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IN RE TOPPO

March 8, 1979

In the Matter of Philip J. Toppo d/b/a 4-J Mobile Home Sales & Service, also d/b/a/ Carlton Heights Estates Mobile Home Park, also d/b/a Jo-Win Trailer Villa and Jane Ann Toppo, Bankrupts. The First National Bank Of Pennsylvania, First National Bank of Mercer County and General Electric Credit Corporation
v.
Philip J. Toppo et al., Bankrupts, William Pineo, esq., Trustee.



The opinion of the court was delivered by: KNOX

This matter is before the court on appeal from the orders of the Bankruptcy Judge dated October 13, 1978 dealing with petitions for reclamation filed by First National Bank of Pennsylvania (hereinafter Pa.), First National Bank of Mercer County (Mercer) and General Electric Credit Corporation (GE) of certain property in connection with the debtors' mobile home sales business, Mobile Home Park and other assets and distribution thereof. The matters have been thoroughly briefed and argued by counsel and are before the court for determination. Our conclusions differ somewhat from those of the Bankruptcy Judge mainly as the result of the decision since handed down November 27, 1978, by the Court of Appeals for the Third Circuit in the Matter of H. L. Bennett Company, Bankrupt, 588 F.2d 389.

The facts are set forth in full in the memorandum and order of the Bankruptcy Judge and will not be repeated except where it is necessary for elucidation of this opinion. The order of distribution as entered by the Bankruptcy Judge provided as follows:

 
"IT IS ORDERED for the foregoing reasons that the proceeds of sale of the various items of collateral sold under stipulation of counsel as above shall be distributed, subject to payment of sale and bankruptcy costs later to be determined, as follows:
 
1. The $ 24,800.00 proceeds of sale of 12 mobile home units to The First National Bank of Pennsylvania;
 
2. The $ 6,620.50 proceeds from the sale of items for maintenance of the debtor's mobile home park to the First National Bank of Pennsylvania;
 
3. The $ 11,554.50 proceeds from the sale of farm machinery, produce and supplies to The First National Bank of Pennsylvania; and
 
4. The $ 4,308.15 proceeds of sale of household goods and motor vehicles clear of encumbrances ($ 2,508.85 from household goods and $ 1,800.00 from motor vehicles) as follows: the $ 2,508.85 proceeds of sale of personal property to The First National Bank of Pennsylvania and the $ 1,800.00 received for the motor vehicles clear of encumbrances to the trustee in bankruptcy.
 
"IT IS FURTHER ORDERED that the First National Bank of Pennsylvania shall be subrogated to the liens of the local tax authorities against the mobile homes for the taxes assessed against them which it paid in the sum of some $ 7,000.00 and protected in regard to said payment in the event any different distribution than the above shall be made of the disputed funds on appeal or under later order of court."

 We will first deal with the problem of the proceeds of sale in the amount of $ 24,800 resulting from the sale of twelve mobile home units which was awarded to Pa. Pa. originally entered into a floor plan agreement with the bankrupts on January 24, 1972, to provide financing for their inventory of Mobile Home Sales on Route 322 in Mercer County and a trailer court operated on additional acreage adjacent to that location. This enterprise was known as "4-J Mobile Homes Sales and Service" and other fictitious names as indicated in the caption. The financing statements as filed, however, were invalid because they were executed and indexed in a fictitious name which had not been registered in accordance with the requirements of Pennsylvania law. The fictitious names were not indexed against the names of the debtors Philip J. and Jane Ann Toppo in violation of Section 9-402 of the Pennsylvania Uniform Commercial Code (UCC) (12A Purdon's Pa.Stats. 9-402). The holding of the Bankruptcy Judge is in accordance with the previous holdings in this court. See In re Penn Housing Corp., 367 F. Supp. 661 (W.D.Pa.1973, Weber, D. J.).

 In any event, the twelve mobile homes were sold with encumbrances to individual purchasers who resided in the trailer park. The mobile homes were sold under installment sales contracts which were assigned to Pa. and Pa."s liens were duly noted on the certificates of title issued in the respective purchasers' names. The purchasers defaulted in their payments and Pa. repossessed the units and obtained new titles on various dates from 1974 to October 25, 1976. After the units were repossessed they were left in the bankrupts' possession for resale, under a stipulation and agreement dated December 9, 1976, which agreement is considered a security agreement under the UCC. This agreement is included in Pa."s Ex. 4 and provides that the bankrupts were Pa."s uncompensated agents in repossessing, repairing and selling the units. The titles however were issued in the name of Pa. as absolute owners with no encumbrances noted.

 The security agreement was duly filed by Pa. in the office of the Prothonotary of Mercer County and financing statements were also filed in the Office of the Secretary of the Commonwealth at Harrisburg, (Penna. Dept. of State) on February 4, 1977. The time stamp shows that the financing statements were received at 9:37 a.m.

 Meanwhile, GE had also entered into financing arrangements with the bankrupts and likewise filed financing statements covering their security agreement which financing statements were filed in the Office of the Prothonotary of Mercer County and with the Pa. Dept. of State on February 4, 1977. The time stamp shows that the financing statement was received at 9:04 a.m.

 The difficulty with the filings of the financing statements as required under UCC 9-401 was that the GE statement, while bearing a time stamp 33 minutes earlier than the time stamp on the Pa."s financing statement, nevertheless was given a later number, 8650243, while Pa."s statements had earlier numbers 8650160, 8650161, 8650162, the Pa. statements being numbered numbers 81 numerals ahead of GE's statements.

 On the other hand, GE's financing statement contained the following description of collateral:

 
"All inventory, new and used, presently owned and hereafter acquired, / together with all proceeds of the sale or other disposition thereof, and all equipment, present and future, used or intended for use in conjunction therewith; / and all accounts, contract rights, accounts receivable and general intangibles presently existing and hereafter arising, and all chattel paper covering the ...

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