UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
MILTON FORD JUDE
ALANA KAY JUDE
DEBTORS CASE NO. 91-00226
SUSAN JOHNSON, TRUSTEE PLAINTIFF
VS. ADV. 89-0132
BANK OF MINGO DEFENDANT
This matter is before the Court on the trustee's Motion for Summary Judgment filed herein on December 20, 1991. The defendant has not filed a response to the Motion. This Court has jurisdiction of this matter pursuant to 28 U.S.C.'1334(b); it is a core proceeding pursuant to 28 U.S.C. '157(b)(2)(K).
The record in this case indicates that the debtors purchased a 1988 Skyline Royal Cove mobile home, serial number 0-615X, on March 29, 1988. They financed the purchase amount, $15,937.50, with the defendant and executed a "Simple Interest Consumer Loan Agreement Secured or Unsecured", within which was contained a "Pledged Collateral Security Agreement". Therein they granted the defendant a security interest in the mobile home.
The debtors filed a Chapter 7 petition in this Court on April 29, 1991. On May 30, 1991, the defendant filed a financing statement, File No. 03057, in the Martin County Clerk's Office. Notation of the filing was made on the Certificate of Title, showing the date of filing as May 30, 1991. The date of issue of the Certificate of Title is June 13, 1991. The trustee alleges that she may therefore avoid the lien pursuant to 11 U.S.C.'544.
The trustee's rights as a judgment lien creditor pursuant to'544(a), the "strong arm statute", arose on the date of filing of the bankruptcy petition, and on that date the defendant's lien was unperfected. As of that date, KRS 186A.190(1) provides, "The perfection and discharge of a security interest in any property for which has been issued a Kentucky certificate of title shall be by notation in the certificate of title." On the date of the filing of the bankruptcy petition herein, the defendant's line was not noted on the certificate of title. In fact, the certificate of title shows on its face that it was not even issued until June 13, 1991.
On the date of the filing of the petition, the trustee became a judgment lien creditor. 11 U.S.C.'544(a). Matter of Quality Holstein Leasing, 752 F2d 1009 (5th Cir. 1985). An unperfected security interest is subordinate to the rights of a lien creditor. KRS 355.9-301(1)(b). A lien creditor includes a trustee in bankruptcy. KRS 355.9-301(3). When a statute requires perfection of a security interest by indication on a certificate of title, a security interest can be perfected only by that method. KRS 355.0-302(3)(4). That section and KRS 186A.195(1) mandate that the certificate of title governs the resolution of perfection and priority disputes. The same conclusion was reached on these issues in In re Johnny Raines, Case No. 89-01606 (Bkrtcy.E.D.Ky 1990).
In consideration of the foregoing, it is therefore the opinion of this Court that the security interest granted by the debtors to the defendant is void, that the defendant has no lien upon or security interest in the subject mobile home, and that the trustee is entitled to judgment as a matter of law.
By the Court -
Susan M. Johnson, Esq., Trustee
J. Thomas Hardin, Esq.