Crowell Little v. County of Orange

ARNOLD, Judge. The issue here is whether plaintiff has a security interest which is superior to the tax liens of Orange County and the *497 Town of Chapel Hill. Requirements for an enforceable security interest in cases not involving land are (1) a writing; (2) the debtor’s signature; and (3) a description of the collateral. Evans v. Everett, 279 N.C. 352, 183 S.E. 2d 109 (1971). Also see 44 N.C.L. Rev. 716, 724. Several sections of the Uniform Commercial Code, G.S. 25-1-101 et seq., are relevant. The crucial section, G.S. 25-9-203(1) (b) provides: “ & security interest is not enforceable against . . . third parties unless . . . the debtor has signed a security agreement which contains a description of the collateral. ...” Other sections define the terms used in G.S. 25-9-203(1) (b). According to G.S. 25-1-201(3), an “ ‘Agreement’ means the bargain of the parties in fact as found in their language [or in ways irrelevant here]. Whether an agreement has legal consequences is determined by the provisions of this chapter, if applicable. ...” According to G.S. 25-9-105 (h), a “ ‘Security agreement’ means an agreement which creates or provides for a security interest.” And, according to G.S. 25-1-201(37), a “ ‘Security interest’ means an interest in personal property . . . which secures payment or performance of an obligation.” Finally, under G.S. 25-9-105 (d), a “ ‘Debtor’ means the person who owes payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral, . . . Where the debtor and the owner of the collateral are not the same person, the term ‘debtor’ means the owner of the collateral in any provision of the article dealing with the collateral, the obligor in any provision dealing with the obligation, and may include both where the context so requires.” The fact that the parties did not execute an instrument denominated as a “security agreement” is not necessarily fatal to plaintiff’s claim. An agreement is the “bargain of the parties in fact as found in their language.” G.S. 25-1-201(3). The requirement that the bargain be reduced to writing before it *498 becomes effective is in the nature of a statute of frauds. G.S. 25-9-203, Official Comment 5. So long as there is written language which makes and evinces the bargain, it does not matter that the writing is not denominated a security agreement. Evans v. Everett, supra. Our Supreme Court has held that a financing statement standing alone can serve as a sufficient memorandum of the security agreement, and that court further indicated that, as in other contracts involving a statute of frauds, two or more writings can be incorporated to satisfy the requirements of G.S. 25-9-203(1) (b). Evans v. Everett, supra. Also see, In re Amex-Protein Dev. Corp., 504 F. 2d 1056, (9th Cir. 1974); In re Numeric Corp., 485 F. 2d 1328, (1st Cir. 1973); In re Carmichael Enterprises, Inc., 334 F. Supp. 94, (N.D. Ga. 1971), aff'd 460 F. 2d 1405 (5th Cir. 1972). Assuming, arguendo, that the purchase agreement and note executed by C. Ray Downing, and the financing statement purportedly signed by Crowell Little Motor Company, Inc., taken together constitute a security agreement, in order to be effective these documents must be signed by the “debtor.” G.S. 25-9-203(1) (b). G.S. 25-9-105 (d) provides that if the debtor and the owner of the collateral are not the same person, “the term ‘debtor’ means the owner of the collateral in any provision . . . dealing with the collateral. ...” Since the security agreement must describe the collateral, it is a document “dealing with the collateral,” and, under G.S. 25-9-203(1) (b), must be signed by the owner of the collateral. The collateral in the case before us was owned by Crowell Little Motor Company, Inc. The name of that corporation appears only on one of the three documents, the financing statement. The financing statement is not signed by any corporate officer of Crowell Little Motor Company, Inc. G.S. 55-36(b) provides: “Any instrument purporting to create a security interest in personal property of a corporation, is sufficiently executed on behalf of the corporation if heretofore or hereafter signed in his official capacity by the president, a vice-president, the secretary, an assistant secretary, the treasurer, or an assistant treasurer. Any instrument so executed shall, with respect to the rights of innocent holders, be as valid as if authorized by the board of directors . . . . ” *499 In Realty Inc. v. McLamb, 21 N.C. App. 482, 204 S.E. 2d 880 (1974), G.S. 55-36 (a) was construed by this Court. That statute requires corporate deeds to be signed by the president and attested by the secretary of the corporation. It was held that a deed which was not attested by the corporate secretary was not a valid deed. In the instant case the typed name of Crowell Little Motor Company, Inc., on the financing statement was insufficient under G.S. 55-36 (b). Nowhere is the instrument signed by any corporate officer in his official capacity. Therefore, no security interest was created, and summary judgment was proper. Affirmed. Judges Morris and Clark concur.