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Text Box: In 1998, New Holland Credit Company financed Pali Brothers Farms’ purchase of two combines, and properly perfected a UCC Financing Statement. (A purchase money security interest will have priority over all other security interests filed either before or after the filing of a purchase money security interest.) In 2000 and 2001, Pali Brothers obtained two different loans from Lewiston State Bank secured by all of the Pali Brothers’ equipment, both present and future. The Bank properly perfected UCC Financing Statements covering each loan. Pali Brothers then defaulted on the New Holland loan. In 2002, Greenline Equipment, L.L.C. refinanced Pali Brothers’ outstanding New Holland debt and received a lien release from New Holland on the combines. The two Pali brothers then, as individuals, obtained a loan from John Deere & Company to purchase the combines from Greenline. John Deere properly filed and perfected UCC financing statements regarding the combines. Pali Brothers then defaulted on Lewiston Bank loan and the individual brothers defaulted on the John Deere loan. John Deere took possession of the combines. Lewiston Bank sent John Deere a demand letter asserting that it had priority over the equipment. After John Deere assigned its interest in the combines to Greenline, Greenline then sold the two combines and failed to notify the Bank of the sale. In 2003, the Bank sued Greenline for the selling of the collateral without payment to Lewiston Bank. The trial court found that the Bank’s security interest in the combines was superior to Greenline’s, and Greenline appealed. The appeals court determined that, under the Uniform Commercial Code, a purchase money security interest terminates when the original purchase-money obligation is satisfied, unless the security interest is refinanced with the original secured party or its assignee. If a new creditor subsequently extends credit to the debtor in exchange for a security interest in the same collateral, the new security interest does not retain the original purchase money status. Here, because Greenline obtained a lien release from New Holland, New Holland’s purchase money security interest was extinguished and Lewiston Bank’s lien, next in line to New Holland, attained priority status over any subsequent lien. This case highlights the importance of obtaining an assignment of a purchase money security interest instead of a lien release if a lender intends to retain the purchase money security interest in the collateral. This case is cited as Lewiston State Bank v. Greenline Equipment, L.L.C. 147 P3d 951 (2006). Failure to Dispose of Collateral in a Commercially Reasonable Manner Bars Recovery Under Article 9 The District Court of Appeals in Florida recently held that a lender who failed to dispose of collateral in a commercially reasonable manner was barred from recovery under Article 9 of the Uniform Commercial Code. New Vision Eye Center received a loan from Wachovia Bank which was secured by the business accounts, inventory, and equipment of the business, as well as the personal guarantees of Dr. Boutros and Dr. Minoso, who owned the business. When New Vision stopped operating, Wachovia placed a lien on the physical assets of the business. Boutros then took possession of the business equipment, stored the equipment in a warehouse and paid the loan in full. At Dr. Minoso’s request, Wachovia then assigned the note and security agreements from the loan to him. Boutros sued Minoso to recover Minoso’s guaranteed portion of the loan. Boutros made a claim for equitable contribution and unjust enrichment. The trial court found that Minoso had an equitable duty to repay the his guaranteed portion of the loan and found that he owed Boutros $186,000, but the trial court also found that Boutros had failed to prove the value of the assets in the warehouse. Based on Boutros’ failure to establish the value of the assets, the trial court held that Boutros could not recover any money from Minoso. In discussing relevant case law, the trial court found that once a party has taken possession of secured collateral, one remedy is to sell, lease or dispose of such collateral in a commercially reasonable manner as