Horse Cave State Bank v. Nolin Production Credit Ass'n

GUDGEL, Judge: This is an appeal from a judgment entered by the Hart Circuit Court. The court found that appellee Nolin Production Credit Association (PCA) has a valid lien on the proceeds from the forced sale of certain personal property which is superior to appellant’s lien on the same proceeds. Appellant contends that the court erred by finding that PCA has a valid lien because the description of the covered collateral in its financing statement is insufficient to satisfy the requirements of KRS 355.9-110 as that statute was construed in Mammoth Cave Production Credit Association v. York, Ky., 429 S.W.2d 26 (1968). We disagree with appellant’s contention. Therefore, we affirm. The pertinent portion of PCA’s financing statement provides as follows: “all farm machindry (sic), including but not limited to tractor, plow and disc ... plus all property similar to that listed above which at any time may hereafter be acquired by the debtor and replacements of and additions to equipment and other personal property above described KRS 355.9-110, the statute which must be used to determine whether the quoted description is sufficient, provides as follows: For the purposes of this Article any description of personal property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described. (Emphasis added.) [67] Thus, the issue before us is whether the description in PCA’s financing statement reasonably identified the covered collateral. The court below was of the opinion that it did. We agree with the trial court. Appellant’s entire argument rests upon the decision in Mammoth Cave Production Credit Association v. York, supra. In that case, the description referred to “all farm equipment” and “all property similar to that listed above, which at any time may hereafter be acquired by the debtor.” While acknowledging that the code liberalized the rules relating to descriptions to allow flexibility, the court concluded that a description must at least identify the covered collateral in a manner that permits it to be distinguished and separated from other property. Applying this principle, the court held that a description which covered “all farm equipment” was simply too vague to reasonably identify the collateral. Appellant argues, therefore, that, if the description “all farm equipment” in the Mammoth Cave case was too vague, then the description in this case, “all farm machinery including but not limited to tractor, plow and disc,” is likewise too vague. We cannot agree. As noted by the court in the Mammoth Cave case, the description “all farm equipment,” without more, “covers everything but describes nothing.” Here, however, PCA’s description does not merely, state that it covers “all farm machinery” without more. Rather, the description includes the qualifying language “including but not limited to tractor, plow, and disc.” The qualifying language gave appellant and other persons notice that PCA’s financing statement was intended to cover any tractor, plow, and disc owned by the debtor as well as all similar farm machinery. In our opinion, such a description is sufficient to enable a creditor to reasonably identify the covered collateral. We hold, therefore, that the court did not err by finding that the description in PCA’s financing statement complied with the requirements of KRS 355.9-110. The judgment is affirmed. All concur.