## Facts

- On February 8, 1980, Kwik Serv Meats, Inc. (Kwik Serv) granted Beef & Bison Breeders, Inc. (Beef & Bison) a security interest in Kwik Serv’s personal property (including furniture, fixtures, equipment, and vehicles) to secure a promissory note.
- On February 20, 1980, Beef & Bison filed a financing statement in the New York Department of State, but did not file in the Albany County Clerk’s office.
- On April 4, 1980, Capitol Refrigeration Co., Inc. (Capitol) entered a judgment against Kwik Serv for about $701.
- On April 16, 1980, a property execution on Capitol’s judgment was delivered to the Albany County Sheriff for service on Kwik Serv.
- Patrick Cornell, the new owner of Kwik Serv’s former premises (700 New Loudon Road, Latham, New York), later obtained his own judgment against Kwik Serv (June 30, 1980) for about $4,469.
- On July 3, 1980, an execution on Cornell’s judgment was delivered to the Albany County Sheriff.
- On August 15, 1980, the sheriff levied on Kwik Serv’s tangible business assets pursuant to Capitol’s execution and scheduled a sheriff’s sale for August 25, 1980; the sale was temporarily stayed.
- The levied tangible property remained on Cornell’s premises, and Cornell asserted storage charges for the property kept there.
- On August 22, 1980, the sheriff levied on Kwik Serv’s bank accounts pursuant to Cornell’s execution; the accounts contained about $1,000.
- Beef & Bison brought a CPLR 5239 special proceeding seeking to vacate Capitol’s execution and levy, claiming priority based on its security interest.
- Cornell separately sought a determination that he had first priority to the bank-account funds because his execution produced the levy on those accounts.

## Issues

1. Whether Beef & Bison had a perfected security interest in Kwik Serv’s personal property, given that it filed only with the Department of State and not in the Albany County Clerk’s office, so as to take priority over Capitol’s rights as a judgment creditor enforcing by execution and levy.
2. Whether Cornell had priority to the proceeds of the bank-account levy because his execution led to the levy on that property, or whether Capitol had priority because its execution was delivered to the sheriff earlier.

## Decision

- The court denied Beef & Bison’s request to vacate Capitol’s execution and to void the levy on Kwik Serv’s tangible assets.
- The court held Beef & Bison’s security interest was not duly perfected because the financing statement was not filed in the Albany County Clerk’s office, which was required where the debtor had a single place of business in Albany County.
- As a result, Beef & Bison’s unperfected security interest was subordinate to Capitol’s rights as a judgment creditor enforcing by execution and levy.
- The court denied Cornell’s claim of first priority to the bank-account funds.
- Applying CPLR 5234(b), the court held that where multiple executions against the same debtor are delivered to the same enforcement officer, they are satisfied in the order delivered; because Capitol’s execution was delivered before Cornell’s, Capitol had priority to the proceeds of the bank-account levy.

## Legal Principles

- Under former N.Y. UCC § 9-401(1)(c), when the debtor has a single place of business in one New York county, a financing statement must be filed both with the Department of State and with the county clerk of that county to perfect a security interest.
- A security interest that is not perfected as required is subordinate to the rights of a lien creditor who proceeds by judgment execution and levy.
- Under CPLR 5234(b), when two or more executions are issued against the same judgment debtor and delivered to the same sheriff (or other enforcement officer), they are satisfied in the order of delivery to that officer.
- For competing executions delivered to the same enforcement officer, priority to proceeds is controlled by the order of delivery of executions, not by which creditor’s levy reached a particular asset first.

## Conclusion

The court held that Beef & Bison failed to perfect its security interest by omitting the required Albany County filing and therefore could not defeat Capitol’s enforcement lien, and it further held that Capitol—whose execution was delivered to the sheriff first—had priority over Cornell to the proceeds of the bank-account levy under CPLR 5234(b).


Beef & Bison Breeders, Inc. v. Capitol Refrigeration Co., Inc., 431 N.Y.S.2d 986 (1980)