## Facts

- Pro Transportation, Inc. executed a promissory note to Mercantile Bank of Arkansas (later Firstar Bank, N.A., then U.S. Bank, N.A.), secured by a mortgage.
- Bobby Eugene Fewell executed personal guaranties covering Pro Transportation’s obligations to the bank and its successors.
- Fewell later signed a collateral pledge agreement granting the bank a security interest in a $200,000 certificate of deposit (CD) titled in his name.
- The parties stipulated the CD qualified as a “deposit account” under Arkansas’s enactment of UCC Article 9.
- U.S. Bank had a perfected security interest in the CD by control and, after assignment, maintained continuous custody and control of the CD.
- U.S. Bank assigned to Beal Bank, S.S.B. the note and related security interests, including the guaranties and the pledge agreement.
- After default, foreclosure left a deficiency; Fewell filed bankruptcy.
- Beal Bank moved for relief from the automatic stay to enforce its security interest in the CD; Fewell and the unsecured creditors’ committee objected, arguing Beal Bank lacked control and therefore perfection.

## Issues

1. Whether, under Arkansas UCC Article 9, an assignee must independently obtain “control” of a deposit account to remain perfected after assignment.
2. Whether UCC § 9-310(c) continues perfection of a control-perfected security interest in a deposit account in favor of the assignee when the depositary bank’s control arrangement remains unchanged.
3. Whether the assignee established cause for relief from the automatic stay to proceed against the CD.

## Decision

- The court held Beal Bank’s security interest in the CD remained perfected after assignment.
- The court rejected the argument that Beal Bank had to obtain new, independent control to maintain perfection.
- The court granted Beal Bank relief from the automatic stay to pursue its remedies against the CD.

## Legal Principles

- A security interest in a “deposit account” is perfected only by control under UCC Article 9 (as enacted in Arkansas).
- The depositary bank where the deposit account is maintained has control for Article 9 purposes.
- Under UCC § 9-310(c) (Ark. Code Ann. § 4-9-310(c)), assignment of a perfected security interest does not require a new act (such as a new filing or other perfection step) to continue perfection in favor of the assignee.
- When the factual basis for control continues after assignment (here, the depositary bank’s continuous custody and control), the assignee takes the security interest with its perfected status intact.
- In bankruptcy, a creditor holding a valid perfected security interest may obtain relief from the automatic stay for cause under 11 U.S.C. § 362(d) to enforce its collateral rights.

## Conclusion

The court treated the assignment as a transfer of the secured party’s rights rather than a new security interest and held that, because the depositary bank’s control over the CD continued uninterrupted, perfection carried over to the assignee under UCC § 9-310(c), supporting relief from the automatic stay.


Beal Bank, S.S.B. v. Fewell (In re Fewell), 352 B.R. 98 (Bankr. E.D. Ark. 2006)