Hassell v. First Pennsylvania Bank, NA

254 S.E.2d 768 (1979)

Charles R. HASSELL, Jr., Trustee for the Home Indemnity Company v. FIRST PENNSYLVANIA BANK, N.A.

No. 782SC686.

Court of Appeals of North Carolina.

May 15, 1979.

*769 Davis, Hassell, Hudson & Broadwell by Charles R. Hassell, Jr. and Donald A. Davis, Raleigh, for plaintiff-appellant.

Spruill, Trotter & Lane by Will H. Lassiter III, Rocky Mount, for defendant-appellee.

HARRY C. MARTIN, Judge.

In order for plaintiff to succeed on this appeal his levy of 14 October 1977 must relate back to the filing of the financing statement on 21 January 1971. N.C.Gen. Stat. 25-9-501(5). It is black letter law that plaintiff, as assignee, has no greater rights than his assignor. Koehring failed to file a continuation statement with respect to its financing statement against Seacrest. Therefore, plaintiff's financing statement lapsed on 21 January 1976 and the security interest became unperfected. N.C.Gen. Stat. 25-9-403(2). Plaintiff contends the effect of the judgment levy should relate back to the filing date of the financing statement, even though the financing statement has lapsed by the passage of the five year period, and the security interest has become unperfected. Plaintiff argues that upon beginning an action to enforce the security interest within the five year period, it is not necessary to file a continuation statement to maintain the priority of the security interest.

Plaintiff relies upon Chrysler Credit Corp. v. United States, 24 U.C.C. Reporting Service 794 (U.S. District Court, E.D.Va., 3 March 1978). Chrysler had filed a financing statement 9 October 1967 and a continuation statement 7 July 1972, giving it a perfected claim against debtor at the time the United States filed its tax lien 27 April 1976. The Court held the filing of the lawsuit against the United States, for the purpose of determining the priority of the parties to the debtor's assets, gave notice to *770 United States of Chrysler's claim and tolled the obligation of Chrysler to file another continuation statement with respect to the defendant, United States.

In the Chrysler case the very purpose of the litigation was to determine priority of liens between Chrysler and the United States. The problem of relation back under Section 25-9-501(5) of the Uniform Commercial Code was not before the Court. Here, plaintiff seeks to maintain his priority by virtue of the judgment against the debtor Seacrest, not by judgment against defendant bank.

We hold the lien by levy pursuant to judgment does not relate back to the filing date of the financing statement when the security interest has become unperfected by the lapse of time under N.C.G.S. 25-9-403(2). See Stearns Mfg. Co., Inc. v. National Bank and Trust Co. of Central Pennsylvania, 12 U.C.C. Reporter 189 (1972).

Plaintiff's levy under the judgment was on 14 October 1977, more than two weeks after Seacrest's interest in the property had been extinguished by the public sale. No lien attached as to the personal property by reason of the docketing of the judgment in Beaufort County. A lien only attaches on personal property upon levy of execution. Hardware Co. v. Jones, 222 N.C. 530, 23 S.E.2d 883 (1943).

The trial court correctly held defendant's lien was superior to plaintiff's claim, and the entry of summary judgment for defendant was appropriate.

The judgment of the Superior Court is

Affirmed.

VAUGHN and ERWIN, JJ., concur.