## Facts

- Robert Bogetti & Sons (the debtor/partnership) operated a farming business that included growing beans on thirteen parcels of land in San Joaquin and Stanislaus Counties, California.
- In June 1990, the partnership obtained a revolving operating loan from the bank (then Security Pacific National Bank; later Bank of America NT & SA as successor), up to $1.7 million.
- In August 1991, the debt was renewed and restructured with a new revolving note up to $2.0 million.
- The notes were secured by identical bank-drafted form security agreements.
- The security agreements granted the bank a security interest in “all farm products of whatsoever kind or nature, including all crops now growing or hereafter to be grown … on that certain real property described below,” and then listed legal descriptions for only five parcels (Exhibits A–E).
- The parties also executed UCC financing statements. The financing statements largely tracked the security-agreement description, identified the same five parcels, and also included “all farm products … now owned or hereafter acquired by debtor” language.
- The partnership filed a Chapter 11 petition on December 16, 1992, and scheduled as assets beans and proceeds from beans harvested in multiple crop years from all thirteen parcels it farmed.
- As of the petition date, the partnership owed the bank $2,154,511.99 ($1,989,622.67 principal and $164,889.32 interest).
- The bank claimed a perfected security interest in beans and bean proceeds attributable to the partnership’s operations, including beans stored or held through third-party agricultural cooperatives/handlers, and argued the lien reached beans from the eight parcels not listed in the security agreements.
- The partnership filed an adversary proceeding to determine the extent, validity, and priority of the bank’s claimed lien in beans and bean proceeds from the 1989–1992 crop years.

## Issues

1. Whether the bank’s security interest in “all farm products … including all crops now growing or hereafter to be grown” was limited to crops grown on the five parcels described in the security agreements, or also reached crops from the eight undescribed parcels.
2. Whether the financing statement language referencing “all farm products … now owned or hereafter acquired” could grant or expand the bank’s security interest beyond the collateral described in the security agreements.
3. Whether beans harvested from undescribed parcels became covered collateral merely because, after harvest, they were “farm products” in the debtor’s possession.

## Decision

- The court held that the security agreements limited the bank’s crop-related collateral to crops grown (and related proceeds/products) on the five parcels described in Exhibits A–E.
- The bank did not have a valid, perfected security interest in beans or bean proceeds traceable to crops grown on the eight parcels not identified in the security agreements.
- The court rejected the argument that the financing statements could create or broaden the collateral grant beyond what the security agreements provided.
- The court also rejected the bank’s theory that harvested crops from undescribed parcels automatically became covered “farm products” subject to the bank’s lien.

## Legal Principles

- A security interest attaches only to collateral the debtor grants in a security agreement; the security agreement defines the scope of the secured party’s rights.
- A financing statement generally serves a notice/perfection function and does not, by itself, create a security interest or expand collateral beyond the security agreement.
- Collateral descriptions are read as a whole; when a general phrase (such as “all farm products”) is tied to a specific limitation (such as crops “on” identified real property), the specific limitation controls the scope of the grant.
- After-acquired property language affects when a lien attaches within the granted collateral, but it does not extend the lien to different collateral that was never granted in the security agreement.
- Where the secured party supplies the form language, uncertainty in the collateral description may be construed against the drafter when determining the scope of the grant.

## Conclusion

The bankruptcy court ruled that Bank of America’s lien on crops, beans, and related proceeds was confined to crops grown on the five parcels specifically described in the security agreements, and that broader wording in the financing statements and after-acquired arguments could not extend the lien to beans and proceeds from the debtor’s other eight parcels.


Robert Bogetti & Sons v. Bank of America NT & SA, 162 B.R. 289 (1993)