Request By:
Mr. Stuart Adams, Jr.
Assistant County Attorney
Kentucky Home Life Building
Suite 1129
Louisville, Kentucky 40202
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
On behalf of Mr. Bremer Ehrler, the Jefferson County Clerk, you request our opinion as to the proper procedure for filing a continuation statement, pursuant to KRS 355.9-403, when an additional debtor is to be added.
Specifically you ask: "Should the continuation statement have been filed with an additional debtor added?" The answer is "no".
Upon timely filing of the continuation statement, the effectiveness of the original financing statement is continued for five (5) years after the last date to which the filing was effective. KRS 355.9-403(3). The term "financing statement" means the original financing statement and any amendments. KRS 355.9-402(5). A continuation statement merely continues the legal effectiveness of the original financing statement, or as the original financing statement may be timely amended. Thus it is our opinion that a continuation statement cannot be used as a device to add collateral or an additional debtor. See OAG 66-173, copy enclosed, 3 UCC Reporting Service 464, as to the ineffectiveness of adding collateral to a continuation statement.
"An amendment to a financing statement may amend any aspect of the statement, and may add new collateral. " Anderson, Uniform Commercial Code, Vol. 4 (2nd ed.), § 9-402:36, p. 503; and KRS 355.9-402(5).
The proper method of filing to add a debtor is to file an amendment to the original financing statement. In other words, the amendment should contain an express reference to the original financing statement on file. When the county clerk accepts such an amendment for filing, he should file such amended financing statement under the same number and cover as the original financing statement such that all information pertaining to the security interest on the particular collateral will be together and indexed accordingly. 5UCC Reporting Service 916; and Anderson, Uniform Commercial Code, Vol. 4 (2nd ed.) § 9-402:36, p. 503.
The answer to your first question is that a continuation statement is not a legal device for "adding a debtor." That can only be done by amending an effective original financing statement. We are not speaking of a mere name change of the original debtor. Cf.
Continental Oil v. Citizens Trust & Sav. Bank, 397 Mich. 203, 244 N.W.2d 243 (1976), holding that the U.C.C. does not require a refiled or amended financing statement to merely reflect a debtor's change in name. As to a mere change in name of debtor, see also In Re Pasco Sales Co., Inc., 77 Misc. 2d 724, 354 N.Y.S.2d 402 (1974), of similar import.
The above also answers your question about the validity of filing a continuation statement when a third debtor is added.