American Card Co. v. H.M.H. Co.
Rhode Island Supreme Court
196 A.2d 150 (1963)
- Written by Sheryl McGrath, JD
Facts
In February 1962, H.M.H. Company (HMH) (debtor) signed a promissory note for about $12 million, payable to American Card Company (American) (creditor) and Oscar A. Hillman & Sons (Hillman) (creditor). The following month, HMH and Hillman signed and recorded a financing statement. The financing statement did not contain a grant of a security interest. A few months later, a court appointed a receiver for HMH. In the receivership action in superior court, Hillman claimed priority over other creditors on the ground that the financing statement gave Hillman a security interest in some of HMH’s equipment, namely tools and dies. The parties presented an agreed statement of facts to the superior court, which included testimony of a debt collector. The debt collector testified that he had attempted to collect the debt that HMH owed to Hillman, that HMH’s treasurer had said HMH could not pay the debt, and that HMH had agreed that the tools and dies would be collateral for the promissory note. The superior court found that the financing statement was not a security agreement and that Hillman thus lacked priority over other creditors. Hillman appealed.
Rule of Law
Issue
Holding and Reasoning (Condon, C.J.)
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