Valley Bank and Trust Co. v. Holyoke Community Federal Credit Union

121 P.3d 358 (2005)

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Valley Bank and Trust Co. v. Holyoke Community Federal Credit Union

Colorado Court of Appeals
121 P.3d 358 (2005)

Facts

An automobile dealership borrowed money from Valley Bank and Trust Company (Valley Bank) (plaintiff) to purchase vehicles for its inventory. As security, Valley Bank took an interest in the vehicles and their proceeds pursuant to a security agreement. Valley Bank properly perfected its security interest. The security agreement provided that Valley Bank would retain possession of the certificates of title until it received the proceeds of the vehicles’ sales. Thereafter, Holyoke Community Federal Credit Union (the credit union) (defendant) financed the purchases of three vehicles from the automobile dealership, obtained security interests in those vehicles, and properly perfected its interests. However, neither the credit union nor the vehicles’ purchasers (the purchasers) could obtain the certificates of title for the vehicles because the automobile dealership had not furnished the proceeds of the sales to Valley Bank. Nevertheless, Valley Bank agreed to release the certificates of title to permit the purchasers to register the vehicles with the state. Once the purchasers registered the vehicles, Valley Bank requested that the credit union return the certificates of title, but the credit union refused to do so on the ground that it had received them for value. Accordingly, Valley Bank sued the credit union and alleged that the credit union had converted the vehicles’ certificates of title and proceeds. The trial court found that neither the purchasers nor the credit union were buyers in the ordinary course of business under Uniform Commercial Code (UCC) § 9-320(a) and granted summary judgment in Valley Bank’s favor. The credit union appealed.

Rule of Law

Issue

Holding and Reasoning (Marquez, J.)

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