debtor in the note, and that the assignment shall be null and void upon payment of the amounts due or a new note. The purpose of the assignment of the lease was to secure the payment of a promissory note, thus satisfying the initial requirement of Article 9-102(1) that the transaction be entered into for the purpose of creating a security interest.
To come within the coverage of Article 9, the transaction in question must create a security interest in personal property; under Pennsylvania law, which governs this case, a lease is personal property. Wilford v. Dickey, 196 Pa. Super. 468, 175 A.2d 98 (1961); J. Stern, Trickett on the Law of Landlord and Tenant in Pennsylvania (3rd ed.), p. 2. Consequently, a security interest in personal property was created by the assignment to Girard of the lease agreement and the rentals thereunder. Accordingly, the provisions of Article 9 are applicable to the instant transaction. See, 1 Gilmore, Security Interest in Personal Property, § 10.8, p. 312 fn. 3.
Girard Bank argues that Article 9-104(j) excludes the assignment of the rentals due the debtor from the Commonwealth of Pennsylvania. Subsection (j) provides that, "This article does not apply . . . to the creation or transfer of an interest in or a lien on real estate, including a lease or rents thereunder." The purpose of this provision is to exclude from Article 9 the creation or transfer of an interest in real estate. However, the assignment of the lease or the assignment of the rentals thereunder did not create an interest in real estate, but rather provided Girard with a security interest in the lease and rentals due thereunder. The debtor did not transfer to Girard any interest in the real estate. The debtor maintained full ownership of the property involved, which is now occupied by the state liquor store. The assignment expressly recognizes that none of the obligations of the debtor under the lease are assigned to or assumed by Girard. As indicated above, upon payment of the amount due under the note, the assignment agreement will be null and void.
This Court does not hold that a lessor of real estate must file a financing statement in order to protect his interest in the rentals due from the lessee under the terms of the lease. This is exactly the type of transaction which Article 9-104(j) excluded from the coverage of Article 9. The Court does hold, however, that an assignment by the lessor of the lease and the rentals thereunder to secure the performance of an obligation creates a security interest in personal property within the meaning of Article 9.
Girard failed to perfect its security interest in the lease and the rentals thereunder by filing a financing statement. Article 9-301(1) (b) of the Uniform Commercial Code provides that an unperfected security interest is subordinate to the rights of a lien creditor. Article 9-301(3) defines a lien creditor to include a trustee in bankruptcy from the date of the filing of the petition under the Bankruptcy Act. For the purposes of this litigation, the Receiver appointed to operate the business of Bristol Associates, Inc., the debtor herein, occupies the same position and is the equivalent to a trustee in bankruptcy. The interest of Girard in the lease is, therefore, subordinate to the interest of Receiver in such property.
Accordingly, the decision of the Bankruptcy Court denying the reclamation petition of Girard Bank and ordering Girard to return to the Receiver the $750 already advanced will be affirmed.
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