469 N.E.2d 1022 | Ohio Ct. App. | 1984
This cause came on to be heard upon an appeal from the Court of Common Pleas of Hamilton County.
This timely appeal follows the trial court's granting of appellee's motion for summary judgment. Appellants also filed a motion for summary judgment which the trial court denied.
The record indicates that sometime in 1968, appellee and Tri-State Distributing Corporation (hereinafter "Tri-State") reached an agreement whereby appellee would provide Tri-State with automobile parts which Tri-State would sell to retail outlets. By the terms of the agreement, appellee was required to accept the return of any new, unused or undamaged automobile parts supplied by appellee. Tri-State subsequently changed its name to T.S.D. Corporation (hereinafter "T.S.D."). On August 9, 1976, T.S.D. sold its assets to a newly created Tri-State Distributing Corporation and took back a security interest in the inventory, trade fixtures, accounts receivable and proceeds of the newly created Tri-State Distributing Corporation. For the purposes of this appeal, we are assuming, as did the trial court, that T.S.D. filed a financing statement and a copy of the security agreement to perfect its security interest on October 25, 1976. The security interest was assigned by T.S.D. to appellants, Marjean W. Davis and Richard L. Wenstrup, on December 15, 1976. In August 1979, appellee repurchased certain of its manufactured automobile parts as required in the 1968 agreement with Tri-State. Appellants did not file a continuation statement within five years of the filing date of T.S.D.'s security interest.
The issue in the trial court was which party had a superior interest in the repurchased collateral. The trial court granted appellee's motion for summary judgment, holding that under R.C.
Appellants' sole assignment of error alleges:
"The trial court erred to the prejudice of the plaintiffs when it granted *40 defendant's motion for summary judgment."
We disagree.
R.C.
"Except as provided in divisions (B)(2) and (F) of this section, a filed financing statement is effective for a period of five years from the date of filing. The effectiveness of a filedfinancing statement lapses on the expiration of the five-yearperiod unless a continuation statement is filed prior to thelapse. * * * Upon lapse the security interest becomes unperfected, unless it is perfected without filing. If a securityinterest becomes unperfected upon lapse, it is deemed to havebeen unperfected as against a person who became a purchaser orlien creditor before lapse." (Emphasis added.)
The plain language of the statute dictates that because appellants failed to file a continuation statement before October 25, 1981, their security interest became unperfected on that date as to appellee, even though appellee became a purchaser of the collateral before lapse.
The case law construing the Ohio statute and similar statutes in other jurisdictions supports this conclusion. The Court of Appeals for Darke County, construing R.C.
The Supreme Court of Washington reached a similar conclusion in examining that state's equivalent of R.C.
"We are convinced that an interest which lapses under RCW 62A.9-403(2) becomes unperfected as against all other interests, including those which were previously junior. * * * Nothing in the statute suggests that it might be unperfected as to some interests and perfected as to others. Such a result would introduce an unnecessary element of uncertainty and confusion into the operation of the code. * * *"
In other jurisdictions which have enacted similar legislation the result is essentially the same. The court in In re Estate ofSweeney (1978),
It was held in In re Super Treads, Inc. (Bankr. Ct. M.D. Ga. 1980),
The case law construing R.C.
Judgment affirmed.
PALMER, P.J., BLACK and DOAN, JJ., concur.