Albany Discount Corp. v. Mohawk Nat. Bank, 28 N.Y.2d 222 (1971)
Under UCC § 9-302(1)(d), a mobile home that is required to be licensed or registered as a motor vehicle under state law is considered a motor vehicle, thus requiring a financing statement to be filed to perfect a purchase money security interest, even if the home is primarily used as a residence.
Summary
Albany Discount Corporation (ADC) sought to recover a mobile home from Mohawk National Bank, which had seized it after a default by a subsequent possessor who mortgaged it. ADC had an earlier retail installment contract, properly filed but not refiled as required by pre-UCC law. The court addressed whether a mobile home is a “motor vehicle” under UCC § 9-302(1)(d), which would require filing a financing statement to perfect a security interest. The court held that the mobile home was a motor vehicle because it was required to be licensed or registered under the Vehicle and Traffic Law, and thus ADC’s failure to properly refile its financing statement resulted in the bank having a superior lien.
Facts
The La Pumees purchased a mobile home in April 1962 for personal use. The mobile home was 50 feet long and 10 feet wide, containing five furnished rooms. They executed a retail installment contract, which was assigned to Albany Discount Corporation (ADC) on the same day. ADC filed the contract on April 30, 1962, but did not refile it in May 1965, as required by the then-applicable Personal Property Law. A subsequent possessor mortgaged the mobile home to Mohawk National Bank in February 1966. After a default, the bank seized the mobile home, prompting ADC to sue for conversion.
Procedural History
The lower court ruled in favor of Mohawk National Bank, finding that ADC had not maintained its lien against subsequent lienors due to its failure to refile the financing statement. The Appellate Division affirmed this decision. ADC appealed to the New York Court of Appeals.
Issue(s)
Whether a mobile home is a “motor vehicle” required to be licensed or registered under state law, as contemplated by UCC § 9-302(1)(d), such that a financing statement must be filed to perfect a purchase money security interest.
Holding
Yes, because the Vehicle and Traffic Law requires house trailers to be licensed or registered if operated on highways, a mobile home falls within the definition of “motor vehicle” under UCC § 9-302(1)(d), thereby requiring the filing of a financing statement to perfect a purchase money security interest.
Court’s Reasoning
The court reasoned that under UCC § 9-302(1)(d), a purchase money security interest in consumer goods is automatically perfected without filing, unless the goods are “motor vehicles” required to be licensed or registered. The court looked to the Vehicle and Traffic Law, which includes house trailers (mobile homes) as vehicles requiring registration when operated on the highway. The court emphasized a functional approach, noting that the Vehicle and Traffic Law focuses on public safety and revenue, while Article 9 of the UCC concerns credit transactions. The court stated that the filing requirement for motor vehicles under the UCC reflects pre-code experience that motor vehicles are chattels of greater value, more likely to be refinanced or resold, and thus likely to remain in the stream of commerce. The court also highlighted that most states with title certification statutes include house trailers. The court explicitly stated, “Consequently, the code test is satisfied if the mobile home may be registered as a motor vehicle and the mobile home need not in fact have been registered.” While acknowledging commentary suggesting that larger, less frequently moved mobile homes might warrant different treatment, the court concluded that legislative action would be necessary to establish clear distinctions based on size, equipment, or weight. The court specifically agreed with the holding in In re Vinarsky and disagreed with Recchio v. Manufacturers & Traders Trust Co. The court affirmed the lower courts’ decisions, holding that the bank was entitled to summary judgment because ADC failed to maintain its lien against subsequent lienors by not refiling its financing statement.