## Facts

- Dove’s Industries, Inc. (Dove) was a Pennsylvania corporation that owned fixtures located at its facility in Virginia.
- Sturtz Machinery, Inc. (Sturtz) and M&T Bank (the bank) each claimed a security interest in Dove’s Virginia fixtures.
- In February 2012, the bank filed a UCC financing statement in Pennsylvania that covered the Virginia fixtures.
- About six months later, Sturtz filed a UCC financing statement in Virginia covering the same fixtures.
- Sturtz also made a separate fixture filing in the Virginia real-estate records covering the fixtures.
- Dove later defaulted, and the fixtures were sold at auction.
- The bank and Sturtz each claimed priority in the auction proceeds.
- Sturtz filed an action in federal court in Ohio seeking a determination of priority, and the bank moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c).

## Issues

1. Whether the bank’s earlier financing statement filed in Pennsylvania (Dove’s state of incorporation) properly perfected a security interest in fixtures located in Virginia.
2. Whether Sturtz’s later Virginia UCC filing and Virginia fixture filing gave Sturtz priority over the bank’s earlier-perfected interest.
3. Whether the bank’s priority in the fixtures carried through to priority in the proceeds from the auction sale of those fixtures.

## Decision

- The court granted the bank’s motion for judgment on the pleadings.
- The court held the bank had priority over Sturtz in the fixtures and the auction proceeds.
- The court rejected Sturtz’s claim that its later Virginia filings displaced the bank’s earlier perfection.

## Legal Principles

- For most Article 9 perfection and priority questions, the governing law is the law of the debtor’s location; a registered organization is located in its state of incorporation.
- A properly filed financing statement in the debtor’s location can perfect a security interest in collateral described as fixtures for purposes of disputes between Article 9 secured creditors.
- A fixture filing in local real-estate records is primarily significant when priority is contested between a secured party in fixtures and a competing real-property claimant; it does not automatically reorder priority between two Article 9 secured parties.
- As between competing perfected security interests, priority generally goes to the creditor that first filed or perfected.
- Priority in collateral generally extends to identifiable proceeds of that collateral.

## Conclusion

Because Dove was located in Pennsylvania, the bank’s February 2012 Pennsylvania financing statement was the earlier effective filing covering the Virginia fixtures, so the bank’s perfected security interest had priority over Sturtz’s later Virginia UCC filing and fixture filing, entitling the bank to priority in the fixtures’ auction proceeds.


Sturtz Machinery, Inc. v. Dove's Industries, Inc., 83 UCC Rep. Serv. 2d 425 (2014)