APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (No. B-233-73 In Bankruptcy)
Before GIBBONS, Circuit Judge, CLARK*fn*, Associate Justice, HUNTER, Circuit Judge
The dispute involved in this appeal arose in the aftermath of a petition under Chapter XI of the Bankruptcy Act*fn1 filed by Callahan Motors, Inc. (formerly known as Cregar Motors). Appellant Princeton Bank and Trust Co., which had been involved in the financing of the debtor's automobile dealership, filed a motion to reclaim certain property (funds and automobiles) which it asserted were covered by a financing statement and continuation statement filed under the provisions of Article 9 of the Uniform Commercial Code.*fn2
The matter came on for hearing before the Bankruptcy Judge, and the following factual background, not disputed here, was developed.
Appellant filed its financing statement in March 1965. This statement, which was derived from a security arrangement in the nature of trust receipt agreements, complied in all respects with the requirements of the UCC. Since the financing statement did not state a shorter duration, it was effective for 5 years, and, absent an effective continuation statement, would expire in March, 1970.*fn3 On or about July 1, 1967, the Department of State of New Jersey sent the following letter to all banks:*fn4
IMPORTANT NOTICE TO SECURED PARTIES OF FINANCING STATEMENTS FILED UNDER UNIFORM COMMERCIAL CODE
(2) A filed financing statement which states a maturity date of the obligation secured of 5 years or less is effective until such maturity date and thereafter for a period of 60 days. Any other filed financing statement is effective for a period of 5 years from the date of filing. The effectiveness of a filed financing statement lapses on the expiration of such 60 day period after a stated maturity date or on the expiration of such 5 year period, as the case may be, unless a continuation statement is filed prior to the lapse. Upon such lapse the security interest becomes unperfected. A filed financing statement which states that the obligation secured is payable on demand is effective for 5 years from the date of filing.
(3) A continuation statement may be filed by the secured party (i) within 6 months before and 60 days after a stated maturity date of 5 years or less, and (ii) otherwise within 6 months prior to the expiration of the 5 year period specified in subsection (2). Any such continuation statement must be signed by the secured party, identify the original statement by file number and state that the original statement is still effective.Upon timely filing of the continuation statement, the effectiveness of the original statement is continued for 5 years after the last date to which the filing was effective whereupon it lapses in the same manner as provided in subsection (2) unless another continuation statement is filed prior to such lapse. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the original statement.
To remain effective, Continuation Statements must be filed for all Financing Statements filed January 2, 1963 and thereafter. This office will accept Continuation Statements beginning July 1, 1967.
There was no evidence that appellant ever received the letter,*fn5 but counsel for appellant stated that "we probably received it." (App. p. 46a).
On December 29, 1967, appellant filed a continuation statement on the appropriate form,*fn6 referring by number to the filing of March 5, 1965. The Secretary of State accepted the filing fee and delivered to appellant an acknowledgment copy evidencing the filing of the continuation statement. This ...