Kalodner, Freedman*fn* and Adams, Circuit Judges.
Where a bank has financed the purchase of 20 motor buses in New Jersey and perfected a security interest in them by proper filing with the New Jersey Director of Motor Vehicles ("Director"), was it required, under New Jersey law, to make a further filing with the Director of a subsequent non-purchase money loan on the same buses in order to perfect a security interest in them as to the second loan?
The question was answered in the affirmative by the Referee in Bankruptcy in the instant proceedings for reorganization under Chapter X of the Bankruptcy Act. The District Court, on review, agreed. This appeal followed.
The relevant undisputed facts may be summarized as follows:
On April 13, 1965, the Washington Corporation ("Washington"),*fn1 one of the 26 related companies involved in the instant reorganization proceedings, bought 20 buses from the General Motors Corporation. The transaction was financed by a $778,000 purchase money loan from the appellant Peoples Trust Company of New Jersey ("Peoples").*fn2 Washington gave Peoples a Secured Installment Note dated April 13, 1965 for $778,000 which provided for a 5% interest rate and the payment of eighty-four consecutive monthly installments of $9,261.90, beginning on May 13, 1965. Washington also gave Peoples an Inventory Loan and Security Agreement dated April 13, 1965 which listed the 20 buses by serial numbers as security for the loan.
On receiving the above stated instruments, Peoples filed with the Director the manufacturer's (General Motors Corporation) Statements of Origin of the 20 buses and an application for issuance of Certificate of Ownership for each of them, in compliance with New Jersey's Motor Vehicle Certificate of Ownership Law, N.J.S.A. 39:10-8. Certificates of title dated April 13, 1965, were then issued by the Director to Peoples for each of the 20 buses. These Certificates noted existence of a lien in favor of Peoples.
Washington also executed a Financing Statement on April 13, 1965 in which the 20 buses were listed by their serial numbers. The Financing Statement was filed with the Secretary of State of New Jersey on April 14, 1965.
On October 4, 1966, Peoples made a second loan of $375,000 to Washington. The latter then gave Peoples a Note, dated October 4, 1966 in the amount of $375,000, bearing interest at 6% and payable monthly for a period of 25 months. Washington, the same day, also gave Peoples a Security Agreement which listed as collateral for the $375,000 loan the 20 buses covered by the April 13, 1965 Inventory Loan and Security Agreement, and 20 other buses previously financed by Peoples in 1963.*fn3
Concurrently with the execution and delivery of the Note and Security Agreement on October 4, 1966, Peoples, as secured party, and Washington, as debtor, executed a single Financing Statement which Peoples filed with the Secretary of State of New Jersey on October 7, 1966. This Financing Statement listed the 40 buses previously mentioned, as security for the $375,000 loan.
Peoples did not file a Financing Statement, nor any other paper, with the Director in connection with the October 4, 1966 loan.
The Referee in Bankruptcy ruled that by reason of Peoples' failure to file a Financing Statement with the Director with respect to its October 4, 1966 loan, it had not perfected a security interest as to it in any of Washington's buses. In doing so, he held that under the Uniform Commercial Code, as enacted by New Jersey, its filing provisions as to the security interest "do not apply to a security interest in property subject to a statute," N.J.S.A. 12A:9-302(3), and that under subsection (4) of that statute a security interest in property covered by a statute "can be perfected only by registration or filing under that statute or by indication of the security interest on a certificate of title or a duplicate thereof by a public official." The cited section, the Referee held, requires a lien on a motor vehicle to be recorded with the Director under the provisions of N.J.S.A. 39:10-11, and Peoples' failure to comply with that requirement in connection with the $375,000 October 4, 1966 loan rendered unsecured the loan's unpaid balance of $225,000.
The Referee further held that Washington and Peoples had not by their April 13, 1965 Inventory and Loan Agreement provided for additional future loans to Washington, and that the Agreement, which was filed with the Director, served to perfect a lien only with respect to the $778,000 loan then made, and did not operate to create a lien with respect to the $375,000 October 4, 1966 loan.
In consonance with his stated holdings, the Referee entered an Order on March 5, 1969 which adjudicated null and void as to the Receiver and/or Trustee, Peoples' claimed lien against any of Washington's buses by reason of the October 4, 1966 loan. The Referee, moreover, pointed out in his Order that the validity of Peoples' claimed lien against the 20 buses involved in the April 13, ...