In re Manuel

On December 7, 1972, James Lucius Manuel (debtor) purchased seven pieces of furniture from Roberts Furniture Co. (Roberts) (creditor). Manuel and Roberts entered into a purchase-money security agreement for the furniture, under which Manuel granted Roberts a security interest in the furniture as collateral for Roberts’s financing. On February 13, 1973, Manuel purchased a television from Roberts. Manuel and Roberts entered into another purchase-money security agreement, which also encompassed the first agreement. Under the new agreement, the remaining balance from the first agreement—approximately $450—was added to the price of the television—approximately $175—for a total balance of approximately $625. The new agreement did not explain what amount was due for each piece of furniture or the order in which the purchases would be paid off. The agreement provided that the furniture and television would secure all present and future debts owed to Roberts by Manuel. Roberts did not file the agreement to perfect its security interest. Later in 1973, Manuel filed for bankruptcy. Roberts filed a claim in the bankruptcy estate, claiming priority because it had a purchase-money security interest in the furniture and television. The bankruptcy court found that Roberts did not have a purchase-money security interest in the furniture, and that Roberts had failed to perfect any security interest in the furniture. The district court affirmed the bankruptcy court. The district court also stated that a purchase-money security interest was likely not created in the television but explained that it could not reach the question because it was not brought up on appeal. Roberts appealed.