K.N.C. Wholesale, Inc. v. AWMCO, Inc.

K.N.C. Wholesale, Inc. (K.N.C.; appellant) took judgment against AWMCO, Inc. and VANSCO, Inc. To satisfy K.N.C.’s judgment, a writ of execution was levied on certain personal property. JAPE, Inc. and Wells Fargo Bank, claiming through JAPE filed a third-party claim to the property. K.N.C. petitioned for a hearing of the third-party claim pursuant to Code of Civil Procedure section 689, and the execution sale was stayed pending that hearing.

The court allowed the third-party claims of JAPE and Wells Fargo Bank, and directed the sheriff to release the property. The present appeal followed.

AWMCO had given as security for a loan from Wells Fargo Bank a financing statement covering certain equipment. The financing statement was executed August 8, 1972, and filed with the Secretary of State August 23, 1972. AWMCO was a subsidiary of JAPE. In February 1973, JAPE assumed the AWMCO loan and later repaid the bank in full. In consideration for the payment of its loan, AWMCO transferred stock to JAPE.

To obtain a Small Business Administration loan from Wells Fargo, JAPE executed a security agreement with Wells Fargo on February 8, 1973, covering the same equipment which had been…