18 Jul DESCRIBE THE FACTS AND ISSUES.
Collateral
Consider the following scenario:
A dispute has arisen out of the installation of equipment in a restaurant that was to be operated in a new building owned by Jerry Wopat and Wally Brown. The restaurant was to be operated by Larry Stevens. The equipment was purchased by Stevens from Middleboro Fixture Company.
Before making the purchase, Stevens contacted Tommy Middleboro, who was vice president of the company, and Middleboro made a list of the individual pieces of equipment, and the price of each, that he and Stevens thought would be needed in the restaurant. Stevens took this list to The Merchants and Farmers Bank, and arranged for a loan to finance the purchase of the equipment. This resulted in a note signed by Stevens, which incorporated a lien on the equipment to be purchased, and a financing statement was also signed by Stevens.
In August 2011, the financing statement was properly filed. The financing statement shows the debtor’s name as “Larry D. Stevens d/b/a Barbecue Shack” and lists the debtor’s address as “300 North Jefferson, Manchester, New Hampshire.” The bank’s name and mailing address are shown on the statement and it is signed for the bank by an assistant vice president. The statement describes the collateral as “All equipment used in the business known as,” and on the back of the statement the description continues by stating “and all replacements thereof and all accessories, parts and equipment now or hereafter affixed thereto or used in connection therewith . . . .”
Stevens’s note to the bank was guaranteed by Wopat and Brown, who signed the note for that stated purpose. Middleboro Fixture Company began installing the restaurant equipment in Wopat and Brown’s building even before the building was completely finished.
Eventually Middleboro submitted an invoice to Stevens and was paid all but $ 4,617.92 of the purchase price and Middleboro had Stevens sign a financing statement and security agreement to secure this balance due. This instrument was also properly filed. The debtor’s name is shown as “Stevens, Larry d/b/a Barbecue Shack,” and the address listed is “300 North Jefferson, Manchester, New Hampshire. Attached to the instrument is a copy of the Middleboro invoice. This financing statement was filed more than six months after the bank’s financing statement was filed. The bank called upon the appellants, Wopat and Brown, to pay Stevens’s note in accordance with their guarantee and they made the payment and took an assignment of the bank’s rights under its security agreement and financing statement.
Describe the facts and issues. Describe the transaction that took place. Then summarize the rights of the parties and the type of collateral.
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