FLEET FACTORS CORP., &C., APPELLANT, v. BANDOLENE INDUSTRIES CORP., ET AL.,
DEFENDANTS, CAMBRIA FUEL OIL CO., INC., &C., RESPONDENT.
86 N.Y.2d 519, 658 N.E.2d 202, 634 N.Y.S.2d 425
October 31, 1995
(Case Commentary by Editorial Board)
2 No. 222 (1995 NY Int. 235)
Decided October 31, 1995
_________________________________________________________________
This opinion is uncorrected and subject to revision before publication
in the New York Reports.
Douglas J. Good, for Appellant.
Harvey Reich, for Respondent.
BELLACOSA, J.:
Neither Uniform Commercial Code § 9-402(7) nor Uniform Commercial Code
§ 1-203, under the circumstances of this case, requires a secured
party to refile a properly and accurately filed financing statement,
upon the subsequent event of a name change by the debtor. Nor does
either section require a special notation of an impending name change
by the debtor on the initially filed financing statement, even if
known by the filing creditor.
Cambria Fuel Oil Co. ("Old Cambria"), on November 1, 1988, sold its
business to 306 Fuel Oil Corp., retaining a security interest in the
transferred assets. Old Cambria filed its only UCC-1 financing
statement on November 18, 1988, and 306 Fuel changed its name on
December 29, 1988 to Cambria Petroleum Corp., referred to here as
"New" Cambria.
The contract of sale identified the buyer as "306 Fuel Oil Corp." Old
Cambria gave 306 Fuel the right to use the name "Cambria Fuel Oil Co.,
Inc." and "Cambria" as trade names, while agreeing not to use either
of the names in the future. The same day they entered into the
contract of sale, 306 Fuel and Old Cambria also entered into an Escrow
Agreement, which included a security interest subordination clause.
Pursuant to that clause, Old Cambria agreed to subordinate its
security interest to the new lender should 306 Fuel acquire additional
financing from another lender. The clause, paragraph 5 of the Escrow
Agreement, also provided that if 306 Fuel obtained new financing, it
would have to deliver a statement on its letterhead informing Old
Cambria of the arrangement, together with a new, subordinate UCC- 1
SNIPPETS:
Neither Uniform Commercial Code § 9-402nor Uniform Commercial Code § 1-203, under the
Nor does either section require a special notation of an impending name change by the debtor
Cambria Fuel Oil Co., on November 1, 1988, sold its business to 306 Fuel Oil Corp., retaining
The contract of sale identified the buyer as "306 Fuel Oil Corp." Old Cambria gave 306 Fuel
The same day they entered into the contract of sale, 306 Fuel and Old Cambria also entered
After the sale in November but before 306 Fuel's name change in December, Fleet Factors
This financing was purportedly secured by the same assets in which Old Cambria still held a
Supreme Court appointed a temporary receiver, who sold New Cambria's assets for $686,000.
It awarded the entire net proceeds to Old Cambria, with interest, concluding that Old Cambria
The Appellate Division affirmed for the reasons stated in the lower court's detailed opinion,
Until 1978, the Uniform Commercial Code was silent as to the effect of a name change by a
In 1978, UCC 9-402, as part of the 1972 revision of the Uniform Commercial Code, went into
Also significantly, "he old financing statement, if legally still valid under the
Because the only collateral at issue in this litigation, however, is that acquired prior to
Appellant Ambassador further proposes to permeate or overlay the duty of good faith in UCC
Section 1-203 provides that "Every contract or duty within this Act imposes an obligation of
Kalamazoo Steel, first of all, predated the enactment of section 9-402).
|
