First State Bank v. Clark

Summary

The Iowa Supreme Court held that a perfected security interest in crop proceeds continued under Iowa Code section 554.9306(2) even though the proceeds were paid directly to an unsecured creditor rather than received by the debtor. The court concluded that the payment remained identifiable proceeds subject to the bank's security interest, reversed summary judgment for the unsecured creditor, and remanded for further proceedings.

Holdings

1. Iowa Code section 554.9306(2) does not require proceeds to be directly received by the debtor. A perfected security interest continues in identifiable proceeds even when the proceeds are paid to a third party rather than to the debtor.
2. The $6,758.80 payment to Johnson Chemicals constituted identifiable proceeds subject to First State Bank's security interest, despite not having been paid to Yezek.

Questions Presented

1. Whether Iowa Code section 554.9306(2) requires crop-sale proceeds to be received directly by the debtor before a perfected security interest continues in those proceeds.
2. Whether the payment made by St. Ansgar Mills to Johnson Chemicals constituted identifiable proceeds subject to First State Bank's security interest.

Disposition

reversed_and_remanded