{
  "id": 3241436,
  "name": "In re ESTATE OF PAUL H. YEALICK, Deceased.-(THE FARMERS' STATE BANK OF PALESTINE, Petitioner-Appellee, v. LOIS YEALICK, Respondent-Appellant.)",
  "name_abbreviation": "Farmers' State Bank v. Yealick",
  "decision_date": "1979-03-20",
  "docket_number": "No. 15068",
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  "last_updated": "2023-07-14T14:51:15.332188+00:00",
  "provenance": {
    "date_added": "2019-08-29",
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  "casebody": {
    "judges": [],
    "parties": [
      "In re ESTATE OF PAUL H. YEALICK, Deceased.\u2014(THE FARMERS\u2019 STATE BANK OF PALESTINE, Petitioner-Appellee, v. LOIS YEALICK, Respondent-Appellant.)"
    ],
    "opinions": [
      {
        "text": "Mr. PRESIDING JUSTICE REARDON\ndelivered the opinion of the court:\nThis appeal arises from an order of the trial court directing the administratrix of the estate of Paul H. Yealick to pay *27,525 (in addition to certain other relief) to the petitioner-bank as a secured creditor of the decedent. The respondent-administratrix contends on appeal that the petitioner\u2019s claim should have been subordinated to various other claims against the estate.\nThe petitioner, Farmers\u2019 State Bank of Palestine, filed a claim against the Yealick estate for amounts due on certain promissory notes executed by the decedent. The petitioner claimed that on September 17, 1977, a public auction was held at which the personal property of the decedent was sold, including items which were allegedly subject to security agreements between the petitioner and the decedent. The respondentadministratrix, the decedent\u2019s wife, placed the proceeds of the sale in the care of the petitioner for temporary holding, but the respondent refused to endorse the checks. The proceeds were, thereafter, turned over to the respondent, but no payment was made for the secured property.\nThe respondent filed a motion to dismiss and a motion for judgment on pleadings contending, in effect, that petitioner was not entitled to any priority as a claimant against the assets of the estate since it had failed to perfect its security interests. The trial court ordered the parties to submit written briefs and took the matter under advisement.\nOn June 23,1978, the court entered a written order finding generally for the petitioner. The court found that the petitioner was a secured creditor as to some but not all of the items of personal property which formed the basis of its claim. The court ordered the respondent to pay to the petitioner *27,525 as the identifiable proceeds from the sale of items covered by valid security agreements. The petitioner was also granted possession of a pickup truck which had been sold at the estate auction but subsequently returned to the respondent by the purchaser. Petitioner was allowed status as a seventh class claimant against the estate as to its remaining unsecured claims.\nRespondent essentially contends that a creditor who fails to perfect a security interest pursuant to the provisions of the Uniform Commercial Code \u2014 Secured Transactions (Ill. Rev. Stat. 1975, ch. 26, par. 9\u2014101 et seq.) (hereinafter cited as U.C.C.) has no priority to the assets of a decedent\u2019s estate. In other words, it is the respondent\u2019s position that, as against the personal representative of a decedent\u2019s estate, a creditor holding an unperfected security interest merely occupies the status of an unsecured creditor, whose claim in the present case would be subordinated to the costs of administration, attorney\u2019s fees, and the surviving spouse and child awards. See Ill. Rev. Stat., 1976 Supp., ch. 110\u00bd, par. 18\u201410.\nPursuant to section 9 \u2014 201 of the U.C.C., a security agreement is effective according to its terms between the parties. (Ill. Rev. Stat. 1975, ch. 26, par. 9\u2014201.) Lack of perfection under the U.C.C. relates only to priority over other creditors\u2019 interests in the collateral. \u201cThe security agreement between the parties themselves and the secured party\u2019s rights \u2022 * * as against the debtor are unaffected by failure to perfect the security interest.\u201d (Emphasis added.) (In re Application of County Treasurer (1973), 16 Ill. App. 3d 385, 392, 306 N.E.2d 743, 749.) The respondent has not challenged the trial court\u2019s finding that valid, although unperfected, security agreements were entered into by the petitioner and the decedent.\nRespondent contends, nevertheless, that an administrator of an estate occupies a status similar to a trustee in bankruptcy and, therefore, the question of whether the creditor\u2019s security interest was perfected would be critical to the petitioner\u2019s rights. The personal representative of a decedent, however, stands in no better position than the decedent as to one holding a lien on the decedent\u2019s property. (See In re Mossler Co. (7th Cir. 1917), 239 F. 262; Waughop v. Bartlett (1896), 165 Ill. 124, 46 N.E. 197.) Thus, secured collateral, which is in the possession of the administrator, is not and does not become a part of the assets of the estate until the creditor\u2019s lien upon it is discharged. Furness v. Union National Bank (1893), 147 Ill. 570, 35 N.E. 624; Baxter v. Continental Illinois National Bank & Trust Co. (1940), 304 Ill. App. 117, 26 N.E.2d 179.\nFinally, we agree with the conclusion of the trial court that, despite the sale of the collateral at the estate auction, the petitioner\u2019s security interest continued in the proceeds from the sale. Section 9\u2014203(3) of the U.C.C. provides;\n\u201cUnless otherwise agreed a security agreement gives the secured party the right to proceeds provided by Section 9 \u2014 306.\u201d (Ill. Rev. Stat. 1975, ch. 26, par. 9\u2014203(3).)\nSection 9 \u2014 306(2) states that:\n\u201c[A] security interest also continues in any identifiable proceeds including collections received by the debtor.\u201d Ill. Rev. Stat. 1975, ch. 26, par. 9\u2014306(2).\nThe court found that certain of the proceeds from the subject property were identifiable. That factual finding has not been challenged by the respondent. Since, pursuant to section 9 \u2014 306(2), the petitioner\u2019s security interest continued in the proceeds from the sale of the secured chattels, the decision of the trial court ordering payment of those sums was proper. The respondent places some importance on the petitioner\u2019s knowledge of the estate auction involving the sale of the collateral and its corresponding failure to object thereto. Although the authorization of a sale of secured property by a creditor may allow the purchaser to take free, of the security interest in the property (First Finance Co. v. Akathiotis (1969), 110 Ill. App. 2d 377, 249 N.E.2d 663), it would not affect the creditor\u2019s rights to the proceeds thereof as against the debtor. (See Ill. Rev. Stat. 1975, ch. 26, par. 9\u2014306(2).) Thus, any acquiescence by the petitioner to the sale has no relevance to the parties\u2019 rights and obligations.\nFor the reasons stated above, we conclude that the judgment of the trial court should be affirmed.\nIn accordance with our decision, the motion of the respondent to stay enforcement of the order of the trial court, which was taken with this appeal, is denied.\nAffirmed.\nTRAPP and WEBBER, JJ., concur.",
        "type": "majority",
        "author": "Mr. PRESIDING JUSTICE REARDON"
      }
    ],
    "attorneys": [
      "Robert L. Douglas, of Robinson, for appellant.",
      "James V. Hill, of Cox, Phillips & Weber, P. C., of Robinson, for appellee."
    ],
    "corrections": "",
    "head_matter": "In re ESTATE OF PAUL H. YEALICK, Deceased.\u2014(THE FARMERS\u2019 STATE BANK OF PALESTINE, Petitioner-Appellee, v. LOIS YEALICK, Respondent-Appellant.)\nFourth District\nNo. 15068\nOpinion filed March 20, 1979.\nRobert L. Douglas, of Robinson, for appellant.\nJames V. Hill, of Cox, Phillips & Weber, P. C., of Robinson, for appellee."
  },
  "file_name": "0353-01",
  "first_page_order": 375,
  "last_page_order": 378
}