Bank's Perfected Security Interest in Car Superior to Car Owner's Possessory Interest in Car
Description Appeals court affirmed that a bank that owned the note on a car bought from a dealership on credit, which had perfected its security interest in the car, had the right to repossess the car when the owner defaulted on payments, the owner's complaints about the dealership notwithstanding.
Topic Negotiable Instruments and Credit
Key Words Security Interest; Priority; Automobile Loan
C A S E   S U M M A R Y
Facts Valentino bought a car from Glendale Nissan and signed a retail installment agreement to finance the purchase. The agreement was assigned to First Bank, which perfected its security interest in the car under UCC Article 9. Valentino later claimed that Glendale violated the Illinois law regarding consumer fraud and ceased making payments on the car. The bank repossessed the car. Valentino sued for return of the car, claiming consumer fraud. The bank moved to dismiss her suit, claiming she was in default under the contract and it had the right to repossess since it has a security interest superior to the interests of Valentino. The trial court agreed and dismissed the suit. Valentino appealed.
Decision Affirmed. A creditor's perfected purchase-money security interest in a vehicle has priority over the vehicle buyer's UCC-based security interest, which is a possessory interest. The UCC provides that a secured party has, on default, the right to take possession of the collateral and may proceed without judicial process if this can be done without breach of the peace. The claims of Valentino regarding consumer fraud do not affect the superior security interest the bank has in the car.
Citation Valentino v. Glendale Nissan, Inc., 740 N.E.2d 538 (App. Ct., Ill., 2000)

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