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Guaranty State Bank & Trust Co. v. Van Diest Supply Company

55 P.3d 357 (2002)

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Guaranty State Bank & Trust Co. v. Van Diest Supply Company

Kansas Court of Appeals

55 P.3d 357 (2002)

Facts

Guaranty State Bank & Trust Company (Guaranty) (plaintiff) provided several loans to Barnard Grain Company (Barnard). On May 24, 1994, Guaranty filed a financing statement, perfecting a security interest in collateral, including all of Barnard’s inventory “now and hereafter owned.” Van Diest Supply Company (Van Diest) (defendant) made a loan to Barnard and in January 1998 filed a financing statement covering “all of debtor’s property . . . purchased or otherwise acquired from Secured Party; all cash and non-cash proceeds arising from or received upon the sale.” While the phrase was never explicitly used, Van Diest was apparently attempting to create a purchase-money security interest. Van Diest did not send separate notification of its security interest to Guaranty. After Barnard began selling off assets in late 1999, Van Diest removed 536.5 gallons of chemicals from Barnard’s facility in February 2000. Barnard neither objected or consented. Van Diest later sent Barnard a refund check because it had inadvertently taken too much of the chemicals. Guaranty filed suit against Van Diest, alleging that it had priority in the chemicals and that Van Diest had committed a conversion, asserting control over the property of Guaranty. Van Diest filed a motion for summary judgment, arguing that Van Diest had a purchase-money security interest that took priority over Guaranty’s interest. Guaranty filed its own motion for summary judgment and argued that Van Diest had failed to provide written notification to Guaranty despite its competing security interest. The district court granted Guaranty’s motion and found that Van Diest lacked priority and had committed a conversion of the chemicals. Van Diest appealed.

Rule of Law

Issue

Holding and Reasoning (Beier, J.)

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