NO. 268 PITTSBURGH, 1981, Appeal from the Order of the Court of Common Pleas of Erie County, Civil Action-Equity, at No. 1457-A-1977.
Thomas J. Ridge, Erie, for appellant.
Gregory L. Heidt, Erie, for appellee.
Cavanaugh, Montemuro and Van der Voort, JJ.
[ 304 Pa. Super. Page 168]
This case requires a determination of priority of two claims to certain assets of a now-bankrupt debtor. The debtor, Carpet Warehouse, Inc., was in the business of selling floor coverings. Plaintiff-appellant, Bigelow-Sanford, Inc., was a major supplier of carpeting to the debtor. The defendant-appellee, Security-Peoples Trust Co., from time to time loaned money to Bigelow.
On April 16, 1971, the debtor executed and delivered to the Bank a security agreement and financing statements, which were properly filed with the Prothonotary and with the Secretary of State on that day. Each financing statement stated: "This Financing Statement covers the following types (or items) of property: All present and future accounts receivable submitted, including new accounts receivable whenever acquired. All cash and non cash proceeds are claimed." On August 10, 1971, the debtor executed and delivered to Bigelow a Security Agreement and Financing Statement properly filed in Erie County and with the Secretary of State. Each Financing Statement stated: "This Financing Statement covers the following types (or items) of property: Inventory of carpet and related products now owned or hereafter acquired, and all additions and accessions thereto, and all proceeds of its sale or other disposition." (Emphasis added). In April of 1974, the debtor and the
[ 304 Pa. Super. Page 169]
Bank executed and filed a second set of financing statements, consolidating the notes extant. In early 1975, similarly, the debtor executed a current note to Bigelow for the balance then due of $91,165.56, endorsed personally by the debtor's president.
In the spring of 1975, the debtor received a purchase order from St. Vincent Hospital for Bigelow carpeting. Bigelow required the debtor to execute financing statements covering the carpet, which statements were duly filed, and which specifically referred to the carpet to be installed in the hospital.*fn1
The carpeting was installed in the Hospital in September or October of 1975. Shortly thereafter, the debtor filed a voluntary petition for bankruptcy. The price of the carpet, less a minor adjustment to correct defects in installation (a balance of $9,484.43) was paid to the Trustee in Bankruptcy, to be held in escrow by him until the conflicting claims of Bigelow and of the Bank could be disposed of. Appellant filed suit in order to procure a determination of the question of priorities. The case was submitted to the lower court on the basis of stipulations, the deposition of the president and owner of Carpet Warehouse, and the deposition of a purchasing agent for the hospital.
The lower court ruled in favor of the bank, noting that both parties, having stipulated to the basic facts, agreed that the issue was not resolved specifically by Article 9 of the Uniform Commercial Code,*fn2 or by Pennsylvania case law. The court, in essence, accepted the position of the bank that:
1) The bank's security interest was perfected on April 16, 1971 (renewed in April, 1974), thus giving it a secured claim to the debtor's ...