Tenn. Code Ann. § 55-3-126(b) (1980); In re Wallace, 251 F. Supp. 581 (E.D.Tenn. 1966); In re Crosson, 226 F. Supp. 944 (E.D.Tenn. 1963); Edmondson v. Farmers Merchants Bank (In re Phippen), BK No. 79-30899 (Bankr.Ct.M.D.Tenn., Jan. 18, 1980); In re DEB Cabinet Co., 16 U.C.C. Rep.Serv. 236 (E.D.Tenn. 1974) (B.J.); see Tenn. Code Ann. § 47-9-302(4) (1979); In re Russell, 300 F. Supp. 6 (E.D.Tenn.
ditor's claims, the rights and liabilities adjudicated within bankruptcy proceedings are often created and determined by reference to state law. See e.g., 3 Collier on Bankruptcy, ¶ 502.02 (15th ed. 1984) (when the bankruptcy court hears a matter that had its source in state law, state law is applied); Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979) (absent a federal interest requiring a differing result, there is no reason why property interests, which are created and defined by state law, should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding); Chicago Board of Trade v. Johnson, 264 U.S. 1, 44 S.Ct. 232, 68 L.Ed. 533 (1924) (where bankruptcy law deals with property rights which are regulated by state law, federal courts in bankruptcy should follow state law); Matter of Bollinger Corp., 614 F.2d 924, 925 n. 1 (3rd Cir. 1980) (state law governs the secured interests asserted by parties in bankruptcy); In re Crosson, 226 F. Supp. 944 (D.C.Tenn. 1963) (state law governs validity of lien claimed by secured creditor). Where, as here, a case falls within the ambit of an extensive federal statutory and regulatory scheme, but the language of the federal legislation does not directly address the precise question at issue, federal courts are competent to fill the void by incorporating state law or by fashioning an independent federal doctrine.
Nor is the date of the bill of sale decisive of any issue in the Court's disposition of the case. The Referee held that title to the automobile effectively passed on October 8, and that Mills held a mere unperfected security interest from that date until after Mills filed the request for a new certificate on November 19 or 20. See In re Wallace, D.C., 251 F. Supp. 581 (1966); In re Crosson, D.C., 226 F. Supp. 944 (1963). Since the bankruptcy petition was filed before perfection, the trustee's rights in the collateral are superior to petitioner's.
In answering this question affirmatively, the Referee concluded that since trade-in or used vehicles have outstanding certificates of title and thus are subject to T.C.A. 59-326 and 59-327 prior to being acquired by a dealer, they must remain so once they have become part of a dealer's inventory. The Trustee herein has made substantially the same contention, citing In re Crosson, 226 F. Supp. 944 (E.D.Tenn. 1963), and In re Wallace, 251 F. Supp. 581 (E.D. Tenn. 1966), in support thereof. The critical defect in this line of reasoning is demonstrated by the fact that neither Crosson nor Wallace dealt with encumbrances on inventory vehicles executed by a dealer, but rather involved purchase money security interests executed by individual buyers who subsequently went bankrupt.
ROBERT L. TAYLOR, Chief Judge. This cause is before the Court upon Petition to Review filed by Claiborne Motors, Inc. On slightly differing facts, it involves the same question decided by this Court in In Re Crosson, 226 F. Supp. 944. In that case, Crosson, the bankrupt, on October 27, 1962 purchased a Ford automobile from the Knoxville Motor Company, Inc., receiving from it the prior certificate of title therefor properly endorsed.
1986); In re Wallace, 251 F. Supp. 581 (E.D.Tenn. 1966); In re Crosson, 226 F. Supp. 944 (E.D.Tenn. 1963). Specifically, Tenn. Code Ann. § 55-3-125 and § 55-3-126(a) address the requirements for perfecting liens on motor vehicles:
1986); In re Wallace, 251 F. Supp. 581 (E.D.Tenn. 1966); In re Crosson, 226 F. Supp. 944 (E.D.Tenn. 1963); Waldschmidt v. Associates Commercial Corp. (In re Groves), 64 B.R. at 329; Still v. Commerce Union Bank (In re Custom Caps, Inc.), 1 B.R. at 99. This method of perfection applies to all security interests in motor vehicles except security interests in vehicles classified as inventory or security interests whose existence depends exclusively on possession, i.e., an artisan's lien.
As a general rule, a security interest in an automobile must be noted on the certificate of title in order to be perfected in Tennessee.In re Wallace, 251 F. Supp. 581 (E.D.Tenn. 1966); In re Crosson, 226 F. Supp. 944 (E.D.Tenn. 1963). The rule is otherwise if the automobile is inventory property of the secured debtor.
1969); In re Wallace, 251 F. Supp. 581, 584 (E.D.Tenn. 1966); In re Crosson, 226 F. Supp. 944, 946-947 (E.D.Tenn. 1963); Still v. Commerce Union Bank (In re Custom Caps, Inc.), 1 B.R. 99, 102 (Bkrtcy.E.D.Tenn. 1979); In re DEB Cabinet Corp., 16 U.C.C.Rep.Serv. 236 (E.D.Tenn.
T.C.A. 47-9-302(3)(b). In re Crosson, 226 F. Supp. 944 (E.D.Tenn. 1963); In re Russell, 300 F. Supp. 6 (E.D.Tenn. 1969); In re Wallace, 251 F. Supp. 581 (E.D.Tenn.