Planned Furniture Promotions, Inc. v. Benjamin S. Youngblood, Inc.

Benjamin and Laura Youngblood had a furniture business. On February 4, 1999, to help finance their business, the Youngbloods obtained a loan from Citizens Bank of Fort Valley, Georgia (the Bank) and pledged the business’s inventory and other assets purchased with the loaned funds as collateral. On February 22, 1999, the Bank filed a financing statement to perfect its purchase-money security interest in the collateral. The Bank’s financing statement listed the debtors’ names as Benjamin Scott Youngblood and Laura B. Youngblood. On February 25, 1999, Benjamin Youngblood incorporated the furniture business as “Benjamin S. Youngblood, Inc.” (defendant). The Youngbloods never notified the Bank about the business incorporation, so the Bank never updated the debtor’s name in its financing statement. The Internal Revenue Service (IRS) later assessed tax deficiencies against Benjamin S. Youngblood, Inc. for the years 2000, 2001, and 2002. The IRS filed notices of federal tax liens to protect the validity of its statutory lien interest against Benjamin S. Youngblood, Inc.’s other creditors. An interpleader action was eventually initiated, and Planned Furniture Promotion, Inc. (plaintiff) filed a motion for summary judgment. The United States of America on behalf of the IRS also filed the subject motion for summary judgment, arguing that it held priority over the Bank’s interest. Specifically, the IRS argued that the error in the debtor’s name listed on the Bank’s financing statement made the financing statement seriously misleading. If true, under Uniform Commercial Code Article 9, the Bank’s financing statement only perfected the Bank’s security interest in the collateral Benjamin S. Youngblood, Inc. acquired before, or within four months after, its incorporation and resulting name change.