## Facts

- Farmers Michael and Rhonda Borden granted Genoa National Bank a blanket security interest in all personal property, including after-acquired machinery and equipment.
- The bank perfected its security interest by filing a UCC financing statement with the Nebraska Secretary of State.
- The debtor later delivered a cornhead and a tractor to Bellamy’s Inc. for repairs.
- After repairs, the debtor could not pay; Bellamy’s retained possession of the equipment to secure payment, asserting an artisan’s lien under Nebraska law.
- The Bordens filed bankruptcy while Bellamy’s still held the equipment.
- Post-petition, the debtor took the equipment from Bellamy’s without authorization, used it, and later returned it to Bellamy’s.
- The bank sought a ruling that its perfected security interest had priority over Bellamy’s artisan’s lien; the bankruptcy court ruled for the bank, concluding the artisan’s lien required continuous possession and was lost when the debtor removed the equipment.

## Issues

1. Under Nebraska law, does an artisan lose a possessory artisan’s lien when the debtor wrongfully removes the repaired goods from the artisan’s possession without consent?
2. If the lien is not lost, is the debtor’s later return of the goods necessary to preserve or reestablish the artisan’s lien?
3. Does the artisan’s lien on the repaired goods have priority over a prior perfected blanket security interest held by a lender?

## Decision

- The Bankruptcy Appellate Panel reversed the bankruptcy court.
- The panel held Bellamy’s did not lose its artisan’s lien when the debtor wrongfully took the equipment.
- The panel held the debtor’s later return of the equipment was not necessary for Bellamy’s to have a valid lien.
- The panel held Bellamy’s artisan’s lien had priority over Genoa National Bank’s perfected blanket security interest as to the repaired equipment.

## Legal Principles

- An artisan’s lien arising from lawful possession for repairs is not extinguished by an unauthorized, wrongful loss of possession caused by the debtor, because the lienholder did not voluntarily surrender the collateral.
- A “continuous possession” requirement does not defeat an artisan’s lien where possession is interrupted only by the debtor’s wrongful taking without the artisan’s consent.
- When an artisan’s lien is not forfeited by voluntary relinquishment, it takes priority in the improved goods over a lender’s earlier perfected blanket security interest, as recognized under applicable Nebraska lien law.

## Conclusion

The appellate panel held that a repairer’s artisan’s lien survives a debtor’s unauthorized removal of the repaired goods and retains priority over a bank’s prior perfected blanket security interest in the specific repaired equipment, without regard to the debtor’s later return of the property.


In re Borden, 361 B.R. 489 (B.A.P. 8th Cir. 2007)