Gregory T. Hinton, Esq.
Evans L. King, Jr., Esq.
Fairmont, West Virginia Steptoe & Johnson
Attorney for Appellant Gregory A. Morgan, Esq.
Young Morgan & Cann
Clarksburg, West Virginia
Attorneys for Appellee Bank One,
West Virginia, NA
The Opinion of the Court was delivered PER CURIAM.
JUSTICE STARCHER concurs and reserves the right to file a concurring opinion.
JUSTICE McGRAW dissents and reserves the right to file a dissenting opinion.
2. A motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law. Syllabus Point 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963).
In the instant case, the circuit court granted summary judgment in a lien priority
case. We affirm the circuit court's judgment.
The instant case began on February 7, 2001, when the appellant served a suggestion on the Harrison County Bank (HCB), seeking to collect funds owed to the appellant as the result of a judgment order of the Circuit Court of Harrison County in the amount of $126,033.63 against Linn Mining Company (Linn), dated November 2, 2000. The judgment order and suggestion came after the appellant prevailed in a Harrison County lawsuit against Linn on a breach of contract claim. The jury's verdict against Linn was for $108,312.58; interest and costs increased that amount by the time the order was entered.
When the suggestion was served on Bank One, on February 7, 2001, HCB had funds on deposit for Linn in the total amount of $29,107.65. HCB filed an answer to the suggestion in circuit court, acknowledging having the Linn funds and seeking the court's direction as to how to dispose of them. On May 18, 2001, Bank One moved to intervene in the suggestion proceeding, claiming that it had a security interest in Linn's HCB account funds, and that Bank One's interest had priority over the appellant's judgment and suggestion.
The circuit court allowed Bank One's intervention, received briefs in argument, and on September 17, 2001 issued a summary judgment order agreeing with Bank One's position. The court reaffirmed this order on December 5, 2001. The issue in the instant appeal is whether the circuit court was correct. We present other pertinent facts in our discussion infra.
Thereafter, the appellant conducted mining activity for Linn, and a dispute led
to the lawsuit that resulted in the judgment against Linn. It appears that Linn was in
default on its payments to Bank One on the note well before the jury's verdict in the lawsuit;
however, Bank One did not foreclose on its note and was working with the company,
which was still doing business after the verdict. From January 2, 2001 to May 18, 2001, Linn
mined more than 25,000 tons of coal. On February 9, 2001, a check for $26,665.64 from a
Linn coal customer was deposited in Linn's HCB account.
The appellant says that the provisions of W.Va. Code, 46-9-402(1) are
controlling; this section provided in pertinent part that:
When the financing statement covers timber to be cut or covers minerals or the like [including oil and gas] or accounts subject to subsection (5) of section 9-103, or when the financing statement is filed as a fixture filing (section 9-313) and the collateral is goods which are or are about to become fixtures, the statement must also comply with subsection (5) [W.Va. Code, 46-9-402(5)].
Id. (Emphasis added.)
Under W.Va. Code, 46-9-402(5), a financing statement must
. . . recite that it is to be filed for record in the real estate records, and the financing statement must contain a description of the real estate sufficient if it were contained in a mortgage . . . .
Thus, pursuant to W.Va. Code, 46-9-402(1), the real estate records filing requirement of W.Va. Code, 46-9-402(5) applied only to minerals . . . subject to [46-9- 103(5)], which addresses:
. . . a security interest which is created by a debtor who has an interest in minerals or the like before extraction and which attaches thereto as extracted, or which attaches to an account resulting from the sale thereof at the wellhead or minehead . . ..
In the instant case, there is no allegation that when Linn borrowed $150,000.00
in 1995, Linn had an interest in the coal it mined in 2001 _ or that Linn, in 1995, sought to
create a security interest by Bank One in minerals that Linn had an interest in before extraction, which interest would attach thereto as the minerals were extracted. (See footnote 2)
Therefore, the real estate filing requirement of 46-9-402(5) is not applicable to Bank One's security interest and financing statement. The appellant's argument that Bank One did not obtain a security interest, because Bank One did not file its financing statement in the real estate records, does not prevail.
Appellant also argues that Bank One did not obtain in 1995 a security interest in any coal later mined by Linn, or the proceeds therefrom. Only in 2001, argues Linn, when the coal was mined, could the coal and proceeds thereof become subject to Bank One's broad lien on Linn's accounts[,] . . . rights to payment[,] . . . goods[,] . . . [and] inventory. However, the 1995 financing statement applied to all accounts . . . of every kind now owned or hereafter arising and all inventory of debtor whether now owned or hereafter acquired . . .. For this reason, appellant's argument on this point must also fail.