Opinion
Bankruptcy No. 180-136 C.
November 21, 1980
Bankruptcy Reform Act — Preferences — Security Interest — Unperfected Lien
A lien noted on the certificate of title covering the subject automobile secured only the outstanding balance on the original note, but not the balance due on a second note since it was not perfected by a sworn notice showing the amount due as required by Florida law. Therefore, the debtor prevailed over this latter unsecured claim, and the creditor's lien secured only the outstanding balance on the first note. See Sec. 544(b) at ¶ 9523.
[Digest of Opinion]
The proceeding was instituted by the creditor who sought to establish a lien on an automobile owned by the debtor in the total amount of $2,310.46. This amount is a combination of the original amount secured by a lien on which there is a $840.25 balance and the sum of $1,476.21 which amount was not noted on the title certificate. It is the creditor's contention that by virtue of the language in the original promissory note, all obligations owed by the debtor are secured by a lien originally granted in conjunction with the first loan on the automobile. This contention is based on certain language contained in the security agreement which recites, that the security agreement is granted to secure the payment of the original note of $3,390 and ". . .any and all other liabilities or obligations of the borrower to the secured party, direct or indirect, absolute or contingent, now existing or hereafter arising, now due or hereafter to become due. . ."
Florida Statutes 319.27(2)(1979) governs the procedure to perfect security interest in personal properties, including automobiles. There is no doubt that the creditor fully complied with the perfection requirement of the statute with regard to the original indebtedness of the debtor in that it filed its sworn notice of lien showing the date and amount of the lien; the kind of the lien; the name and address of the registered owner; the description of the motor vehicle, make type, serial number, and the name and address of the lienholder.
It was equally evident and without dispute that the creditor did not file sworn notice of its lien showing the amount due on the second note as required by statute. Thus, there was no question that the creditor did not comply with the requirement of Section 319.27(2) of the Florida statute.
The lien not being perfected, the debtor, armed with the special voiding powers of a trustee by virtue of Section 547 of the Bankruptcy Code and by virtue of a special provision of the UCC itself, Fla. Stat. § 679.302(3)(b) (1979), shall prevail and the creditor's lien on the subject automobile secures only the outstanding balance on the first note.