{ "id": 3515671, "name": "IRVING TURK et al., Plaintiffs-Appellants, v. WRIGHT & BABCOCK, LTD., et al., Defendants-Appellees", "name_abbreviation": "Turk v. Wright & Babcock, Ltd.", "decision_date": "1988-08-23", "docket_number": "No. 3\u201487\u20140866", "first_page": "139", "last_page": "144", "citations": [ { "type": "official", "cite": "174 Ill. App. 3d 139" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "618 F.2d 432", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1380714, 6544682 ], "opinion_index": 0, "case_paths": [ "/f2d/618/0432-01", "/br/3/0432-01" ] }, { "cite": "485 F.2d 1328", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 670009 ], "opinion_index": 0, "case_paths": [ "/f2d/485/1328-01" ] }, { "cite": "484 F.2d 572", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 238456 ], "year": 1973, "opinion_index": 0, "case_paths": [ "/f2d/484/0572-01" ] } ], "analysis": { "cardinality": 482, "char_count": 8971, "ocr_confidence": 0.766, "pagerank": { "raw": 9.524662277775155e-08, "percentile": 0.5244230455134643 }, "sha256": "87cd9c159c6e8dbded0d381c86b4c8ed81f853c07038324dbe9c79989dd77fb2", "simhash": "1:2188373a786e4ece", "word_count": 1411 }, "last_updated": "2023-07-14T22:48:34.473456+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "IRVING TURK et al., Plaintiffs-Appellants, v. WRIGHT & BABCOCK, LTD., et al., Defendants-Appellees." ], "opinions": [ { "text": "JUSTICE WOMBACHER\ndelivered the opinion of the court:\nIn September 1982, the plaintiffs, Irving, Elizabeth and Mark Turk, and Will County Produce Company, Inc., a corporation in which the plaintiffs were sole shareholders, engaged the defendants, Wright & Babcock, Ltd., to represent them in the sale of the business.\nAn agreement to sell was arrived at by the plaintiffs and prospective buyers, Thomas Przetacznik and William Herchenbach, which provided for a sale price of $410,000 plus an amount to be determined by the taking of an inventory. Part of the purchase price was to be secured by a security agreement covering the inventory and tangible assets. The buyers were to form a nominee corporation to take title to the assets of the business.\nIt was the buyers\u2019 intention to organize a corporation named \u201cTMP Incorporated\u201d to acquire the assets in the transaction. The name \u201cTMP Incorporated\u201d was not available for use in Illinois; the corporation ultimately came into existence named \u201cTP Incorporated.\u201d\nAt the time of the closing, the documents involved in the sales transaction listed the name of the acquiring corporation as TMP Incorporated. A financing statement was prepared by the defendants which listed the debtors as Thomas Przetacznik, William Herchenbach and TMP Incorporated. Thomas Przetacznik signed the statement. The statement listed the machinery and fixtures of the business, as well as the inventory, as collateral. A separate security agreement was never prepared or executed.\nA fire destroyed the tangible assets of the business on August 19, 1983. TP Incorporated instituted bankruptcy proceedings. The plaintiffs filed a claim in the proceedings as unsecured creditors. They had received $80,000 as of September 30, 1985. They expected to recover a total of $200,000 in their status of unsecured creditor. The unpaid principal owing to the plaintiffs under the sale agreement was $834,528.79.\nThe plaintiffs filed a malpractice action against the defendants to recover the amounts due to them under the sale agreement. The complaint alleged that the defendants failed to create a valid security interest; failed to require in the sale agreement that the buyers maintain insurance; and failed to require in the sale agreement that the buyers name the sellers as additional insureds. On December 22, 1987, the plaintiffs\u2019 amended complaint was dismissed upon the trial court\u2019s allowance of the defendants\u2019 motion. The trial court held that a valid security interest had arisen and the financing statement was valid. The court also found that the sale contract did provide for maintenance of insurance coverage. Further, had the agreement provided that the sellers be named as additional insureds on the buyers\u2019 insurance policies, a different result would not have occurred.\nThe plaintiffs appeal the dismissal, contending that the financing statement, without an executed security agreement, does not create a security interest. Furthermore, the plaintiffs contend that the defendants failed to require that the sellers maintain insurance covering the tangible property, with the plaintiffs named as additional insureds.\nThe Illinois Uniform Commercial Code (Ill. Rev. Stat. 1985, ch. 26, par. 1 \u2014 101 et seq.) sets out a comprehensive scheme for the regulation of security interests in personal property and fixtures. Article 9 applies to any transaction (regardless of its form) which is intended to create a security interest in personal property. (Ill. Rev. Stat. 1985, ch. 26, par. 9 \u2014 102.) Substance rules over form and courts will look through a transfer absolute in form to find a secured transaction if that was the real intent of the parties. Oral agreements to create a security interest have been found valid where other documents relating to the transaction evidenced the intent of the parties. (See Wambach v. Randall (7th Cir. 1973), 484 F.2d 572.) In In re Numeric Corp. (1st Cir. 1973), 485 F.2d 1328, the court held that a financing statement, together with a corporate resolution of the debtor referring to the existence of a security interest in equipment, constituted a security agreement in the absence of a written document.\nIn the instant case, the sale agreement and financing statement contained a full listing of the collateral secured. The contract included extensive provisions of security. It provided the sellers purchase money security rights, including physical possession of the business\u2019 capital stock. Furthermore, the plaintiffs\u2019 verified complaint admitted an intent to obtain security. Clearly, the parties intended for the sale to entail a security interest in the assets of the business; under the law the question of whether a security agreement exists is one of intent and the absence of a separate and written agreement is not controlling.\nNext we turn to the validity of the financing statement. The plaintiffs assert on appeal that the financing statement was invalid inasmuch as it listed an erroneous corporate name as the debtor. The sale transaction was closed on November 12, 1982. On November 23 TP Incorporated came into existence. Upon closing, the assets were initially held by the individual debtors. The financing statement was filed on December 10 and named Thomas Przetacznik and William Herchenbach as well as TMP Incorporated (the anticipated name of the acquiring corporation) as debtors. Przetacznik signed the statement in his capacity as an officer of the corporation.\nThere is precedent that the names of the corporate principals on the financing statement are sufficient to perfect a security interest. The court in the case of In re Pubs, Inc. (7th Cir. 1980), 618 F.2d 432, held that a financing statement, naming individual officers as debtors rather than their corporation, was valid.\nFurther, the issue of the validity of the financing statement is resolved at its threshold by section 9 \u2014 402 of the Illinois Uniform Commercial Code (Code), which reads in pertinent part:\n\u201cA filed financing statement remains effective with respect to collateral transferred by the debtor even though the secured party knows of or consents to the transfer.\u201d (Ill. Rev. Stat. 1985, ch. 26, par. 9-402(7).)\nPursuant to the Code, the plaintiffs were not required to file a new financing statement after Mr. Przetacznik and Mr. Herchenbach incorporated TP Incorporated. The financing statement, which had listed them as individual debtors, remained valid after the transfer of the collateral to the corporate entity.\nWe recognize that the correct designation of the debtor\u2019s name is of obvious importance because this is the basis for the alphabetical indexing of the financing statement. Furthermore, the purpose of the notice provision is to apprise creditors that others may have a security interest in the subject collateral. We conclude that the subject financing statement properly identified the debtors and was valid.\nNext, we consider the plaintiffs\u2019 contention that the defendants failed to exercise reasonable care in drafting the sale agreement inasmuch as it contained no provision requiring the buyers to maintain insurance and name the seller as an assured.\nInitially we note that paragraph 15(E) of the sale agreement required the buyers to assume the payments on the plaintiffs\u2019 current general liability policy. The fact that the agreement did not require the buyers to maintain their own insurance is immaterial under the facts of this case. The defendants did provide in the agreement that there be insurance to protect the plaintiffs in the event of casualty loss. Further, the record admits the fact that the buyers had an insurance policy covering the loss which resulted in proceeds to the bankrupt\u2019s estate. The plaintiffs would be entitled to the same amount of insurance proceeds as a beneficiary of the insurance policy as they would by way of their security interest in the collateral.\nFurther arguments raised initially upon appeal shall not now be considered inasmuch as they do not address matters relied upon by the trial court in its disposition of the motion to dismiss. Due to our affirmance of the trial court\u2019s finding that the plaintiffs held a security interest in the assets of the business, and provisions for insurance were contained in the agreement, we need not pass upon whether the complaint stated a claim for professional malpractice.\nFor all of the foregoing reasons the dismissal order of the circuit court of Will County is affirmed.\nAffirmed.\nHEIPLE and BARRY, JJ., concur.", "type": "majority", "author": "JUSTICE WOMBACHER" } ], "attorneys": [ "Seyfarth, Shaw, Fairweather & Geraldson, of Chicago (Maurice L. Davis, of counsel), for appellants.", "Stephen R. Swofford and George W. Spellmire, Jr., both of Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago (Debra A. Winiarski, of counsel), for appellees." ], "corrections": "", "head_matter": "IRVING TURK et al., Plaintiffs-Appellants, v. WRIGHT & BABCOCK, LTD., et al., Defendants-Appellees.\nThird District\nNo. 3\u201487\u20140866\nOpinion filed August 23, 1988.\nRehearing denied October 13, 1988.\nSeyfarth, Shaw, Fairweather & Geraldson, of Chicago (Maurice L. Davis, of counsel), for appellants.\nStephen R. Swofford and George W. Spellmire, Jr., both of Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago (Debra A. Winiarski, of counsel), for appellees." }, "file_name": "0139-01", "first_page_order": 161, "last_page_order": 166 }