Uni Imports, Inc. v. Aparacor

CRABB, District Judge. This appeal raises an issue best described as one of those ""delicious academic morsels so dear to the hearts and minds of commercial law teachers,"" 2 James J. White & Robert S. Summers, Uniform Commercial Code, § 26-1, 491 (Practitioner's ed. 1988). The actual circumstances in which it arises occur very seldom; similar cases are ""as scarce as hen's teeth."" Id. at 493. The case arises out of supplementary proceedings held in the district court on a petition by UNI, INC., for a turnover of assets in the possession of Exchange National Bank of Chicago. It involves the relative priorities between a judgment creditor and a secured lender of lines of credit, the applicability of Ill. Rev. Stat. ch. 26, § 9-301(4), and the treatment of non-advance expenditures by a secured creditor. On UNI's motion for summary judgment, the district court held that Exchange was required to turn over assets sufficient to satisfy UNI's lien. That holding may be correct, but the present record does not allow an affirmance. Under § 9-301(4), Exchange's perfected security interest has priority over UNI's judgment lien to the extent that the interest secures advances made within 45 days after the lien attached; the $274,000 payment that Exchange made after the expiration of the 45-day grace period following attachment of UNI's lien and before the assignment for the benefit of creditors is not protected from subordination to that lien. Whether Exchange has claims to reimbursement that take priority over UNI's security interest in the $274,000 advance is a question we cannot answer on the present record. The district court did not analyze the various expenditures and payments made by Exchange after the 45-day period to determine whether Exchange has a right to reimbursement superior to that of UNI. We will remand the matter to allow the district court to make that analysis.