## Facts

- Lewistown Propane Company sold propane and related products on credit to Tom H. Ford (individually and doing business as Ford Cattle Company) and family members, and the account was not paid.
- On September 8, 1999, Ford executed a promissory note to Lewistown Propane for $28,503.62 plus 10% annual interest, due within six months.
- On December 14, 1999, Lewistown Propane sued to collect the debt.
- On February 11, 2000, before Lewistown Propane obtained its judgment, Ford sold a 1974 Super Piper Cub aircraft (PA18-150) to Raymond Becky; Ford kept the aircraft in Fergus County.
- Neither Ford nor Becky recorded the aircraft conveyance with the Federal Aviation Administration (FAA) or with Montana’s aeronautics records at the time of the sale.
- Lewistown Propane later obtained a judgment against Ford for the debt.
- When attempting to collect, Lewistown Propane checked both the FAA registry and Montana aeronautics records; both listed Ford as the aircraft’s owner and showed no liens or encumbrances.
- On July 7, 2000, Lewistown Propane obtained a writ of execution and seized the aircraft, and it filed a notice of execution levy stating its intent to sell the plane to satisfy the judgment.
- Becky intervened, claimed ownership based on the earlier sale, and sought return of the aircraft and a stop to the execution sale.
- The district court permanently restrained Lewistown Propane from executing on the aircraft and ordered the aircraft returned to Becky.
- After the levy, Becky recorded the bill of sale with the FAA; Lewistown Propane did not record its execution lien with the FAA. Becky argued his now-recorded ownership took priority over Lewistown Propane’s unrecorded lien.

## Issues

1. Did the district court err by ruling that a judgment creditor has no lienable interest in an aircraft when the debtor conveyed the aircraft to a third party before entry of judgment but the conveyance was not recorded with the FAA?
2. Does the buyer’s later FAA recordation of the aircraft transfer defeat the judgment creditor’s previously obtained execution levy when the creditor relied on FAA and state records listing the debtor as owner at the time of levy?

## Decision

- The Montana Supreme Court reversed the district court’s order (Justice Jim Regnier).
- The court held Lewistown Propane, as a judgment creditor, had a lienable interest and could proceed with execution against the aircraft because the Ford-to-Becky transfer was unrecorded when Lewistown Propane levied.
- The court rejected the argument that Becky’s later recordation of the transfer displaced Lewistown Propane’s execution interest created by the earlier levy.

## Legal Principles

- Under the federal aircraft recording scheme (as explained in Philko Aviation, Inc. v. Shacket), aircraft transfers must be evidenced by a written instrument and recorded with the FAA before they can affect the rights of innocent third parties.
- Although state law supplies priority rules, federal law requires FAA recordation as a condition to asserting an aircraft ownership interest against third parties who act without notice in reliance on the registry.
- A judgment creditor may rely on FAA and state aviation records showing the debtor as owner and no recorded adverse interests when levying execution on an aircraft.
- An unrecorded aircraft conveyance may be valid between seller and buyer, but it is ineffective against a judgment creditor who levies while the public aviation records still show the debtor as owner.
- A buyer’s later FAA recordation does not retroactively defeat an execution levy that attached when the transfer remained unrecorded.

## Conclusion

Lewistown Propane Co. v. Ford holds that a judgment creditor may execute on an aircraft when the creditor levies while FAA and Montana records list the judgment debtor as owner and the alleged prior sale has not been recorded; the buyer’s later FAA recordation does not cut off the creditor’s execution interest created by the levy.


Lewistown Propane Co. v. Ford, 42 P.3d 229 (2002)