chattel mortgages, conditional sales contracts, bailment leases and forms of chattel paper now existing or to be hereafter created or acquired, including collections and their proceeds." The debtor was designated only as Platt Fur Co.
In January, 1964, the Bank repossessed bankrupt's inventory and demanded that he turn over to it all receivables currently collected from his account debtors. Platt turned over $3,902.36 from collected accounts. The Bank received about an additional $10,000 directly from the account debtors upon notice to them. All moneys are currently held by the Bank subject to final disposition of. F.C.A.'s reclamation petition.
The Uniform Commercial Code, Pa.Stat.Tit. 12A § 9-101 et seq. applies in determining whether a lien creditor could have obtained a lien at the time of bankruptcy. Specifically, § 9-301 provides that a security interest unless perfected is subordinate to persons who become lien creditors without knowledge of the security interest and prior to perfection. A lien creditor includes a trustee in bankruptcy. § 9-301(3).
Section 9-303(1) states generally when a security interest is perfected, i.e. when the security interest has attached and when all of the applicable steps for perfection have been taken. Attachment can occur only when there is agreement that the security interest attach, the creditor gives value and debtor obtains rights in the collateral. § 9-204(1). Perfection is completed in most cases, as it would have been herein, when a financing statement is timely filed. § 9-302(1). A failure of any of the requisites on the part of either F.C.A. or the Bank precludes assertion of a security interest against the trustee.
F.C.A. contends first that the Bank's financing statement is not formally proper in failing to identify the collateral, as is provided under § 9-402, by not including the word "future" before accounts and inventory.
The appropriate section makes a financing statement sufficient if it contains a statement indicating the types or describing the items of collateral. Any description of personal property is sufficient whether or not it is specific if it reasonably identifies what is described. § 9-110.
A financing statement which covered all present and future accounts receivable submitted was held to identify reasonably what was described. Industrial Packaging Products Co. v. Fort Pitt Packaging Int'l, Inc., 399 Pa. 643, 161 A.2d 19 (1960). The comments to the Code define the purpose of § 9-110 briefly as follows:
"The test of sufficiency of a description laid down by this Section is that the description do the job assigned to it - that it make possible the identification of the thing described."
The Code adopts the system of "notice filing" which requires a filing only of a simple notice which indicates merely that the secured party who has filed may have a security interest ...