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FIRST PENNSYLVANIA BANK, N. A. v. WILDWOOD CLAM CO

March 29, 1982

FIRST PENNSYLVANIA BANK, N. A.
v.
WILDWOOD CLAM COMPANY, INC. and Wildwood Two Corporation and West P. Woodbridge, Jr.



The opinion of the court was delivered by: SHAPIRO

MEMORANDUM AND ORDER

BACKGROUND

 Plaintiff First Pennsylvania Bank, N.A. ("First Pennsylvania") seeks a declaration of its rights and specific performance as to the proceeds from the sale of a New Jersey clamming license by defendant Wildwood Two Corporation. Defendant Wildwood Clam Company, Inc. is the parent of Wildwood Two Corporation (hereinafter collectively referred to as "Wildwood"), and defendant West P. Woodbridge, Jr. ("Woodbridge") signed a loan agreement with First Pennsylvania as President of both corporations. Defendant corporations are citizens of New Jersey. Woodbridge is a citizen of New York. Plaintiff is a national bank whose principal place of business is in Pennsylvania. Jurisdiction exists by reason of diversity of citizenship. 28 U.S.C. §§ 1332, 1348. Before the court is First Pennsylvania's motion for a preliminary injunction. The parties filed a stipulation of facts and agreed to consolidate the hearing of this application with that for a final judgment pursuant to Fed.R.Civ.P. 65(a)(2).

 The facts as stipulated are these. On April 19, 1979, First Pennsylvania and Wildwood entered into a Term Loan Agreement ("TLA") with respect to a term loan of $ 600,000 and an additional discretionary loan of $ 100,000. On September 26, 1979, an additional $ 50,000 was advanced by First Pennsylvania pursuant to an amendment to the TLA. *fn1"

 Under Section 4.03 of the TLA, First Pennsylvania took, as collateral for the loans, a security interest in, among other items, general intangibles "whether now owned or hereafter acquired, together with all replacements therefor or proceeds." Proper financing statements were filed with the Secretary of the State of New Jersey and the Clerk of the Court of Cape May County. At the time the TLA was executed Wildwood possessed a "Commercial Boat License to Dredge Sea Clams," issued by the State of New Jersey for a fee of $ 395.

  The loans to Wildwood were subsequently declared in default and accelerated. On December 23, 1981, Wildwood's clamming license was sold to a third party for the sum of $ 35,250. *fn2" The parties agree that their rights to the proceeds are the same as the license had it not been sold, but they disagree on whether First Pennsylvania has a security interest in the license. First Pennsylvania claims the license is included in the general intangibles pledged as collateral by Section 4.03 of the TLA. Wildwood contends that the clamming license is not a general intangible subject to a security interest. For the reasons stated below, we declare that First Pennsylvania did possess a perfected security interest in the clamming license and in the proceeds of its sale. Therefore, First Pennsylvania is entitled to the proceeds pursuant to Section 7.03 of the TLA.

 DISCUSSION

 Wildwood's clamming license is a general intangible subject to First Pennsylvania's security interest under either Pennsylvania or New Jersey law.

 A. Pennsylvania Law:

 Section 8.08 of the TLA states:

 
Applicable Law. The substantive laws of the Commonwealth of Pennsylvania shall govern the construction of this Agreement and the rights and remedies of the parties thereto.

 Section 1.01 of the TLA states that as used therein "general intangibles"

 
shall have the same respective meanings as are given to those terms in the Uniform Commercial Code of Pennsylvania.

 The Pennsylvania Uniform Commercial Code ("UCC") defines intangibles to be "any personal property ... other than goods, accounts, contract rights, chattel paper, documents and instruments." 13 ...


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