Kaichen's Metal Mart, Inc. v. Ferro Cast Co.

Appellant Kaichen’s Metal Mart, Inc., challenges the trial court’s order denying its motion to declare respondent Rohr Industries, Inc.’s senior secured lien invalid. We affirm.

This case presents a question of competing liens held by appellant (Kaichen’s) and respondent (Rohr), creditors of respondent Ferro Cast Company (Ferro).

Rohr’s senior lien is based on a $600,000 loan it made to Ferro in June 1986. In consideration for the loan, Ferro executed a promissory note in favor of Rohr stating that the amount loaned was due and payable on July 1, 1988. In order to secure Ferro’s obligation under the note, the parties executed an agreement granting Rohr a security interest in Ferro’s personal property, including a bank account. A financing statement pursuant to the California Uniform Commercial Code (hereinafter Commercial Code) was filed with the Secretary of State in June 1986. (Com. Code, § 9401 et seq.) Except for some interest payments made in 1987 and January 1988, Ferro made no payments on the principal and defaulted on the promissory note effective July 1, 1988.

Meanwhile, Kaichen’s’ lien was obtained pursuant to a judgment against Ferro in March 1987 for…