Bank of California v. Thornton-Blue Pacific, Inc.

In this case we determine the relative priority of the claims of the Bank of California (Bank) and Jay Fisher Farms, Inc. (Grower) to approximately $139,000 in a bank account (Fund) of Thornton-Blue Pacific, Inc. (Thornton). The trial court held the Bank was entitled to the Fund because a security agreement and a UCC-1 financing statement filed with the California Secretary of State created a perfected security interest in the Fund in favor of Bank prior to the claim of Grower. Grower contends, inter alia, that neither the source of the Fund nor the Fund was ever owned by Thornton and therefore no security interest in the Fund was created by the security agreement or perfected by the financing statement between Thornton and Bank.

Factual and Procedural Background

Because of a limited appellate record the background of this case is not free of uncertainty. It appears that Bank made a $600,000 loan to the three shareholders of Thornton. Thornton guaranteed the loan. Apparently to secure the guarantee Thornton and Bank entered into a security agreement granting Bank a security interest in certain assets of Thornton. The security interest was perfected by the filing of a…