{
  "id": 8553936,
  "name": "PROVIDENT FINANCE COMPANY v. BENEFICIAL FINANCE COMPANY",
  "name_abbreviation": "Provident Finance Co. v. Beneficial Finance Co.",
  "decision_date": "1978-06-06",
  "docket_number": "No. 778DC481",
  "first_page": "401",
  "last_page": "409",
  "citations": [
    {
      "type": "official",
      "cite": "36 N.C. App. 401"
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  "court": {
    "name_abbreviation": "N.C. Ct. App.",
    "id": 14983,
    "name": "North Carolina Court of Appeals"
  },
  "jurisdiction": {
    "id": 5,
    "name_long": "North Carolina",
    "name": "N.C."
  },
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      "cite": "500 F. 2d 654",
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    {
      "cite": "309 U.S. 478",
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      "reporter": "U.S.",
      "case_ids": [
        6142014
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      "year": 1940,
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        {
          "page": "481"
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        {
          "page": "879-80"
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      "year": 1965,
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    {
      "cite": "186 S.E. 2d 649",
      "category": "reporters:state_regional",
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      "year": 1972,
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    {
      "cite": "13 N.C. App. 606",
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      "reporter": "N.C. App.",
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    {
      "cite": "3 UCC Rep. Serv. 1112",
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      "year": 1966,
      "opinion_index": 0
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    {
      "cite": "10 UCC Rep. Serv. 1285",
      "category": "reporters:specialty",
      "reporter": "U.C.C. Rep. Serv. (West)",
      "year": 1972,
      "opinion_index": 0
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  "analysis": {
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    "char_count": 20021,
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  "last_updated": "2023-07-14T17:02:41.791978+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
  },
  "casebody": {
    "judges": [
      "Judges Martin and Arnold concur."
    ],
    "parties": [
      "PROVIDENT FINANCE COMPANY v. BENEFICIAL FINANCE COMPANY"
    ],
    "opinions": [
      {
        "text": "MORRIS, Judge.\nWe will first discuss the rights of the parties to the property. Our analysis will entail answering two questions: (1) Which creditor has priority? (2) What property, if any, is covered in the financing statements?\nDefendant, Beneficial Finance Company, argues that it has priority. Defendant argues first that the financing statement given to plaintiff became ineffectual as soon as the original indebtedness was paid, but, even if we reject that position, defendant still should prevail because plaintiff\u2019s employees represented that the original debt had been paid. Defendant basically ignores Article 9 of the Uniform Commercial Code which governs this case. (There have been amendments to Article 9, some of which apply in this case and some of which do not apply.)\nThe security interest of both parties in this case must be perfected, if perfected at all, by the filing of a financing statement. G.S. 25-9-302. It appears that both parties have an \u201cattached\u201d security interest under G.S. 25-9-203. It also appears that, pursuant to G.S. 25-9-302, both parties have perfected these security interests by filing financing statements in proper form and in the proper offices. Thus, we determine the priority of their interests under G.S. 25-9-312. More precisely, all loans, except the 2 July 1976 loan, are governed by \u201cold\u201d G.S. 25-9-312(5) which provides in pertinent part that \u201cpriority between conflicting security interests in the same collateral shall be determined ... in the order of filing if both are perfected by filing, regardless of which security interest attached first under \u00a7 25-9-204(1) and whether it attached before or after filing. . . .\u201d (Emphasis added.) It would be difficult to conceive language which would more expressly reject defendant\u2019s argument.\nThe official comment to section 25-9-312 offers the following example:\n\u201cExample 1. A files against X (debtor) on February 1. B files against X on March 1. B makes a non-purchase money advance against certain collateral on April 1. A makes an advance against the same collateral on May 1. A has priority even though B\u2019s advance was made earlier and was perfected when made. . . .\u201d\nIn this case, plaintiff filed on 20 December 1973. Defendant filed on 3 January 1975. Defendant made a loan to the Carlyles on 31 December 1974 which was perfected on 3 January 1975 by the filing. Plaintiff made loans on 11 July 1975 and 1 December 1975, which were perfected at the time the loans were made. Plaintiff clearly has priority, however, because plaintiff was the first to file.\nDefendant argues that the 20 December 1973 financing statement was terminated by the payoff of the original loan since the original security agreement did not provide for future advances. The termination provisions in effect at the times relevant to this case provide that a financing statement specifying no maturity date \u201cis effective for a period of five years from the date of filing.\u201d G.S. 25-9-403(2). One could terminate prior to that time by filing a termination statement which would \u201cremain in the file for such period of time as the financing statement . . . would be effective under the five year life provided in \u00a7 G.S. 25-9-403 . . . .\u201d G.S. 25-9-404 (now amended). The debtor was protected by the requirement that\n\u201c[w]henver there is no outstanding secured obligation and no commitment to make advances . . . the secured party must on written demand by the debtor send the debtor a statement that he no longer claims a security under the financing statement . . . .\u201d (Emphasis added.) G.S. 25-9-404 (now amended).\nDefendant urges this Court to engraft upon the statute by judicial decision additional termination provisions. Defendant relies upon In re Hagler, 10 UCC Rep. Serv. 1285 (U.S.D.C. E.D. Tenn. 1972), and Coin-O-Matic Service Co. v. Rhode Island Hospital Trust Co., 3 UCC Rep. Serv. 1112 (R.I. Super. Ct. 1966), to support his argument. These two cases, however, are clearly in a minority. The minority position was discussed and was expressly rejected by the Review Committee for Article 9 of the Permanent Editorial Board for the Uniform Commercial Code on page 115 of its 25 April 1971 Final Report. This position has also been criticized by major commentators. Bender\u2019s Uniform Commercial Code Service discusses Coin-O-Matic by name and rejects the case. P. Coogan, W. Hogan, and D. Vagts, Bender\u2019s Uniform Commercial Code Service. Vol. 1, \u00a7 3A.03[l][b]. We believe that it is unnecessary for this Court to involve itself in a detailed analysis of this problem. We align ourselves with the majority for two reasons. First, we believe the majority position is the correct one. There are adequate safeguards for the debtor: (1) He must sign the financing statement. (2) He has the five-year automatic cutoff. (3) He can demand and file a termination statement. The majority position is not unlike the position our courts have taken to strengthen our real estate recording statute. Second, the legislature rewrote G.S. 25-9-404 in 1975. The legislature placed upon the creditor the duty of filing the termination statements. A $100 penality plus liability for all losses is now imposed on creditors who fail to file the termination statements. However, the legislature specifically chose to retain the requirement that the debtor must first request in writing the termination statement. G.S. 25-9-404(1). We believe that this legislative action is an implicit rejection of defendant\u2019s argument.\nAlso, we note that the legislature has amended G.S. 25-9-312 in such a manner that the present results might be different under the new statute. However, the legislature specifically provided that priorities fixed under \u201cold\u201d Article 9 prior to 1 July 1976 would not be altered by the new statute. G.S. 25-11-107.\nDefendant also argues that plaintiff no longer has priority because plaintiff\u2019s employee informed defendant that the Carlyles had paid off the 1973 debt. This representation was obviously true. The real problem is that defendant either misunderstood or ignored the law. It would have been a simple matter for defendant to have required the Carlyles to obtain a termination statement prior to making the loan. Plaintiff would have been required by law to furnish the Carlyles such a termination statement. Defendant had more than ample opportunity to protect itself at little or no cost. Defendant failed to do so. We will not undermine the integrity of the notice filing system established under the U.C.C. to aid lenders who disregard the law and fail to help themselves. Thus, we conclude that plaintiff has a perfected security interest and that plaintiff\u2019s security interest has priority over defendant\u2019s security interest.\nThe remaining loan by plaintiff, made on 2 July 1976, is governed by \u201cnew\u201d Article 9. Specifically, it is governed by \u201cnew\u201d G.S. 25-9-312(7) which provides that \u201c[i]f future advances are made while a security interest is perfected by filing . . . , the security interest has the same priority for the purposes of subsection (5) with respect to the future advances as it does with respect to the first advance. . . .\u201d The record reveals that the 2 July 1976 loan was made while plaintiff\u2019s security interest in the property, by virtue of the 1 December 1975 loan, was perfected. Thus, under \u201cnew\u201d G.S. 25-9-312(7), the 2 July 1976 advance would take the same priority as the 1 December 1975 advance. As we have stated previously, the 1 December 1975 loan has priority [under G.S. 25-11-107 and \u201cold\u201d G.S. 25-9-312(5)], over defendant\u2019s loan. Therefore, the 2 July 1976 loan will also have priority over defendant\u2019s loan.\nNext, we must determine in which property plaintiff has a perfected security interest. The focal point of this issue is the 20 December 1973 financing statement. That financing statement covers:\n\u201c1 living room suite \u20144 pc. red black\n2 tables maple end\n1 table brn.\n1 Television Motorola \u2014 25 inch F21870621\n1 coffee table\n1 washing machine Auto Kenmore 6504807\n2 lamps blk. gold\n1 dryer Whirlpool 03717M939\n1 gas stove heater\n1 bed room suite 4 pc. Queen Cherry\n4 chairs beige\n1 bed room suite 4 pc. mah.\n1 refrigerator Coldspot 81220951\n1 sewing machine Enedas\n1 air conditioner 3,2000(sic)\n1 gas stove Kenmore.\u201d\nThe financing statement listed as debtor \u201cNorman Carlyle\u201d and was signed by \u201cJanette Carlyle\u201d as debtor. G.S. 25-9-402, as it stood at the times relevant to this case, provided that\n\u201c[a] financing statement is sufficient if it is signed by the debtor and the secured party, gives an address of the secured party from which information concerning the security interest may be obtained, gives a mailing address of the debtor and contains a statement indicating the types, or describing the items, of collateral. . . .\u201d\nPlaintiff\u2019s financing statement lists the items of collateral, gives addresses for both the debtor and the secured party. There are problems, however. At the top Norman Carlyle is listed as debtor. At the bottom Janette Carlyle signed as debtor. The question presented is whether Norman Carlyle \u201csigned\u201d the financing statement. Plaintiff argues that Janette Carlyle signed as agent of Norman Carlyle. Because financing statements only perform a notice function, we believe that any agency status should be obvious on the face of the financing statement. In this case, there is no indication of any agency relationship between Janette Carlyle and Norman Carlyle. We note that the secured party\u2019s signature does suggest an agency status: \u201cProvident Finance Co. By/s/ Brenda Sutton\u201d. This signature is clearly adequate. No such suggestion of agency can be found in Janette Carlyle\u2019s signature. Nor does the mere fact of the marital relation establish agency. Hayes v. Griffm, 13 N.C. App. 606, 186 S.E. 2d 649 (1972). We cannot, therefore, say that Janette Carlyle signed as the agent of Norman Carlyle.\nG.S. 25-1-201(39) provides that \u201c \u2018[signed\u2019 includes any symbol executed or adopted by a party with present intention to authenticate a writing.\u201d We must determine whether Norman Carlyle \u201cadopted\u201d the typed name at the top of the financing statement as his signature. We realize that the U.C.C. does have a liberal definition for \u201csigned\u201d. Because of the importance placed upon financing statements, we believe that, in cases dealing with the debtor\u2019s signature on financing statements, the courts should apply this liberal definition with caution. Some other courts have applied these provisions somewhat liberally when dealing with a creditor\u2019s signature. See, e.g. Benedict v. Lebowitz, 346 F. 2d 120 (2d Cir. 1965). However, absence of the debtor\u2019s signature is a different matter. J. White and R. Summers, Uniform Commercial Code (1972) noted the distinction:\n\u201cWe have found no case construing the official version of 9-402 in which a court found a financing statement to be effective despite the absence of the signature of the debtor. If the debtor\u2019s signature is omitted the financing statement is ineffective. . . .\u201d White and Summers at 835.\nThey later note that, on the other hand, the courts are divided on the question of whether a creditor will be deemed to have adopted the typed name. The creditor ought always to be aware of the importance of the signature on the financing statement. Furthermore, because of the notice function of the financing statement, we believe that the financing statement can function adequately only when it meets the necessary requirements on its face. This position is supported by R. Anderson, Uniform Commercial Code (1971), where the author argues for an \u201cobjective\u201d interpretation of financing statements. See Anderson, Vol. 4 at \u00a7 9-402:23. In this case, there is nothing at all on the face of the financing statement which suggests that Norman Carlyle \u201cadopted\u201d the typed name as his signature. Where, as in this case, there is nothing whatsoever on the face of the financing statement to suggest that the debtor \u201cadopted\u201d the typed name as his signature, the debtor has not signed the financing statement as required by G.S. 25-9-402, and that financing statement is ineffective.\nThus, we conclude that plaintiff has a perfected security interest in the property interests of Janette Carlyle in those items of personalty listed in the financing statement. It may be that she owns that property completely; on the other hand, she may own only an one-half interest in that property. We cannot determine from the record precisely what she does own. Plaintiff\u2019s security interest in the property of Janette Carlyle has priority over defendant\u2019s security interest. Conversely, as between the parties, defendant\u2019s security interest in the property of Norman Carlyle and in the property of Janette Carlyle not listed in the 30 December 1973 financing statement has priority under G.S. 25-9-301 and G.S. 25-9-312. Insofar as those items listed in plaintiff\u2019s financing statement are concerned, the trial court must determine how the property is owned and, upon proper petition, how to divide that property. In summary, plaintiff has priority only as to the property interest of Janette Carlyle in those items listed in the 20 December 1973 financing statement.\nIn both motions for summary judgment there is a fatal defect. Neither motion has shown adequate jurisdictional grounds. The record shows that the Carlyles filed a petition in bankruptcy on 23 September 1976, and \u201c[t]hat, pursuant to the Carlyles\u2019 request, your Affiant [Gene West, a Beneficial employee] on September 30, 1976 did pick up the said furniture.\u201d\nIt is axiomatic that\n\u201c[Bankruptcy courts have summary jurisdiction to adjudicate controversies relating to property over which they have actual or constructive possession. And the test of this jurisdiction is not title in but possession by the bankrupt at the time of the filing of the petition in bankruptcy. . . .\u201d Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 481, 60 S.Ct. 628, 630, 84 L.Ed. 876, 879-80 (1940).\nUnless the parties can establish that the trustee has abandoned the property, the bankruptcy court is the only court having jurisdiction to adjudicate the rights of the parties in this property. We recognize that no set formalities are required for abandonment, but the evidence must establish a clear and unambiguous manifestation of an intent of the trustee in bankruptcy to abandon the property. In the Matter of Newkirk Mining Co., 238 F. Supp. 1 (E.D.Pa. 1964), aff\u2019d per curiam 351 F. 2d 954 (3d Cir. 1964). Also, the burden of proving abandonment is on the party seeking to show abandonment. Hanover Insurance Co. v. Tyco Industries, Inc., 500 F. 2d 654 (3d Cir. 1974). Thus, unless the parties can offer facts to show abandonment, this case must be dismissed for lack of jurisdiction.\nFor the preceding reasons, the judgment of the trial court must be vacated and the case remanded. The trial court must first determine whether it can properly exercise jurisdiction over the property. If not, the case must be dismissed. If the trial court, however, determines that it has jurisdiction, the court shall then inquire into the property interests of Norman Carlyle and Janette Carlyle in the personalty listed in the 20 December 1973 financing statement and enter a judgment consistent with this opinion. The judgment of the trial court is vacated, and the case is remanded.\nVacated and remanded.\nJudges Martin and Arnold concur.",
        "type": "majority",
        "author": "MORRIS, Judge."
      }
    ],
    "attorneys": [
      "Walter Ray Vernon, Jr., for plaintiff appellee.",
      "Gerrans & Spence, by William D. Spence, for defendant appellant."
    ],
    "corrections": "",
    "head_matter": "PROVIDENT FINANCE COMPANY v. BENEFICIAL FINANCE COMPANY\nNo. 778DC481\n(Filed 6 June 1978)\n1. Uniform Commercial Code \u00a7 75\u2014 filing of financing statement \u2014 priority of interests\nLoans from plaintiff and defendant to borrowers were governed by former G.S. 25-9-312(5) and plaintiff\u2019s security interest in the borrowers\u2019 property had priority over defendant\u2019s interest where borrowers executed a promissory note and security agreement in favor of plaintiff on 1 December 1973; plaintiff filed a financing statement on 20 December 1973; the debt was paid in full on 8 November 1974; no termination statement was filed; defendant made a loan to borrowers on 31 December 1974 without requiring borrowers to obtain a termination statement; defendant filed a financing statement on 3 January 1975; plaintiff made new loans to borrowers on 11 July and 1 December 1975 and on 3 July 1976; and plaintiff relied on the financing statement filed 20 December 1973.\n2. Uniform Commercial Code \u00a7\u00a7 4, 73\u2014 financing statement \u2014 typed name not a signature\nWhere there is nothing whatsoever on the face of a financing statement to suggest that the debtor \u201cadopted\u201d his typed name as his signature, the debtor has not signed the financing statement as required by G.S. 25-9-402, and that financing statement is ineffective; therefore, plaintiff had priority interest only as to the property interest of the borrower wife in those items listed in a financing statement and not as to the property interest of the borrower husband, since the husband\u2019s name was typed on the financing statement but he did not sign the statement, and there was no indication that the wife signed the statement as his agent.\n3. Bankruptcy \u00a7 2; Uniform Commercial Code \u00a7 73\u2014 interests in secured property-bankruptcy of debtor \u2014 jurisdiction to determine interests\nIn an action between lenders to determine their interests in secured property where the evidence shows that borrowers have filed a petition in bankruptcy, the action should be dismissed for lack of jurisdiction, unless the parties can offer facts to show abandonment of the property by the trustee in bankruptcy, since the bankruptcy court is the only court having jurisdiction to adjudicate the rights of the parties, absent an abandonment by the trustee.\nAPPEAL by defendant from Exum, Judge. Judgment entered 14 April 1977 in District Court, LENOIR County. Heard in the Court of Appeals 9 March 1978.\nThe essential facts are these: On 1 December 1973 Norman Carlyle and Janette Carlyle (Norman Carlyle\u2019s wife) executed a promissory note and security agreement in favor of plaintiff, Provident Finance Company. The security agreement pledged certain items of houshold furnishings as collateral. The agreement did not provide for future advances. A financing statement was prepared and was signed by plaintiff, the creditor, through its agent and by Janette Carlyle and was properly filed 20 December 1973. After having been refinanced at least once, the debt was paid in full on 8 November 1974. No termination statement was filed.\nOn 31 December 1974, defendant, Beneficial Finance Company, made a loan to the Carlyles. The parties executed a security agreement, again pledging as collateral some of the very same property pledged as collateral in the security agreement with plaintiff. Again, a financing statement was prepared and was signed by defendant, the creditor, through its agent and by both Norman Carlyle and Janette Carlyle and was properly filed 3 January 1975.\nOn 11 July 1975, 1 December 1975, and 2 July 1976, plaintiff made new loans to the Carlyles. New notes and security agreements covering the same collateral first pledged in 1973, were executed, but plaintiff relied upon the 20 December 1973 financing statement.\nThe Carlyles filed a petition in bankruptcy 23 September 1976. At that time, the Carlyles owed the plaintiff approximately $940 and the defendant approximately $1500. On 30 September 1976, defendant seized the property covered by its security agreements and financing statements. Plaintiff commenced this action by the filing of a verified complaint on 11 October 1976, seeking possession of the collateral. Both parties submitted motions for summary judgment supported by affidavits. By order of 14 April 1977, the trial court entered summary judgment in favor of plaintiff. From that order, defendant appeals alleging error in the court\u2019s failure to grant its motion for summary judgment as well as in the court\u2019s granting plaintiffs\u2019 motion.\nWalter Ray Vernon, Jr., for plaintiff appellee.\nGerrans & Spence, by William D. Spence, for defendant appellant."
  },
  "file_name": "0401-01",
  "first_page_order": 429,
  "last_page_order": 437
}
