Monday, January 6, 2014

Credit Bureau of Broken Bow, Inc. v. Moninger case brief

Credit Bureau of Broken Bow, Inc. v. Moninger case brief summary
204 Neb. 679

Plaintiff judgment creditor sought review of the order of the District Court for Custer County (Nebraska) which affirmed a judgment entered by the county court awarding the proceeds from a sheriff's sale of defendant judgment debtor's truck to defendant bank.

After the entry of the judgment creditor's default judgment against the judgment debtor, the judgment debtor renewed a note with the bank. No security agreement was signed. A writ of execution was issued on the judgment. When the sheriff levied on the truck, the judgment debtor informed him that the truck was security for the bank's loan. The sheriff did not take immediate possession of the truck. The judgment debtor and the bank executed and filed a security agreement on the truck. The truck was sold upon the writ of execution. The sheriff filed a motion for a determination of the division of the proceeds. 

The county court entered an order awarding the proceeds to the bank. The district court affirmed. 

  • On appeal, the court reversed. 
  • The court held that the judgment creditor was a lien creditor without knowledge of the security interest that the bank claimed in the truck, under U.C.C. § 9-301 and Neb. Rev. Stat. § 25-1504 (1943). 
  • A valid levy occurred before the bank perfected its security interest in the truck, even though the sheriff failed to take physical possession. 
  • The judgment creditor thus had prior rights to the proceeds of the sheriff's sale.
The court reversed the judgment of the district court affirming the order of the county court awarding to the bank the proceeds of a sale of the judgment debtor's truck, upon the sheriff's motion for a determination of the division of the proceeds from the sale of the truck upon a writ of execution issued on the judgment creditor's judgment.

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