ITT Indus. Credit Co. v. Regan - 487 So. 2d 1047 (Fla. 1986)

Rule:

Fla. Stat. ch. 679.312(5) provides that, in the event of a conflict between two secured parties claiming a security interest in the same collateral, the first to file a financing statement gains priority. Fla. Stat. ch. 679.312(4) (Supp. 1984) sets forth a specific exception to the rule, however, by giving purchase money security interests priority over other security interests in the same collateral, provided the purchase money interest is perfected by filing within a designated period after the debtor takes possession of the goods.

Facts:

Respondent was a holder of a mortgage and security agreement on a Jacksonville hotel property which, in an after-acquired property clause, granted to him all of the right, title and interest of the mortgagor in any such personal property or fixtures subject to a conditional sales contract, chattel mortgage or similar lien or claim together with the benefit of any deposits or payments made by the mortgagor or on its behalf. The hotel purchased computer equipment financed by petitioner, ITT Industrial Credit. Respondent sought to foreclose his mortgage on the hotel property and alleged that his interest in the after-acquired computer equipment was superior to petitioner’s interest under its purchase money lien. In response, petitioner asserted its lien was superior and that the after-acquired property clause in respondent’s mortgage, by its terms, rendered respondent’s interest subject to petitioner’s purchase money lien. The trial court entered summary judgment for petitioner, construing the mortgage to exclude personal property liens such as petitioner’s. The district court reversed and held that petitioner's purchase money lien was subordinate to respondent mortgage holder's lien on after acquired property. Petitioner appealed. 

Issue:

Was the respondent’s security interest entitled to priority over petitioner’s purchase money security interest? 

Answer:

Yes, if petitioner failed to perfect within the 10-day grace period provided by Fla. Stat. ch. 679.312(4) (Supp. 1984).

Conclusion:

The court affirmed and remanded and found that respondent's security interest was entitled to priority over petitioner's purchase money security interest only if petitioner failed to perfect within the 10-day grace period provided by Fla. Stat. ch. 679.312(4) (Supp. 1984). The court held that upon remand, if the trial court determined that petitioner was not entitled to the purchase money priority because of late filing, the priority problem was to be resolved under ch. 679.312(5), and respondent was entitled to priority over petitioner in the after acquired property without regard to the debtor's equity in the property.