## Facts

- Cedar Springs Tractor & Equipment Company (debtor) was a dealer of Timberjack logging equipment.
- Timberjack held a security interest in Timberjack products supplied to the debtor and their proceeds and filed a UCC financing statement in December 1971.
- Timberjack filed a continuation statement six months and five days before the original financing statement’s five-year expiration; it later filed additional continuation statements through 1986.
- In June 1984, NBD Bank loaned money to the debtor, took a security interest in all assets, and filed its own financing statement; NBD timely filed a continuation statement in April 1989.
- After the debtor defaulted, both creditors claimed perfected security interests in the same collateral.
- The trial court granted partial summary disposition to NBD, concluding Timberjack’s early continuation statement was ineffective, causing lapse and loss of priority; Timberjack appealed.

## Issues

1. Whether a continuation statement filed more than six months before the financing statement’s expiration satisfies the requirement that it be filed “within six months prior to” expiration.
2. Whether an otherwise premature continuation statement is effective under a substantial-compliance or actual-notice theory.
3. Whether the filing office’s acceptance of an early continuation statement and fee supports equitable relief treating the filing as effective.

## Decision

- The Michigan Court of Appeals affirmed partial summary disposition for NBD Bank.
- A continuation statement filed outside the six-month period preceding expiration is not authorized by the statute and is ineffective.
- Because Timberjack’s continuation statement was filed too early, Timberjack’s financing statement lapsed at the end of the five-year period, and its security interest became unperfected as against subsequent secured creditors.
- NBD Bank’s properly perfected and timely continued security interest had priority.
- Substantial compliance, actual notice, and the filing office’s acceptance did not cure noncompliance with the statutory timing requirement.

## Legal Principles

- A continuation statement preserves perfection only if filed within the statutorily specified six-month window before the financing statement’s expiration.
- Filing a continuation statement earlier than the permitted window is ineffective and does not extend the financing statement’s effectiveness.
- Lapse of a financing statement results in loss of perfection as against later secured creditors who properly perfect and continue their interests.
- The UCC filing system favors clear, rule-based timing requirements over substantial-compliance or notice-based exceptions.
- A filing officer’s ministerial acceptance of a nonconforming filing does not make the filing legally effective or alter priority outcomes.

## Conclusion

The court held that strict compliance with the UCC continuation timing rule is required: an early continuation statement is ineffective, the financing statement lapses, and the earlier creditor loses perfection and priority to a later creditor that properly perfects and timely continues its interest.


NBD Bank, N.A. v. Timberjack, Inc., 527 N.W.2d 50 (Mich. Ct. App. 1994)