Hcc Credit Corporation v. Springs Valley Bank & Trus

712 N.E.2d 952 (1999)

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Nature of the Case

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Facts

Lindsey Tractor Sales, Inc., purchased wholesale farm equipment from Hesston Corporation for resale. Written contracts governed the relationship between Hesston and P and Lindsey, including a security agreement. In the security agreement, Lindsey granted P a security interest in all the equipment it purchased from Hesston and in the proceeds from the sale of the equipment. Lindsey also agreed to pay P immediately for equipment sold from the proceeds of the sale. However, at no time did Hesston or P require Lindsey to deposit or segregate proceeds from the sale of Hesston products in a separate account. In 1991, Lindsey sold 14 Hesston tractors to a single customer. Lindsey acquired the tractors from Hesston on credit provided by, and subject to the security agreement in favor of, P. Lindsey received payment and deposited the proceeds of $199,122 in the company's checking account at D. At the time of the deposit, Lindsey had $22,870 in other monies on deposit in the account. On the next day, August 16, 1991, Lindsey wrote a check on this account payable to D for $ 212,104.75. Lindsey' owed D on four promissory notes. Three of them were not yet due when they were paid on August 16. During the previous eight years, Lindsey borrowed funds or refinanced debts in excess of 100 times with D. The average debt balance was between $100,000 and $200,000. After payment, Lindsey owed the D between $2,000 and $15,000. Lindsey filed a bankruptcy liquidation in December of 1991 P sought to recover the $199,122 in proceeds from the sale of Hesston tractors that the bank received from Lindsey. The trial court granted summary judgment D and the Court of Appeals affirmed. P appealed.