203 A.2d 441 | Conn. Super. Ct. | 1964
This is a motion of the receiver for a determination of priorities and an order of distribution with relation to The First Hartford Fund, Inc., and General Electric Credit Corporation, secured creditors of the defendant, Country Club Delicatessen of Saybrook, Inc.
On order of court, the assets of defendant corporation were sold December, 1963, free and clear of liens and encumbrances, in accordance with the consent of the parties, and the entire proceeds of the sale were ordered held by the receiver in substitution for said property, subject however to such valid and enforceable security interests, liens and encumbrances as might exist against the property, to the extent and in such priority as might be determined by this court.
The claim of The First Hartford Fund, Inc., is for a principal sum of $35,000 plus interest, costs and attorneys' fees. The claim of General Electric Credit Corporation is for $23,835.90 plus interest and attorneys' fees. The remaining fund in the hands of the receiver is about $24,400, representing the net proceeds from the sale of all the assets of the defendant corporation after payment of certain other claims superior to those of the present claimants.
For convenience said parties may be referred to in this opinion as First Hartford and General Electric, respectively.
Defendant corporation opened its restaurant business in Old Saybrook on July 26, 1962. At that time it was fully equipped. Its assets included property subsequently purchased from Hewitt Engineering, Inc., referred to herein as Hewitt. On August 16, 1962, defendant corporation borrowed $35,000 from First Hartford, giving a promissory note secured by a chattel-mortgage type of security *330 agreement covering a security interest in "All goods, personal property, equipment, machinery, fixtures, inventory, leasehold rights, including, but not limited to, the property described below, including all after acquired property of like kind," and then follows an enumeration of specific items, as set forth in schedule A thereof.
The day previously, viz., August 15, 1962, First Hartford had filed a financing statement with the secretary of state, Uniform Commercial Code division, showing the defendant as debtor and First Hartford as the secured party. This financial statement had the same description as to property as did the security agreement mentioned above, and also contained a provision covering after-acquired property, and a description of the real estate and other data relating to requirements as to fixtures, in the event any of the property were fixtures. Also on August 15, 1962, First Hartford executed another financing statement, being a duplicate of the one filed in the office of the secretary of state, and filed it with the town clerk of the town of Old Saybrook. The description of the property was the same as in the financing statement filed with the secretary of state. Both these financing statements were executed by the defendant corporation.
On August 30, 1962, defendant corporation and Hewitt Engineering, Inc., executed a conditional sale contract covering property sold by Hewitt to defendant as described in schedule A, attached thereto. Some of this property is expressly mentioned in the financing statement and security agreement of the defendant with First Hartford, above mentioned. On August 30, 1962, a financing statement was filed with the town clerk of the town of Old Saybrook showing Hewitt Engineering, Inc., as the secured party, and General Electric as assignee of *331 Hewitt, and defendant corporation as debtor. The description of the types or items of property covered by it read: "Complete restaurant and delicatessen including kitchen equipment and display equipment."
No financing statement of either Hewitt Engineering, Inc., or General Electric was on file with either the secretary of state, Uniform Commercial Code division, or the town clerk of Old Saybrook against defendant corporation up to the time on August 15, 1962, when First Hartford first filed its financing statements respectively in both of said offices. Also, no financing statement of said Hewitt or General Electric was on file with the secretary of state up to September 23, 1962, when the instant proceeding was started.
Some of the property specifically mentioned in the conditional sale contract of Hewitt, assigned to General Electric, appears also in the description of the property covered by the financing statement and security agreement of First Hartford. On trial it was stipulated by these parties that substantially if not all of the items of property described in schedule A of the conditional sale contract of Hewitt were delivered by Hewitt to the defendant corporation or before July 26, 1962, and that if any of these items were not delivered on or before July 26, 1962, all of them were delivered to the defendant corporation "before August 19, 1962." It appeared also from testimony that all property of defendant corporation, including that concerned with the goods sold by Hewitt, was to be removed from the premises upon termination of the lease between defendant corporation and the owner of the land involved.
The position of First Hartford is that it was first to file, that it filed with the secretary of state so as to cover itself with respect to personal property, that it filed with the town clerk of Old Saybrook so as to *332 cover itself as to fixtures (if any be involved), and that General Electric, by failing to file with the secretary of state, does not have priority as to the personal property, and by filing when it did with said town clerk, acquired no rights superior to those of First Hartford in any fixtures, if any there were.
The claim of General Electric is that the evidence shows that as of August 15, 1962, when the financing statement of First Hartford was filed, and as of August 16, 1962, when its security agreement was made, the debtor defendant corporation had only possession of the property subsequently bought from Hewitt, the assignor of General Electric; that there is no evidence showing that as of those dates and within the meaning of General Statutes §
Under §
In the instant case, while it is shown that the personal property bought August 30, 1962, from Hewitt, called here the Hewitt goods for convenience, was in the possession of the defendant debtor by July 26, 1962, and at least before August 19, 1962, and that the conditional sale contract between defendant and Hewitt was executed August 30, 1962, there is no showing as to the circumstances or arrangement whereby the defendant had this possession. No legal authority has come, or been brought, to the notice of this court that such mere possession may constitute such "rights in the collateral." An inference that defendant was an unconditional owner of the Hewitt goods on August 15, 1962, would be speculation. Also, there is no evidence showing a sale to defendant corporation in July, 1962, of the Hewitt goods by Hewitt, or that the possession by defendant of them before August 30, 1962, was in conjunction with said conditional sale contract. It is clear that as of the date, August 15, 1962, when First Hartford filed its financing statements, the conditions of §
The claim of First Hartford that the Hewitt goods came under the coverage of its financing statement as *334
of August 15, 1962, by virtue of §§
The financing statements filed by First Hartford on August 15, 1962, with both the secretary of state and the town clerk of Old Saybrook each had an after-acquired property clause in it expressly including in the description of the property covered "all after acquired property of like kind" to the type described and specifically mentioned therein. The description expressly includes certain specific items of the Hewitt goods, and where otherwise, the description of the types of property covered is sufficiently broad to cover any other of the Hewitt goods. A similar clause is also contained in the security agreement between First Hartford and defendant corporation. For the purposes of article 9 of the Uniform Commercial Code, any description of personal *335
property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described. §
The question arises as to the effect of this after-acquired property clause, in relation to the conditional sale contract of Hewitt and the defendant corporation, in respect of the Hewitt goods as of August 30, 1962. Under §
The conditional sale contract of August 30, 1962, between defendant corporation and Hewitt created a security interest in favor of Hewitt which attached to the property thereby sold. §
Hewitt failed to file in the office of the secretary of state; its financing statement was filed only in the office of the town clerk. It described the property covered as the "Complete restaurant and delicatessen *336
including kitchen and display equipment." To the extent that this purports to include that portion of the personal property of the defendant debtor not including the Hewitt goods, it is plain that, Hewitt not having filed at all with the secretary of state and First Hartford having done so August 15, 1962, and perfected its security interest on August 16, 1962, First Hartford has priority over General Electric as to this portion of the personal property of the debtor within the coverage of the security agreement of First Hartford. §§
A more fundamental reason for the priority of First Hartford in this non-Hewitt goods portion of the defendant corporation's collateral subject to First Hartford's security agreement, whether fixtures or otherwise, is that neither Hewitt nor General Electric has been shown to have a security interest in that portion of the defendant's property. While the financing statement of Hewitt attempts to be all embracing, there is no security agreement of Hewitt and defendant creating a security interest in that non-Hewitt portion of defendant's property. Without a security agreement (§§
The priorities as to the Hewitt goods remain to be considered. In this regard it is convenient to *337 consider it in two aspects, viz., one in regard to such goods as were not fixtures at the time the security interest attached, and the other in regard to such goods as might be fixtures at that time. In respect of the goods as were not fixtures at the time, there is a priority in favor of First Hartford because of its prior filing with the secretary of state under the circumstances in evidence, and the failure to do so by Hewitt, as previously explained regarding the non-Hewitt goods.
The question of the priority of such of the Hewitt goods as at the time the security interest of Hewitt may have attached were fixtures is next considered. Parenthetically, it is noted that when the court acquiesced in hearing this matter on the last day of the session, after usual adjournment hours, upon the reported stipulation of certain facts as of record appear, the court had the impression that General Electric had abandoned its earlier proposal to offer evidence as to claimed fixtures. The subsequent correspondence of its counsel, in essence deploring the lack of opportunity to offer such evidence, has been not without surprise, because, as the court had made clear, although the presentation of such evidence would have required a postponement of the matter, on account of the crowded short calendar docket on the last day of the spring session, General Electric would not have been deprived of an opportunity duly to present the same at a future session of the court. It is noted also that in neither of the two briefs submitted to the court has General Electric discussed its claims as to fixtures. Nevertheless, to avoid any injustice and further delay, the court is assuming to consider this aspect of the matter.
The question when and whether personal property becomes fixtures is determined by the law of the state other than the Uniform Commercial Code. *338
§
In National Cash Register Co. v. Firestone Co.,
In accordance with the foregoing, it is hereby found and adjudged that the secured claim of The First Hartford Fund, Inc., in its full amount has priority over the secured claim of General Electric Credit Corporation and is entitled to payment in priority to said General Electric Credit Corporation.
The court makes no order of payment of the claim of The First Hartford Fund, Inc., at this time and leaves any such action to the future consideration of this court, pending the filing of such reports, accountings and motions as may be required for a determination and approval by the court of administration expenses, fees and any other deductions which may be required in the matter.