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Peterson v. Ziegler

OPINION FILED JUNE 11, 1976.

RALPH PETERSON, D/B/A PETERSON'S MOBILE HOME SALES, PLAINTIFF AND THIRD-PARTY DEFENDANT-APPELLANT,

v.

RICHARD L. ZIEGLER ET AL., DEFENDANTS. — (R.C. HUDLER, INTERVENING THIRD-PARTY PLAINTIFF-APPELLEE.)



APPEAL from the Circuit Court of Montgomery County; the Hon. WILLIAM H. SPITLER, JR., Judge, presiding.

MR. JUSTICE GEORGE J. MORAN DELIVERED THE OPINION OF THE COURT:

The plaintiff, Ralph Peterson, appeals from a judgment of the circuit court of Montgomery County which held that an intervenor, R.C. Hudler, was entitled to the possession of a house trailer sold by the plaintiff to the defendants, Richard and Marie Ziegler.

The principal question in this appeal is whether an application for a certificate of title for a house trailer, which indicated the existence of a lien on the trailer and which was signed by the purchaser of the trailer, constituted a security agreement within the meaning of section 9-203 of the Uniform Commercial Code (Ill. Rev. Stat. 1969, ch. 26, par. 9-203) between the seller and purchaser.

The plaintiff is a dealer in mobile homes, that is, house trailers. On November 4, 1970, the plaintiff and defendants executed a contract for the sale of a trailer for a cash price of $12,085 and a finance charge of $7245. Defendants made a down payment of $1735. The contract provided that defendants' payment of the balance of the purchase price was to be secured by a mortgage on land. It said nothing about creating a security interest.

When the sales contract was executed, the land which the defendants were to mortgage to the plaintiff was owned by R.C. Hudler. It was a 160-acre farm which the defendants worked under an agreement with Hudler. The defendants had a contract for deed with Hudler with respect to the farm. They intended to acquire the farm and then to mortgage the farm to the plaintiff.

By the end of November, 1970, the plaintiff delivered the trailer to the farm. The defendants had poured a concrete slab. The trailer was set on concrete blocks which rested on the slab. The plaintiff removed the trailer's wheels. The defendants supplied the trailer with water and electricity and then began to reside there.

Because of the defendants' inability to make timely payments on the farm, Hudler canceled the contract for deed. Hudler agreed to lease the 160 acres to the defendants for $6000 rent per year. The defendants were thus not able to mortgage the farm to the plaintiff.

On May 12, 1971, the plaintiff and defendant Richard Ziegler cooperated in filling out an application for a certificate of title for the house trailer. The plaintiff printed on the application the make, model, and serial number of the house trailer. The plaintiff also caused the application to show that he had a security interest in the trailer in the amount of $17,595. Defendant Richard Ziegler signed the application and filed it with the Illinois Secretary of State. A certificate of title was issued for the trailer on June 1, 1971, which revealed the existence of the plaintiff's security interest in the trailer. The defendants had difficulty in making the payments on the house trailer, and they defaulted on a number of payments. On March 25, 1974, the plaintiff filed a complaint under "An Act to revise the law in relation to replevin" (Ill. Rev. Stat. 1973, ch. 119, pars. 1-28) and sought the return of the house trailer.

On May 2, 1974, Hudler filed with the circuit court of Montgomery County a distress warrant, in accordance with section 17 of "An Act to revise the law in relation to landlord and tenant" (Ill. Rev. Stat. 1973, ch. 80, par. 17), which alleged that the defendants owed Hudler $12,000 rent on the farm. Hudler requested that the defendants' personal property on the farm be seized as security for payment of the rent.

Hudler then filed a petition to intervene in the plaintiff's action for replevin of the house trailer. His petition alleged that he was entitled to the possession of the trailer because of the defendants' failure to pay their rent. Hudler was allowed to intervene.

After a trial, the circuit court made an order on March 7, 1975, which awarded Hudler possession of the trailer. The defendants have not appealed from the order.

The plaintiff contends that he had a perfected security interest in the trailer before the landlord's lien arose, and that his interest should be given priority over Hudler's interest. Hudler argues in response that no security interest for the plaintiff was ever created in the trailer because the defendants did not sign a security agreement, as required by section 9-203 of the Uniform Commercial Code (Ill. Rev. Stat. 1969, ch. 26, par. 9-203).

The intervenor, Hudler, does not argue that the trailer was a fixture on his land. Thus the question whether Hudler owned the trailer by reason of its being a fixture need not be considered. Moreover, as a result, the complicated passages of section 9-313 of the Uniform Commercial Code (Ill. Rev. Stat. 1969, ch. 26, par. 9-313), dealing with the perfection of security interests in fixtures, do not apply to this case.

Three problems typically arise when a creditor asserts that he has a security interest in personal property owned by his debtor. These problems are whether a valid security interest has been created which is enforceable by the creditor against the debtor, whether the security interest has been perfected by the creditor so that it is generally enforceable by the creditor against third parties, and whether the security interest has priority over other liens and security interests in the personal property. All these questions are usually answered by recourse to article ...


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