The opinion of the court was delivered by: GREEN
Plaintiff, Maglificio Berga, an Italian corporation and the unpaid seller, brought this action seeking damages or recovery of goods against Amit International Trade, Ltd. (hereafter referred to as "Amit"), a Pennsylvania corporation and the buyer, and Fidelity Bank. Presently before the court is Fidelity's motion for summary judgment. Berga's action against Amit is based on Berga's June 6, 1978 sale of garment and clothing products worth $ 138,515.79 to Amit. These goods were sold on credit to Amit and received by Amit in Philadelphia. Plaintiff alleges receipt of thirteen checks drawn on Fidelity Bank from Amit which were subsequently returned for insufficient funds. On October 1, 1979 and on unspecified prior occasions, the plaintiff alleges that it unsuccessfully demanded return of the goods. Plaintiff further alleges that on or about November 1979 Fidelity Bank, the institution managing Amit's account and a secured party with respect to Amit's inventory, accounts receivable, proceeds and after-acquired property, purchased the goods from Amit and resold them with knowledge of Amit's insolvency and with knowledge of the fact that Amit received the goods in exchange for dishonored checks. Plaintiff's complaint at para. 17.
Defendant, Fidelity Bank, in its answer, denies purchasing or receiving possession of the goods, but rather states through the uncontested affidavit of Robert V. Rowland, Vice-President of Fidelity Bank and the officer in charge of Amit's account that Fidelity received the proceeds from Amit's sale of the goods in partial satisfaction of Amit's indebtedness to Fidelity. See Affidavit of Robert V. Rowland at para. 4.
Defendant, Fidelity Bank, asserts that prior to the credit sale between Berga and Amit, Fidelity obtained the status of a perfected secured creditor, who in making loans to Amit, retained a security interest in the goods including after-acquired property and proceeds. Fidelity perfected this interest in 1976 and 1977 by filing two financing statements with both the Secretary of the Commonwealth and the Prothonotary of Philadelphia County.
During oral argument on Fidelity Bank's motion for summary judgment heard on November 29, 1980, this Court granted plaintiff sixty days to complete discovery and to file affidavits or other proof relating to this motion. On January 5, 1981, plaintiff's counsel inspected Fidelity Bank's files and on January 12, 1981 he received copies of the bank documents he requested. At plaintiff's request, defendant's counsel agreed to an extension of time until February 4, 1981 to allow plaintiff to complete discovery. To date, plaintiff's counsel has not filed any documents or affidavits. His stated reason for failing to file these documents is the difficulty in obtaining information from his client, Berga, an Italian citizen who frequently travels.
Plaintiff's counsel was afforded ample time to file affidavits in opposition to Fidelity Bank's motion for summary judgment. Since no affidavits have been filed by the plaintiff, the facts set forth in Fidelity's affidavits must be considered uncontested.
This case is governed by the Uniform Commercial Code as adopted by the Commonwealth of Pennsylvania, 13 Pa.C.S.A. § 9101 et seq.
Plaintiff does not allege in his complaint that he retained a security interest in the goods.
Even assuming arguendo that the plaintiff had an unperfected security interest, this interest would be subject to Uniform Commercial Code § 9301(a)(1), 13 Pa.C.S.A. § 9301(a)(1), which states that an unperfected security interest is subordinate to the rights of "persons entitled to priority under Section 9312." Uniform Commercial Code § 9312(e), 13 C.S.A. § 9312(e) which determines the priority of conflicting security interests states that:
(e) In all cases not governed by other rules stated in this section (including cases of purchase money security interests which do not qualify for the special priorities set forth in subsections (c) and (d) of this section), priority between conflicting security interests in the same collateral shall be determined as follows:
(1) in the order of filing if both are perfected by filing, regardless of which security interest attached first under section 9204(a) and whether it attached before or after filing;
(2) in the order of perfection unless both are perfected by filing, regardless of which security interest attached first under section 9204(a) and, in the case of a filed security interest, whether it attached before or after filing; and
(3) in the order of attachment under section 9204(a) so long as neither is perfected.
Section 9312(e)(2) mandates that the order of perfection governs priority of security interests. While the plaintiff has not perfected by either possession or filing, Fidelity has perfected its interest by filing two financing statements. There is no requirement in the Code's § 9312 or § 9301(a)(1) that the security interests who have priority over an unperfected security interest be without knowledge of it; nor is there any basis in § 9312 to require absence of knowledge to defeat a prior unperfected party. The Code's draftsmen have made the knowledge requirement under § 9312 irrelevant. See In Re Gunderson, 4 U.C.C. Rep. 358 (S.D.Ill. 1967); Felsenfeld, Knowledge as a Factor in Determining Priorities Under The Uniform Commercial Code, 42 New York U.L.Rev. 246, 249-51 (1967).
The basic scheme of § 9312 priorities places reliance on the state of the record by creating a filing structure and removing knowledge as a factor. Felsenfeld, at 249-51.
Defendant supports its position as a perfected secured creditor entitled to priority under § 9312(e) by citing Bloom v. Hilty, 427 Pa. 463, 234 A.2d 860 (1967). In Bloom, the Pennsylvania Supreme Court held that the interest of the unpaid pipe seller was subordinate to that of the holder of a perfected security interest in the debtor's drilling rig and pipe, notwithstanding the fact that the perfected party may have known of the pipe seller's security interest prior to perfecting its own security interest in the same pipe. The court reasoned that under § 9301(a)(1) the unperfected security interest of the pipe seller ...