NBD Bank, N.A. v. Timberjack, Inc.

Cedar Springs Tractor & Equipment Company (Cedar Springs) was a dealer of Timberjack, Inc. (Timberjack) (defendant) products. In the dealership agreement, Cedar Springs gave Timberjack a security interest in the products it received from Timberjack and the proceeds of its sales of the Timberjack products. In December of 1971, Timberjack filed a financing statement with the Secretary of State, which was effective for five years. Six months and five days before the five-year expiration date, Timberjack filed a continuation statement. Subsequently, NBD Bank, N.A. (NBD Bank) (plaintiff) loaned Cedar Springs money and took a security interest in all of Cedar Springs’s assets. NBD Bank filed a financing statement in June of 1984 and timely filed a continuation statement in April of 1989. Timberjack continued to file continuation statements through 1986. NBD Bank and Timberjack claimed competing security interests in Cedar Springs’s collateral. The trial court found that Timberjack’s security interest became unperfected because it prematurely filed the first of its continuation statements. Accordingly, the trial court ruled that NBD Bank had the senior priority interest. On appeal, Timberjack argued that Michigan’s Uniform Commercial Code (UCC) Article 9 statute permitted it to file the first continuation statement five days early. Alternatively, Timberjack argued that it substantially complied with the statute and put NBD Bank on notice of its interest. Timberjack also argued entitlement to equitable relief because the Secretary of State accepted its continuation statement and filing fee.