Appeal from decree of Court of Common Pleas, Orphans' Court Division, of Montgomery County, No. 71,993, in re estate of Katie M. Beyer v. The Bank of Pennsylvania.
Philip D. Weiss, with him McTighe, Brown, Weiss, Bonner & Stewart, for appellant.
Albert B. Wrigley, with him Kranzley, Wrigley, Yergey, Daylor, for appellee.
Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice O'Brien. Mr. Justice Manderino dissents.
The Estate of Katie M. Beyer, Deceased, petitioned the Orphans' Court Division of Montgomery County to issue an order that certain stocks held by the Bank of Pennsylvania, appellee, as collateral for loans made to Clarence E. Beyer, the son of the decedent and executor until his death on November 23, 1970, rightfully belonged to the estate. According to the estate, the blank
"hypothecation agreement" signed by the appellant's decedent could not convey a valid security interest in the stock to the bank because it did not describe the collateral as being stocks let alone describe the specific stocks being pledged. Moreover, the estate contends, since Clarence E. Beyer paid off the original debt subsequent to the pledge, although incurring new ones, and the security agreement did not specifically secure future advances, the bank has no right to keep the stocks as security for future advances.
The Orphans' Court Division concluding that the bank had an enforceable security interest in the stocks, dismissed the estate's petition and the estate brought this appeal. According to U.C.C. § 9-204(1), 12A P.S. § 9-204(1): "A security interest cannot attach until there is agreement that it attach and value is given and the debtor has rights in the collateral."
The estate first contends that there was no agreement that the security interest remain attached to the stock for the advances made by the bank to Clarence E. Beyer after the decedent had turned over her stock to the bank.
The estate emphasizes that the amount of the loan continuously fluctuated and that all of the previous notes made by Clarence E. Beyer were paid off or merged into a $58,700 note dated April 18, 1969, which date was subsequent to Katie Beyer's death.*fn1 However, § 204(5) of Article 9 of the Uniform Commercial Code specifically provides that: "Obligations covered by
a security agreement may include future advances or other value whether or not the advances or value are given pursuant to commitment." ...