## Facts

- Ronald J. Grabowski and Trenna R. Grabowski owned and operated a farm in Illinois and, beginning in 1993, also owned a John Deere dealership known as Grabowski Tractor–Benton, Inc.
- The dealership operated from a Benton, Illinois business location; the Grabowskis later sold the dealership in 1999, and Trenna continued an accounting practice at the same Benton address.
- The Grabowskis borrowed money from Bank of America (BoA) and from South Pointe Bank (South Pointe).
- In 1998, BoA filed a UCC-1 financing statement naming the debtors as “Ronald J. Grabowski” and “Trenna R. Grabowski.”
- BoA’s financing statement described the collateral by category as “all inventory, chattel paper, accounts, equipment, and general intangibles,” and it listed the Benton business address associated with the dealership rather than the Grabowskis’ home/farm address.
- In 2000, South Pointe filed its own UCC-1 financing statement naming the same individual debtors and listing the Grabowskis’ home address.
- South Pointe’s financing statement specifically identified various farm equipment as collateral, including three disputed items: a John Deere 925 flex platform, a John Deere 4630 tractor, and a John Deere 630 disk.
- In 2001, the Grabowskis filed Chapter 11 and brought an adversary proceeding to determine the validity, extent, and priority of liens on their farm equipment.
- The lien disputes with other creditors were resolved by stipulation, leaving a single contested priority dispute between BoA and South Pointe as to the three pieces of equipment.
- South Pointe argued BoA’s earlier filing was ineffective as to the three items because (i) the collateral description was too general and (ii) using the Benton business address would lead a later lender to think the filing related only to dealership-related property, not farm equipment kept at the home/farm.

## Issues

1. Whether BoA’s UCC-1 financing statement, using a broad collateral description by type (including “equipment”), sufficiently indicated collateral to perfect a security interest in the debtors’ farm equipment under Illinois Article 9.
2. Whether listing the debtors’ business address (rather than their home/farm address) made BoA’s financing statement misleading so that it failed to perfect as to the farm implements.

## Decision

- The court held BoA’s 1998 financing statement sufficiently indicated the collateral and perfected BoA’s security interest in the three disputed pieces of farm equipment.
- The court ruled that Article 9’s notice-filing system does not require a financing statement to itemize each piece of machinery; identifying collateral by recognized UCC categories, including “equipment,” is adequate to alert later creditors that a security interest may exist.
- The court rejected South Pointe’s argument that the Benton business address restricted the filing to dealership property or otherwise defeated perfection; the address served as contact information and did not limit the collateral.
- Because BoA filed first and its filing was effective, BoA had priority over South Pointe’s later-filed financing statement as to the John Deere 925 flex platform, the John Deere 4630 tractor, and the John Deere 630 disk.

## Legal Principles

- Article 9 financing statements are designed for notice filing: they signal that the debtor’s property may be subject to a security interest and invite further inquiry, rather than providing a complete collateral inventory.
- A financing statement can sufficiently indicate collateral by listing collateral types (such as “equipment”) instead of listing each item, so long as the description alerts later creditors to the possibility of a lien.
- The debtor’s name is the primary identifier for search and notice purposes; an address on the financing statement is generally contact information and does not, by itself, narrow the scope or location of the collateral.
- When competing security interests are perfected, priority generally goes to the secured party that first filed a compliant financing statement (first-to-file-or-perfect).

## Conclusion

In re Grabowski holds that Bank of America’s earlier UCC-1—naming the individual debtors, describing collateral by broad UCC categories including “equipment,” and listing a business address—was effective to perfect a security interest in the debtors’ farm implements, so BoA’s 1998 filing had priority over South Pointe Bank’s later, more specific 2000 filing for the three disputed items.


In re Grabowski, 277 B.R. 388 (2002)