## Facts

- Golden Plains Credit Union financed Duane Lewis’s purchase of two 1978 John Deere combines in Kansas in 1978 and filed a financing statement in the Kansas county of Lewis’s residence, perfecting its security interest under Kansas law.
- In late 1979, Lewis moved the combines from Kansas to Baca County, Colorado.
- On February 7, 1980, Lewis sold one combine in Colorado to Bud Konkel (Konkel Equipment Company).
- Konkel did not search filing records and lacked actual knowledge of Golden Plains’ security interest; he later resold the combine to a Colorado farmer.
- Golden Plains never filed a financing statement in Colorado.
- In 1984, Golden Plains sued Konkel for conversion, seeking return of the combine or damages based on interference with its security interest.
- The trial court granted summary judgment to Konkel, treating Golden Plains’ perfection as lapsed four months after the combine’s move to Colorado without classifying the collateral under Article 9.
- The court of appeals reversed, reasoning the four-month period ran from the debtor’s change of residence, and remanded to determine when Lewis moved to Colorado.

## Issues

1. Under UCC § 9-103 as adopted in Kansas and Colorado, did Golden Plains’ Kansas perfection continue after the combine and/or debtor moved to Colorado, and what event started any continuation period?
2. How should the combine be classified under Article 9, and which UCC § 9-103 subsection governs the duration of continued perfection and any refiling requirement?
3. If Golden Plains’ security interest remained perfected (or continued) at Konkel’s purchase, could Konkel be liable for conversion for buying and reselling the combine subject to that interest?

## Decision

- The Colorado Supreme Court affirmed in part and reversed in part the court of appeals and remanded for further proceedings.
- The Court held the trial court erred by applying a four-month lapse period without first classifying the collateral to determine the governing UCC § 9-103 subsection.
- The Court directed the lower courts to determine the proper collateral classification and then apply the correct statutory trigger (movement of collateral versus change in the debtor’s location) to decide whether and when the security interest expired.
- Because the needed factual and statutory determinations were not made, the Court did not finally resolve Konkel’s conversion liability.

## Legal Principles

- A court must classify collateral under Article 9 before selecting the applicable UCC § 9-103 provision governing interstate effects on perfection.
- UCC § 9-103 provides temporary continuation of perfection when collateral and/or the debtor crosses state lines, but the trigger and duration depend on the collateral type and the specific subsection.
- Treating physical movement of collateral as the automatic trigger for lapse, without examining whether the statute instead ties continuation to the debtor’s relocation, is legal error.
- A buyer’s lack of actual knowledge and failure to check filings does not alone defeat a secured party’s claim if the security interest remained perfected or otherwise effective against the buyer at the time of purchase.

## Conclusion

The court required a collateral-specific UCC § 9-103 analysis—beginning with proper classification of the combine—to determine whether Kansas perfection continued in Colorado and, consequently, whether Konkel took subject to the security interest and could be liable for conversion; it remanded for fact-finding and application of the correct statutory subsection.


Konkel v. Golden Plains Credit Union, 778 P.2d 660 (Colo. 1989)