## Facts

- Murdock Acceptance Corporation financed the inventory of Parks Auto Sales (a car dealer) through trust-receipt (“floor plan”) arrangements, with Parks as “trustee” and Murdock as “entruster.”
- From 1961–1964, the parties executed and filed annual “statements of trust receipt financing” in the Newton County chancery clerk’s office; the filings were indexed under Murdock’s name rather than Parks’s name.
- Woodham obtained a judgment against T.C. Parks and his wife, Myrtle Parks; the judgment was enrolled on September 15, 1964.
- A further financing statement was executed December 29, 1964 and filed January 7, 1965; it was also indexed under Murdock rather than Parks.
- T.C. Parks died intestate on July 11, 1965; no estate administration occurred, and Myrtle Parks continued operating the dealership under the same name.
- On August 16, 1965, Myrtle Parks executed a power of attorney authorizing Murdock’s employees to execute trust receipts and notes for “Parks Auto Sales.”
- Using that authority, Murdock’s agent executed trust receipts on September 28, 1965 (three vehicles) and October 23, 1965 (three vehicles); the trust receipts themselves were not recorded.
- On December 14, 1965, Woodham obtained a writ of execution on the enrolled judgment.
- On December 15, 1965 at about 9:00 a.m., Murdock filed a new “statement of financing” naming “Parks Auto Sales by Mrs. Myrtle W. Parks” as trustee.
- Around 11:00 a.m. that day, the sheriff notified Myrtle Parks that he was levying execution on six automobiles at the dealership and instructed her not to dispose of them.
- The circuit court, on stipulated facts, ruled for Woodham, and Murdock appealed.

## Issues

1. Whether Murdock’s trust-receipt financing filings perfected an interest in the six automobiles superior to Woodham’s rights as an enrolled judgment creditor who levied execution.
2. Whether financing statements indexed under the entruster’s name, rather than the dealer/trustee’s name, provided constructive notice sufficient to bind third parties under Mississippi’s Uniform Trust Receipts Act.
3. Whether Murdock’s December 15, 1965 filing perfected its interest in time to defeat Woodham’s levy made later that morning.
4. Whether the death of T.C. Parks and Myrtle Parks’s continuation of the business affected the validity or enforceability of Murdock’s claimed interest against Woodham.

## Decision

- The Mississippi Supreme Court affirmed the circuit court’s judgment for Woodham.
- The court held that Murdock’s asserted interest in the automobiles was not effective against Woodham as a judgment creditor because the filings did not provide the constructive notice required to avoid a “secret lien.”
- The levy of execution on the six automobiles therefore prevailed over Murdock’s claim.

## Legal Principles

- Trust-receipt (“floor plan”) financing is treated as a secured transaction; protection against third parties depends on compliance with statutory public-notice requirements.
- Under the Uniform Trust Receipts Act, filing a notice/statement is intended to prevent “secret liens” and to provide constructive notice to creditors and purchasers dealing with the dealer/trustee.
- A filing that is not indexed in a manner reasonably searchable under the dealer/trustee’s name does not function as constructive notice to third parties who extend credit to the dealer.
- A judgment creditor who levies execution can prevail over an unperfected or defectively perfected security interest in the debtor’s inventory.

## Conclusion

The court upheld a judgment creditor’s execution on dealer inventory because the financer’s trust-receipt filings, indexed under the financer rather than the dealer, failed to provide statutory constructive notice; as a result, the financer’s claim was treated as a secret lien and was subordinate to the creditor’s levy.


Murdock Acceptance Corp. v. Woodham, 208 So. 2d 56 (Miss. 1968)