## Facts

- Robert O. Troupe and Dawn Lynn Troupe bought a John Deere tractor for about $16,500 in July 2001, financing the purchase through John Deere Credit (Deere).
- The debtors owned a 10-acre property in Colorado and represented the tractor would be used on the property for tasks such as moving dirt, hay, snow, and maintaining irrigation ditches.
- Deere marketed the tractor as “residential equipment.”
- The debtors signed a security agreement granting Deere a purchase-money security interest (PMSI) and classifying the tractor as for “personal, family or household use.”
- Deere provided a separate commercial-use affidavit, but the debtors did not sign it.
- Deere did not file a financing statement.
- The debtors later engaged in farming/ranching efforts that generated losses; on tax returns they characterized the tractor as 100% business use and claimed depreciation and farming losses.
- In bankruptcy depositions, the debtors testified the tractor was used predominantly for personal purposes (about 90% personal).
- The debtors filed a Chapter 7 petition in September 2004; the Chapter 7 trustee sued to avoid Deere’s lien under 11 U.S.C. §§ 544, 549, and 550.
- The case was submitted on cross-motions for summary judgment.

## Issues

1. Whether the tractor was “consumer goods” or “equipment” under UCC Article 9 for perfection purposes.
2. Whether Article 9 collateral classification is fixed at the time the security interest attaches or can change based on later actual use and tax treatment.
3. Whether a secured creditor may rely on the debtor’s contemporaneous written representations of intended use in the loan documents when classifying the collateral.

## Decision

- The court held the tractor was “consumer goods” because its primary intended use at the time the security interest attached was personal, family, or household, as shown by the transaction documents.
- The court ruled that collateral classification under Article 9 is determined when the security interest is created and does not change based on later use or tax characterization.
- The court concluded Deere was entitled to rely on the debtors’ written representations of personal use and the absence of a signed commercial-use affidavit.
- Because the tractor was consumer goods, Deere’s PMSI was perfected upon attachment without filing a financing statement.
- The trustee could not avoid Deere’s security interest under § 544, and Deere was granted summary judgment.

## Legal Principles

- Under revised UCC Article 9, whether goods are “consumer goods” depends on the debtor’s primary intended use at the time the security interest attaches.
- A consumer-goods PMSI is perfected automatically upon attachment; filing is not required.
- Subsequent use of the collateral and later tax reporting do not retroactively alter Article 9 collateral classification, though they may be considered only as evidence bearing on original intent.
- A secured creditor may reasonably rely on contemporaneous written loan documentation and the debtor’s stated intended use when determining consumer-goods status for perfection.

## Conclusion

The bankruptcy court held that the tractor was consumer goods based on intended personal use at the time of attachment, making Deere’s PMSI automatically perfected without filing; therefore, the Chapter 7 trustee could not avoid the lien under § 544.


Nelson v. John Deere Credit (In re Troupe), 340 B.R. 86 (Bankr. W.D. Okla. 2006)