Summary of Opinion — In the Matter of Loren Leo Maples and Grace Carolyn Maples; C.I.T. Financial Services Corp. v. Maples

Factual and Procedural Background

On August 3, 1983, the court entered a final judgment granting the plaintiff's complaint for relief from the automatic stay unless, within 45 days (or such additional time as the court might grant), the defendants or the trustee cured arrearages owed to the plaintiff. On August 22, 1983, the defendant trustee in bankruptcy filed a "motion for rehearing" asserting that the judgment failed to address affirmative defenses raised by the trustee: (a) that no financing statements were supplied showing signatures by the debtors; (b) that the financing statements were filed in the name "Maples Machine Shop and Welding" rather than in the debtors' names as required by Section 400.9-402; and (c) that the creditor must demonstrate a perfected security interest before a complaint to lift the stay can be granted because, absent perfection, the asset might be available to unsecured creditors. The court considered the trustee's motion and issued the present order denying it.

Legal Issues Presented

Whether the trustee's "motion for rehearing" was timely under Rule 59, F.R.Civ.P., and therefore subject to consideration.
Whether the financing statements lack the debtors' signatures such that the security interest is unperfected.
Whether the filing of financing statements under the trade name "Maples Machine Shop and Welding" rather than the debtors' legal names rendered the filings fatally defective under Section 400.9-402.
Whether a financing statement signed by only one debtor (Loren Leo Maples) is insufficient to perfect a security interest when there are two debtors.
Whether a creditor must demonstrate a perfected security interest before a court may grant relief from the automatic stay.

Arguments of the Parties

Trustee's Arguments

The judgment did not address the trustee's affirmative defenses regarding perfection of the plaintiff's security interest.
The financing statements supplied by the plaintiff were not signed by the debtors.
The financing statements were filed in the trade name "Maples Machine Shop and Welding" rather than in the debtors' names, in violation of Section 400.9-402.
The creditor must demonstrate a perfected security interest before a complaint to lift the automatic stay can be granted because, if the security interest is unperfected, the collateral may be available to unsecured creditors.

Plaintiff's Response (as reflected in the opinion)

Copies of financing statements submitted to the court show the debtor's signature (described as vaguely visible on the originals and more visible on documents filed August 5, 1983, after the judgment).
By implication in filings and the court's review, the trade name used on the financing statements was sufficiently related to the debtors' names to give notice to a searcher under "Maples."
Pleadings and documents on file suggested that a single debtor's signature was adequate to perfect the security interest absent proof that the signing debtor did not own the collateral or lacked authority to sign for both debtors.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Matter of Gerdes, 33 B.R. 531 (Bkrtcy.W.D.Mo. 1983)	Explains timeliness requirements for Rule 59(e) motions and that courts generally lack power to extend the time for filing such motions.	Used to support conclusion that the trustee's motion, filed far more than ten days after judgment, was untimely and not actionable under Rule 59(e).
United States v. Hall, 463 F. Supp. 787, 791, n.1 (W.D.Mo. 1978), affirmed, 588 F.2d 1214 (8th Cir. 1978)	Stated that courts generally lack power to extend time for Rule 59(e) motions and that Rule 60(b) cannot be used to avoid Rule 59(e) time limits absent exceptional circumstances.	Relied upon to reinforce the untimeliness determination and the inapplicability of Rule 60 to avoid Rule 59(e) deadlines in this context.
In re Hammons, 438 F. Supp. 1143, 1151 (S.D.Miss. 1977)	Filing under a trade name only is generally defective where the trade name materially differs from the debtor's real name.	Quoted to frame the standard for when a trade name filing is defective; court applied the distinction to find no material difference here.
Matter of Clairmont Pharmacy, Inc., 8 B.R. 695, 696 (Bkrtcy.N.D.Ga. 1981)	A financing statement is sufficient if the trade name is sufficiently related to the debtor's real name so as to give notice to searches.	Applied to conclude that filing under "Maples Machine Shop and Welding" would have been found by a search under "Maples," so the error was minor and did not destroy perfection.
In re Leichter, 471 F.2d 785, 787 (2d Cir. 1972)	Support for the proposition that slight name differences that would alert a searcher do not defeat perfection.	Referenced as analogous authority to show minor name discrepancies do not fatally impair perfection.
In re Firth, 363 F. Supp. 369, 372, n.5 (M.D.Ga. 1973)	The distinction is whether the name on the financing statement is only slightly different (placing searchers on notice) or materially different (fatally defective).	Used to emphasize the "slight difference" standard; court found the Maples filing only slightly different and adequate.
In re Thomas, 466 F.2d 51, 53, n.3 (9th Cir. 1972)	If the name on the statement is materially different from the debtor's real name, the filing is fatally defective.	Cited to support the proposition that only materially different names are fatal; court determined the present filing was not materially different.
Citizens Bank v. Ansley, 467 F. Supp. 51, 54 (M.D.Ga. 1979), affirmed, 604 F.2d 669 (5th Cir. 1979)	Holds contrary authority where the name on the financing statement is a business but the true debtor is an individual who never did business under that trade name; such an entry can be seriously misleading.	Distinguished: court noted Ansley involved a debtor who never did business under the trade name; here there was no offer to show the debtors did not do business under the trade name and that entity was also a debtor in the proceeding.
Anno., Security Agreement — Designation of Debtor, 99 A.L.R.3d 478, 496	Collects cases concerning designation of debtor on financing statements.	Referenced as a source of collected authority on the subject; used to support the court's review of the authorities.
Matter of Bergsieker, 30 B.R. 757 (Bkrtcy.W.D.Mo. 1983)	Holds that, absent proof the signing debtor was not the sole owner of the collateral or lacked authority to sign for both debtors, a single debtor's signature is sufficient to perfect the security interest.	Applied to reject the trustee's contention that the financing statement was unperfected because only Loren Leo Maples signed; court found no showing that the signing debtor did not own the collateral or lacked authority.

Court's Reasoning and Analysis

The court's analysis proceeded in two independent parts.

Timeliness. The court first addressed whether the trustee's motion was timely under Rule 59, F.R.Civ.P. It found the motion was not filed or served within ten days of the judgment as required by Rule 59 and therefore could not constitute a timely motion the court could grant. The court relied on its prior statement of law in Matter of Gerdes and United States v. Hall to conclude that the court generally lacks power to extend the time to file a Rule 59(e) motion and that Rule 60 cannot be used to avoid Rule 59(e) time limits absent exceptional circumstances. Because the trustee filed the motion far beyond the Rule 59 period, the court determined it was untimely.
Merits. Independently of timeliness, the court examined the trustee's substantive objections and found them meritless:
- Signature: The court observed the debtor's signature was "vaguely visible" on the financing statement copies submitted and more visible on documents filed by the plaintiff on August 5, 1983 (post-judgment). Thus, the contention that financing statements lacked a signature was rejected.
- Trade-name filing: The court applied authorities distinguishing between trade-name filings that are materially misleading and those sufficiently related to the debtor's name to give notice. Citing cases such as In re Hammons, Matter of Clairmont Pharmacy, In re Firth and others, the court concluded that a search under "Maples" would reveal the security interest. Therefore, filing under "Maples Machine Shop and Welding" was a minor error, not fatal to perfection, and did not constitute serious misleading under the circumstances (and there was no showing the debtors did not do business under that name).
- Single signature sufficiency: The court relied on Matter of Bergsieker to hold that, absent proof the signing debtor did not own the collateral or lacked authority to sign for both debtors, a single debtor's signature is sufficient to perfect the security interest. No such showing was made here, so this contention failed.

Holding and Implications

DENIED. The court ordered that the motion of the defendant trustee in bankruptcy "for rehearing" be, and it is hereby, denied.

Implications: The trustee's motion was denied both because it was untimely under Rule 59, F.R.Civ.P., and because the substantive defenses asserted were without merit based on the court's review of the financing statements and applicable authority. The prior final judgment granting the plaintiff relief from the automatic stay (subject to the 45-day cure provision) remains in effect. The opinion does not announce a new broad rule beyond its application of existing precedent; its effect here is to preserve the prior judgment and to reject the trustee's asserted defects in perfection.

Show full summary ...

In the Matter of Loren Leo MAPLES and Grace Carolyn Maples, Debtors. C.I.T. FINANCIAL SERVICES CORP., Plaintiff, v. Loren Leo MAPLES and Grace Carolyn Maples, and Thomas J. Carlson, trustee in bankruptcy, Defendants.

ORDER DENYING THE MOTION OF THE TRUSTEE IN BANKRUPTCY "FOR REHEARING"

DENNIS J. STEWART, Bankruptcy Judge.

On August 3, 1983, this court entered its final judgment in this action granting the plaintiff's complaint for relief from the automatic stay unless, within 45 days or within such additional time as the court may grant, the defendants or the trustee cure arrearages owed to the plaintiff.

On August 22, 1983, the defendant trustee in bankruptcy filed a "motion for rehearing," complaining that "the judgment did not address the affirmative defenses raised by the trustee, to-wit: (a) that there are no financing statements supplied by the plaintiff showing that they were signed by the debtors; (b) that the financing statements were filed in the name of Maples Machine and Welding rather than the name of the debtors as required by Section 400.9-402; and (c) that the creditor has to demonstrate that it has a perfected security interest before a complaint to lift stay can be granted for the reason that if it does not there may be an asset available to the unsecured creditor."

The motion must be denied, both as untimely and on its merits. It was neither filed nor served within ten days of the judgment, as required by Rule 59, F.R.Civ.P., and therefore cannot constitute a timely motion which the court could grant.

This court has recently set out the applicable law in Matter of Gerdes, 33 B.R. 531 (Bkrtcy.W.D.Mo. 1983), to the following effect: "The court is initially faced with the issue of timeliness of assertion of the motion, far more than ten days following the judgment as described in Rule 59, F.R.Civ.P., in permitting the filing of motions to alter or amend judgment or for a new trial. Further, it `has generally been held (that) the Court is without power to extend the time in which a party may make a Rule 59(e) motion.' United States v. Hall, 463 F. Supp. 787, 791, n. 1 (W.D.Mo. 1978), affirmed, 588 F.2d 1214 (8th Cir. 1978). Although Rule 60, F.R.Civ.P., prescribes longer time periods for seeking relief from judgment, it does not appear applicable in the action at bar. A party `may not avoid the time limitation imposed by Rule 59(e) by filing his motion pursuant to Rule 60(b).' Id. It does not therefore appear, in the absence of the exceptional circumstances described in Rule 60, that the court can take any action because of the untimeliness of the motion."

But, separately and independently, the motion is also without merit. The signature of the debtor is vaguely visible on the copies of financing statements submitted to the court. It is even more visible on documents filed by the plaintiff on August 5, 1983, after the rendition of the former judgment. It appears therefore that the contention that the financing statements lack a signature is without merit and must be denied.

Next, it is contended that the financing statements were filed in the name of "Maples Machine Shop and Welding" rather than in the name of the debtors. The rule in this regard is that "filing under a trade name only is generally defective where the trade name materially differs from the debtor's real name." In re Hammons, 438 F. Supp. 1143, 1151 (S.D.Miss. 1977) (Emphasis added.). Where the trade name is "sufficiently related to the name of the bankrupt . . . so as to give notice of a possible prior existing security interest to anyone searching the records," it is sufficient to perfect the security interest. Matter of Clairmont Pharmacy, Inc., 8 B.R. 695, 696 (Bkrtcy.N.D.Ga. 1981), and cases there cited. In this case, when the search of an index under "Maples" would have revealed the existence of the security interest, the error is only minor and cannot serve to destroy perfection of the security interest. Cf. In re Leichter, 471 F.2d 785, 787 (2d Cir. 1972). "(T)he distinction drawn in the reported decisions is whether the name as it appears on the financing statement is only slightly different than the debtor's real name in which case parties searching the records would be placed on notice by such entry." In re Firth, 363 F. Supp. 369, 372, n. 5 (M.D.Ga. 1973). Only "if the name on the statement is materially different from the debtor's real name (is) the filing . . . fatally defective." In re Thomas, 466 F.2d 51, 53, n. 3 (9th Cir. 1972). Citizens Bank v. Ansley, 467 F. Supp. 51, 54 (M.D.Ga. 1979), affirmed, 604 F.2d 669 (5th Cir. 1979), seems to be contrary authority when the name on the financing statement is a business and the true debtor is an individual, but there is no offer to show in this case that the debtors did not do business under the name of "Maples Machine Shop and Welding" and in fact that entity is also a debtor in this same proceeding. But, in the Ansley case, supra, it was found that "Mr. Ansley is not a farmer, has never engaged in the farming business and has never done business under the trade name Ansley Farms" and therefore the name "Ansley Farms" on the financing statement was seriously misleading. 467 F. Supp. at 52. And see cases collected in Anno., Security Agreement — Designation of Debtor, 99 A.L.R.3d 478, 496. Under the circumstances of this action, it cannot be said that the designation of the debtor was seriously misleading or a major error or that it would not have given reasonable notice of the claim of perfection. This contention must therefore be denied.

It seems next to be suggested that the security interest must be deemed to be unperfected because it contains the signature of only Loren Leo Maples instead of the signature of both debtors. But this court has recently held, in Matter of Bergsieker, 30 B.R. 757 (Bkrtcy.W.D.Mo. 1983), that, in the absence of proof that the signing debtor was not the sole owner of the property constituting the collateral or that he did not have authority to sign on behalf of both debtors, a single debtor's signature is sufficient to perfect the security interest. "This is especially so in a case such as that at bar, in which the security interest appears valid and perfected on its face and extrinsic evidence is necessary to show otherwise." 30 B.R. at 760. There has been no statement or showing that the signing debtor does not own the property pledged as collateral or that, if it is contended that both debtors own the property, he did not have authority from the other debtor to sign for both of them. Accordingly, this contention must also be denied.

For the foregoing reasons, because the motion for rehearing was untimely filed and because it is also meritless, it will be denied. It is hereby

ORDERED that the motion of the defendant trustee in bankruptcy "for rehearing" be, and it is hereby, denied.

MATTER OF MAPLES, (Bankr.W.D.Mo. 1983)