{
  "id": 2960172,
  "name": "ARENA AUTO AUCTION, INC., Plaintiff-Appellant, v. MECUM'S COUNTRYSIDE MOTOR COMPANY, INC., et al., Defendants (Amcore Bank N.A., Rockford, Defendant-Appellee)",
  "name_abbreviation": "Arena Auto Auction, Inc. v. Mecum's Countryside Motor Co.",
  "decision_date": "1993-09-23",
  "docket_number": "No. 2\u201492\u20140514",
  "first_page": "96",
  "last_page": "101",
  "citations": [
    {
      "type": "official",
      "cite": "251 Ill. App. 3d 96"
    }
  ],
  "court": {
    "name_abbreviation": "Ill. App. Ct.",
    "id": 8837,
    "name": "Illinois Appellate Court"
  },
  "jurisdiction": {
    "id": 29,
    "name_long": "Illinois",
    "name": "Ill."
  },
  "cites_to": [
    {
      "cite": "90 Ill. App. 3d 601",
      "category": "reporters:state",
      "reporter": "Ill. App. 3d",
      "case_ids": [
        3161810
      ],
      "pin_cites": [
        {
          "page": "602"
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      "opinion_index": 0,
      "case_paths": [
        "/ill-app-3d/90/0601-01"
      ]
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  "analysis": {
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    "char_count": 12260,
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    "simhash": "1:3d20a25e832e3e56",
    "word_count": 1974
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  "last_updated": "2023-07-14T16:22:05.264174+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
  },
  "casebody": {
    "judges": [],
    "parties": [
      "ARENA AUTO AUCTION, INC., Plaintiff-Appellant, v. MECUM\u2019S COUNTRYSIDE MOTOR COMPANY, INC., et al., Defendants (Amcore Bank N.A., Rockford, Defendant-Appellee)."
    ],
    "opinions": [
      {
        "text": "JUSTICE WOODWARD\ndelivered the opinion of the court:\nPlaintiff, Arena Auto Auction, Inc. (Arena), appeals from an order in which the trial court held that defendant Amcore Bank\u2019s (Am-core\u2019s) security interest in certain automobiles was superior to Arena\u2019s, and, therefore, Amcore was entitled to approximately $126,197.76 held in escrow. On appeal, Arena raises two arguments: (1) whether Amcore\u2019s security interest attached to the subject vehicles and (2) whether Arena properly filed its financing statement.\nArena is a corporation which conducts the sale of motor vehicles at auctions. Its principal place of business is in Bolingbrook, Illinois. Defendant Amcore is a national banking association located in Rockford, Illinois. Defendant Mecum\u2019s Countryside Motor Company, Inc. (Mecum\u2019s), which is not a party in this appeal, is a corporation which operates used car lots in Loves Park, Illinois, and Roscoe, Illinois. Defendants Edward L. Mecum, Sr., Edward L. Mecum, Jr., and Dana Mecum, who are also not parties in this appeal, are officers of Me-cum\u2019s.\nOn January 12, 1989, Mecum\u2019s executed a loan agreement and promissory note in the face amount of $750,000 in favor of Amcore. Mecum\u2019s also executed a security agreement and financing statement in favor of Amcore to secure the promissory note in the amount of $750,000, which pledged Mecum\u2019s vehicle inventory as security for the debt. Amcore properly perfected its security interest in the vehicle inventory on January 20, 1989, by filing with the Illinois Secretary of State\u2019s office financing statement No. 2525170, which covered Me-cum\u2019s vehicle inventory.\nOn March 22, 1989, Mecum\u2019s provided a dealer information sheet to Arena in order to trade vehicles at the latter\u2019s auction. The corporate name of Mecum\u2019s was incorrectly listed on the dealer information sheet as \u201cMecum\u2019s Countryside Motor, Inc.,\u201d rather than in its correct corporate name of \u201cMecum\u2019s Countryside Motor Company, Inc.\u201d\nOn the same date, Mecum\u2019s executed a dealer registration agreement (Agreement) with Arena under the name of \u201cMecum\u2019s Countryside Motor.\u201d Dealers were required to sign the Agreement before they could trade vehicles at the Arena auction. The Agreement sets forth the terms and conditions under which dealers were to obtain motor vehicles through the Arena auction. Paragraph 8(d) provides that both the title and ownership of vehicles which Mecum\u2019s obtained through the auction would remain in the seller of the vehicles until payment in full had been made.\nThereafter, Mecum\u2019s began to acquire vehicles through Arena pursuant to the terms and conditions of the Agreement. In January 1991, Arena and Mecum\u2019s were contemplating an increase in the latter\u2019s line of credit. At that time, Arena presented two requests for information (Uniform Commercial Code form 11.7) to the Secretary of State\u2019s office. One of the requests involved Edward L. Mecum, Sr. The other request listed the name \u201cMecum\u2019s Countryside Motor, Inc.,\u201d the above-cited corporate name provided in the dealer information sheet. The Secretary of State\u2019s office advised Arena that as of December 7, 1990, there were no prior security interests recorded against Mecum\u2019s.\nOn January 15, 1991, Mecum\u2019s executed a security agreement and financing statement in favor of Arena, which pledged the motor vehicles obtained from Arena as security for its debt. Arena recorded its financing statement on January 28, 1991, with the Secretary of State\u2019s office. On or about October 1, 1991, Mecum\u2019s acquired 93 vehicles from Arena without making any payment towards the vehicles. As of December 13, 1991, Mecum\u2019s had sold 53 of these vehicles to the public.\nOn December 12, 1991, Arena filed a complaint for injunction, imposition of trust and other relief against Mecum\u2019s, Edward L. Mecum, Sr., Edward L. Mecum, Jr., and Dana E. Mecum. On that same date, Arena also obtained a temporary restraining order prohibiting Me-cum\u2019s from selling the remaining vehicles purchased from Arena.\nBy agreement, Amcore was added as a defendant on December 20, 1991. As part of its answer to the amended complaint for injunction, imposition of trust and other relief, Amcore filed a counterclaim against Arena stating that it had a valid prior and senior perfected lien in Mecum\u2019s vehicle inventory. Also, by agreement, the court entered an order providing that the remaining Mecum\u2019s vehicles be sold and the proceeds placed in escrow at Amcore. The amount realized from the sale of the remaining inventory was $126,197.76.\nOn February 21, 1992, the trial court held a hearing to determine whether Amcore or Arena was entitled to the proceeds held in escrow. In a hearing held on March 23, 1993, the trial court stated its decision thusly:\n\u201cGetting to the crux of it, the Arena Auction \u2014 Auto Auction never gave notice to the bank pursuant to 9 \u2014 312 and especially 9 \u2014 312(e) Uniform Commercial Code their claimed lien on the property and they never \u2014 they didn\u2019t file a proper security document either. But primarily they didn\u2019t notify the bank within the twenty days of preferred time that they could have.\nWhat it comes down to then deciding the lien rights between the two parties, the Court finds that the bank has a valid prior and senior lien to the Auction. And therefore the $125,000 [sic] in escrow belongs to the bank.\u201d\nThe trial court\u2019s finding was reflected in an order entered on April 1,1992. This timely appeal followed.\nArena first argues that Mecum\u2019s did not hold a sufficient interest in the Arena vehicles for Amcore\u2019s security interest to attach to same. Specifically, Arena maintains that Arena and Mecum\u2019s did not intend that Mecum\u2019s would acquire ownership of Arena\u2019s vehicles until payment had been made and that Arena retained titles to all of the Arena vehicles.\nIn response, Amcore contends that Arena\u2019s title retention is immaterial for purposes of determining ownership or rights in vehicle inventory. We agree. A security interest in a motor vehicle is ordinarily perfected according to the provisions of the Illinois Vehicle Code (Vehicle Code) (Ill. Rev. Stat. 1989, ch. 951/2, par. 1 \u2014 100 et seq.). Section 3 \u2014 201 of the Vehicle Code contains specific exception for security interests in vehicle inventory of the type involved in the instant case. (See, e.g., Central National Bank v. Worden-Martin, Inc. (1980), 90 Ill. App. 3d 601, 602.) Section 3 \u2014 201 of the Vehicle Code provides:\n\u201cExcepted liens and security interests. This Article does not apply to or affect:\n* * *\n(c) A security interest in a vehicle created by a manufacturer or dealer who holds the vehicle for sale, but a buyer in the ordinary course of trade from the manufacturer or dealer takes free of the security interest.\u201d Ill. Rev. Stat. 1989, ch. 95V2, par. 3-201(c).\nIn the Uniform Commercial Code (Code), a \u201c[security interest\u201d is defined as:\n\u201c[A]n interest in personal property or fixtures which secures payment or performance of an obligation. The retention or reservation of title by a seller of goods *** is limited in effect to a reservation of a \u2018security interest\u2019.\u201d (Ill. Rev. Stat. 1989, ch. 26, par. 1-201(37).)\nFurthermore, section 9 \u2014 202 of the Code provides:\n\u201cTitle to Collateral Immaterial. Each provision of this Article with regard to rights, obligations and remedies applies whether title to collateral is in the secured party or in the debtor.\u201d (Ill. Rev. Stat. 1989, ch. 26, par. 9 \u2014 202.)\nAgain, in section 2 \u2014 401(1), the Code specifically states that \u201c[a]ny retention or reservation by the seller of the title *** in goods *** is limited in effect to a reservation of a security interest.\u201d Ill. Rev. Stat. 1989, ch. 26, par. 2 \u2014 401(1).\nGiven this statutory language, there is little doubt that Arena\u2019s retention of title to the subject vehicles has no effect upon determining which party could claim the funds held in escrow. In so finding, we have considered the authority cited by Arena and have determined that it is irrelevant to this issue.\nAs a subargument of this initial argument, Arena maintains that, because Amcore was not engaged in dealer-floor-plan financing, it would have had to perfect its interest in accordance with the Vehicle Code. Arena then contends that because Amcore did not do this it did not have any security interest in the subject vehicles.\nAs Amcore points out, there is no language in the relevant statutes which limits the exemptions from the Vehicle Code\u2019s provisions to situations involving dealer floor financing. Indeed, Arena has cited no case law in support of its argument. We find no reason to follow Arena\u2019s very narrow reading of when the exemption from the Vehicle Code is permitted.\nFinally, Arena contends that it substantially complied with the Code\u2019s filing requirements. Amcore argues that Arena failed to follow the necessary steps required by the Code and, consequently, Arena\u2019s security interest in the subject funds is secondary to Amcore\u2019s.\nPursuant to section 9 \u2014 309 of the Code (Ill. Rev. Stat. 1989, ch. 26, par. 9 \u2014 309), Amcore perfected its security interest in Mecum\u2019s vehicle inventory by filing a financing statement with the Illinois Secretary of State\u2019s office on January 20, 1989. Thus, we find that Amcore complied with the relevant Code requirements.\nArena filed its financing statement on January 28, 1991, fully two years after Amcore\u2019s filing. Under these circumstances, the only way Arena\u2019s security interest could have achieved priority over Amcore\u2019s would have been for Arena to perfect a purchase money security interest pursuant to section 9 \u2014 312(3) of the Code. This section provides:\n\u201cA perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory and also has priority in identifiable cash proceeds on or before the delivery of the inventory to a buyer ***.\u201d (Ill. Rev. Stat. 1989, ch. 26, par. 9 \u2014 312(3).)\nTo take advantage of this provision, Arena was required to give Am-core written notice of its filing within 21 days as required by section 9-312(3). (Ill. Rev. Stat. 1989, ch. 26, par. 9-312(3).) Arena failed to provide Amcore with the requisite notice.\nArena implies that its failure to provide such notice was due to Mecum\u2019s not putting its proper corporate name on the dealer information sheet. Without Mecum\u2019s actual corporate name, Arena was unable to determine Amcore\u2019s security interest in the subject vehicles. This attempt to explain Arena\u2019s failure to give requisite notice is undercut by a letter in the record from Arena\u2019s treasurer, James Buzzell, to Edward Mecum dated December 21, 1990, more than one month before Arena filed its financing statement. The letter is addressed to \u201cMECUM\u2019S COUNTRYSIDE MOTOR COMPANY, INC.,\u201d which is Mecum\u2019s corporate name. Obviously, Arena was aware of Me-cum\u2019s actual corporate name, prior to its submission of requests for information to the Secretary of State\u2019s office in January 1991. Its failure to turn up Amcore\u2019s security interest in the subject vehicles was the result of a lax investigation, not misinformation.\nSection 9 \u2014 312(5)(a) of the Code provides that, when a purchase money security interest is not properly perfected, as in the case here, conflicting security interests in the same inventory are ranked in priority according to the time of filing or perfection. (Ill. Rev. Stat. 1989, ch. 26, par. 9 \u2014 312(5Xa).) Having perfected its security interest on January 20, 1989, more than two years before Arena\u2019s January 28, 1991, filing, Amcore has priority to the subject funds. Accordingly, the trial court properly determined that Amcore\u2019s security interest was superior to Arena\u2019s. Its award of the funds in escrow to Amcore was correct.\nFor reasons stated above, we affirm the judgment of the circuit court.\nAffirmed.\nUNVERZAGT and QUETSCH, JJ., concur.",
        "type": "majority",
        "author": "JUSTICE WOODWARD"
      }
    ],
    "attorneys": [
      "Robert K. Slattery, of Freeport, and Gary Hollander, of Bixby, Lechner & Potratz, P.C., of Chicago, for appellant.",
      "Craig A. Wilette, of Ritz, Shair & Wilette, and Pamela S. Fox, of Maggio & Fox, P.C., both of Rockford, for appellee."
    ],
    "corrections": "",
    "head_matter": "ARENA AUTO AUCTION, INC., Plaintiff-Appellant, v. MECUM\u2019S COUNTRYSIDE MOTOR COMPANY, INC., et al., Defendants (Amcore Bank N.A., Rockford, Defendant-Appellee).\nSecond District\nNo. 2\u201492\u20140514\nOpinion filed September 23, 1993.\nRobert K. Slattery, of Freeport, and Gary Hollander, of Bixby, Lechner & Potratz, P.C., of Chicago, for appellant.\nCraig A. Wilette, of Ritz, Shair & Wilette, and Pamela S. Fox, of Maggio & Fox, P.C., both of Rockford, for appellee."
  },
  "file_name": "0096-01",
  "first_page_order": 116,
  "last_page_order": 121
}