Thursday, November 29, 2012

Credit Bureau of Broken Bow v. Moninger case brief

Credit Bureau of Broken Bow v. Moninger
(Neb. 1979)

•10/27/77: Bureau got default judgment against Moninger.
•5/16/78: Moninger renewed his prior note to the Bank, w/ therenewed note to be secured by a security agreement on feeder pigsand Moninger's Ford pickup. No security agreement was enteredinto at that time.
•6/27/1978: At Bureau's request, a writ of execution was issuedon its judgment for the balance remaining due on the judgment.
•7/7/78: Sheriff who received the writ examined the motorvehicle title records and found no lien on the pickup. The sheriff went to where Moninger worked to levy on the vehicle. When theSheriff told Moninger he was executing on the pickup, Moningersaid that the Bank had title to the vehicle. The sheriff walked over,"grabbed ahold of the pickup," and stated: "I execute on the pickupfor the County of Custer." The sheriff left w/o taking possession of the truck or asking for its keys.
•7/10/78: Bank and Moninger executed a security agreement onthe vehicle which was immediately filed and notated.
•7/13/78 : Deputy sheriffs seized the vehicle, which was sold atthe sheriff's sale on 8/14/78.

Was the Bureau a lien creditor on 7/7/78?
•If the bank is a secured creditor before the purportedlevy, the bank will get the money. If the bank is not a securedcreditor, then the facts that it became a secured creditor meredays after the sheriff levied upon the property makes nodifference; the judgment creditor gets the money.
•At best, late recordation makes the bank a secondsecured creditor, second in priority after the first lender hasbeen paid in full.
•Bank: "There wasn't a properly executed levy before werecorded our security agreement. The pickup had to be physicallyseized to make the levy valid."

A valid levy occurred before the Bank had perfected itssecurity interest in the truck. The Bureau was a lien creditor on July 7.
•A lien on personal property is acquired in NE at the time it is"seized in execution" - requires only "that the property is presentand subject for the time to the control of the officer holding thewriit, and that he in express terms asserts his domination over it byvirtue of such writ."

Notes: The requirement that the lien creditor have no knowledge of thesecurity interest was eliminated in the 1972 UCC Amendments. Thiscourt reached the same result under the 1962 Code by holding that thesheriff's knowledge is not appropriately imputed to the judgmentcreditor.


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