A recent change to Ohio’s agricultural lien law clarifies the interplay between security interests governed by Article 9 of the UCC and those governed by Ohio’s agricultural lien statutes, and confirms the ruling of the Sixth Appellate Court of Erie County in Ohio Dept. of Agriculture v. Central Erie Supply & Elevator Association, 2013-Ohio-3061.
Central Erie Supply & Elevator Association (Central Erie) operated a grain elevator that it used to receive grain and other commodities from farmers (known as “claimants” under the statutory scheme) and sell the commodities to third parties. This made Central Erie an “agricultural commodity handler” under Ohio Revised Code Chapter 926. Pursuant to ORC § 926.021(C), the claimants who provided commodities to Central Erie retained a statutory lien on the commodities until they were paid.…
Continue Reading →
Last year (October 23, 2009) we posted on the topic of UCC search logic in light of the bankruptcy case of In re EDM Corporation 2009 Westlaw 367773 (Bankr.D.Neb.). In the bankruptcy court, the first-filing lender lost its priority because it had filed a UCC-1 financing statement with the debtor name listed as “EDM Corporation d/b/a EDM Equipment,” which was not located by the two later-filing lenders when doing a search on “EDM Corporation,” which was the debtor’s true legal name. The bankruptcy court held that the financing statement was “seriously misleading” and rearranged the priority accordingly.
Under Revised 9-506(a), errors or omissions in a filed financing statement are of no consequence unless they render the financing statement “seriously misleading.” Revised 9-506(c) provides that if a search in the filing office using the filing office’s standard search logic would disclose the financing statement, then it is not “seriously misleading,” even if it fails to provide the precise name of the debtor as required under Revised 9-503(a).
This case was recently taken up on appeal to 8th Circuit Bankruptcy Appellate Panel (In re EDM Corporation, 2010 WL 1929772 (8th Cir. BAP May 14, 2010)). The appellate panel noted that the first step for creditors in attempting to find prior liens “is finding the UCC statement in the first place, and the way to do that is by searching the records under the debtor’s organizational name. In other words, complete accuracy is even more important with the debtor’s name than …
Continue Reading →