Request By:
Mr. J. U. Grow
Simpson County Clerk
Courthouse
Franklin, Kentucky
Opinion
Opinion By: Steven L. Beshear, Attorney General; BY: Charles W. Runyan, Assistant Deputy Attorney General
You enclosed with your letter a financing statement that contained this printed clause: "Description of encumbered property: All household goods and other personal property owned by debtors, and located at their above address, including and without limitation, the following specific items: ." The statement specifically listed as security a 1972 Buick, with make, body type, serial number, etc.
On your index cards you listed only the 1972 Buick, since household goods and other personal property owned by debtor was not specifically listed and described with particularity.
Your question: "Should our index cards show household goods and other personal property when it is not specifically set forth on the instrument?"
KRS 355.9-402(1) provides in part that a financing statement must contain a statement indicating the types, or describing the items, of collateral. Subsection (2) of that statute expressly requires that where a motor vehicle is included in the collateral, the make, year, model and motor number or identification number shall be given. The financing statement you enclosed adequately set out the motor vehicle.
It is also our opinion that the general reference to "all household goods and other personal property" , etc., was sufficient description under the statute. In addition, KRS 355.9-110 provides that "For the purposes of this article any description of personal property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described." (Emphasis added). See in Re Anselm (U.S.D. Ct. W.D. Ky. - 1972) 344 F.Supp. 544, 546; In Re Leckie Freeburn Coal Company (U.S.C.A. -6, 1969) 405 F.2d 1043, 1046. Also see the annotation in 2 A.L.R.3d 839, dealing with the "sufficiency of description in chattel mortgage as covering all property of a particular kind", Sections 2-5.
The major point about description in a chattel mortgage is that an insufficient description of the property operates to deprive the instrument of its character as constructive notice by reason of recordation. Hart County Deposit Bank v. Hatfield, 236 Ky. 725, 33 S.W.2d 660 (1930) 662. In that case the chattel mortgage covered mules, corn, tobacco, hay, cows, etc. The mortgage failed to give the address of the mortgagor, the location of the property, or other descriptive details. The court wrote that "The usual method of describing personal property of the character involved is by reference to the present ownership, the source of title, the present physical possession, the usual location, or some particular description of the property sufficient to identify it or distinguish it from other similar things." We cite this as an expression of the philosophy of our appellate court as relates to chattel mortgage property descriptions prior to the adoption by Kentucky of the Uniform Commercial Code. That same philosophy is reflected now in KRS 355.9-402, relating to financing statements. Thus your index cards, under "description of collateral" , can show the car and the household goods, etc., although the description of the collateral is not actually required for the card index. See KRS 355.9-403(4). We shall discuss that point in more detail hereinafter.
Your second question is whether the original financing statement, rather than the index card, is considered to be the legal instrument for the description of property involved?
The financing statement is the legal instrument which must contain adequate description of property, pursuant to KRS 355.9-402. A nonpossessory security interest created by written agreement of the parties may be perfected as against third parties by recording a public notice, i.e., the financing statement, the requisites of which are stated in that statute. Lincoln Bank & Trust Company v. Queenan, Ky., 344 S.W.2d 383 (1961) 385. The index card you enclosed is adequate in that it identifies the parties, contains a place for a brief description of the property (though this is not required), shows the addresses of the parties and refers to the specific file number involving the filed security agreement. KRS 355.9-403(4) requires the filing officer to index the financing statements according to the name of the debtor and shall note in the index the file number and the address of the debtor given in the statement. The index card you are using complies with that statute. A person looking for the financing statement has enough data on the index card to locate the statement.