Скачать или смотреть GE Capital Commercial Automotive Finance, Inc. v. Spartan Motors, Ltd. Case Summary | Law Explained

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General Electric Capital Commercial Automotive Finance, Inc. v. Spartan Motors, Ltd. | 246 A.D.2d 41 (1998)

With a purchase-money security interest, a seller or lender gives a purchaser financing. That financing, in turn, enables the purchaser to buy the collateral. Because the lender’s funds enabled the purchase, the lender gets a superior interest in the collateral.

In the usual scenario, the loan is made, and then the buyer acquires the collateral. However, in General Electric Capital Commercial versus Spartan Motors, that ordering was flipped. The collateral was acquired before the loan was made. With the flip-flopped transaction, does the lender have a purchase-money security interest?

General Electric Capital Commercial, which we’ll call Electric, had a perfected security interest in the inventory of car dealership Spartan Motors.

Spartan entered a financing agreement with General Motors Acceptance Corporation, which we’ll call Motors. Motors agreed to enable Spartan to obtain inventory by advancing funds to vehicle distributors. Motors filed the agreement and notified Electric that it had a purchase-money security interest in inventory obtained with its financing.

The agreement specified that Motors would provide funds directly to the seller of the vehicles, but in practice Motors often reimbursed Spartan for purchases. Spartan paid just over one hundred twenty thousand dollars to a wholesaler for a Mercedes-Benz. Six days later, Motors reimbursed Spartan for the vehicle. Spartan also obtained a second Mercedes-Benz from the wholesaler, and two days later, Motors reimbursed Spartan.

Electric later sued Spartan, seeking money due under its financing agreement. Spartan then filed for bankruptcy. Motors claimed a purchase-money security interest in the two Mercedes-Benz vehicles. Electric claimed it had a superior interest in the vehicles.

The trial court reasoned that Motors lacked a purchase-money security interest in the vehicles, and therefore Electric had a superior interest. The court granted summary judgment to Electric. Motors appealed to the appellate division.

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