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04/13/94 FIRST NATIONAL BANK TOLEDO v.

April 13, 1994

THE FIRST NATIONAL BANK IN TOLEDO, A NATIONAL BANKING CORPORATION, PLAINTIFF-APPELLEE,
v.
EFFINGHAM-CLAY SERVICE COMPANY, DEFENDANT-APPELLANT.



Appeal from Circuit Court of Cumberland County. No. 92L4. Honorable H. Dean Andrews, Judge Presiding.

As Corrected May 9, 1994. Released for Publication June 1, 1994.

Honorable Carl A. Lund, J., Honorable Robert W. Cook, J., Honorable Robert J. Steigmann, J.

The opinion of the court was delivered by: Lund

JUSTICE LUND delivered the opinion of the court:

Jerry Sherwood, a farmer living on a rural route near Greenup, Illinois, borrowed money from the First National Bank in Toledo (Bank), plaintiff, pledging his 1991 corn, soybeans, and wheat crops as security. Adequate security documentation was duly filed with the Cumberland County clerk's office (Greenup and Toledo are both located in Cumberland County). Sherwood executed a document stating that he sold his various grain crops to defendant Effingham-Clay Service Company (Effingham-Clay Service), Greenup Elevator in Greenup. A notice of security interest dated May 1, 1991, was sent by certified mail from the Bank to Effingham-Clay Service on May 2, 1991. It was received on May 5, 1991. This notice directed Effingham-Clay Service to include the Bank's name on any check made payable to Sherwood for 1991 crops sold. Effingham-Clay Service did not include the Bank's name on the checks used to compensate Sherwood for the sale of 1991 crops, Sherwood did not use the funds from the grain sales to pay the Bank loans, and the Bank brought this action.

Effingham-Clay Service defended, contending the notice it received from the Bank was insufficient because it did not set forth the "county" where the crops were grown and failed to provide "a reasonable description of the property" as required by section 9-307.1(a)(ii)(IV) of the Uniform Commercial Code--Secured Transactions (Code) (810 ILCS 5/9-307.1(a)(ii)(IV) (West 1992)).

Entering judgment for the Bank, the Judge of the circuit court of Cumberland County made the following statement:

"I find further that the description required under 810 USC [sic] 5/9-307(4)(a)(ii)(IV) [sic] is sufficient. The notice reasonably describes the farm products that are secured. It further provides that those products are secured 'wherever located.' I find that it is not necessary to include a legal description of the land on which the grain is produced in the notice of security interest under 810 ILCS 5/9-307(4)(a) [sic]. The financing statement needed to perfect a security interest in crops must have a legal description of the land. It is intended to be a public record that can be recorded and indexed in the Recorder's Records. The notice of security interest is intended to be a document that obviates the necessity of the buyer of grain making a search of the County Clerk's records every time a sale of grain is contemplated. A legal description of the land would not further that purpose in any way. It can also be reasonably determined by the Greenup address of Sherwood that the Notice deals with grain to be sold in Cumberland County. Where the grain is produced is irrelevant for the purposes of the notice. The place and entity of sale is important."

Applicable portions of section 9-307.1 of the Code provide:

"A commission merchant or selling agent who sells a farm product for others shall be subject to a security interest created by the seller in such farm product if--

(a) within one year before the sale of the farm products, the buyer has received from the secured party or the seller written notice of the security interest organized according to farm products that:

(i) is an original or reproduced copy thereof;

(ii) contains,

(I) the name and address of the ...


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