United States Postal Service(TM) 


 In the Matter of a Mail Dispute Between: 

 G. I. SUPPLY, INC.
 and
 AMERICAN FUNDING CORPORATION

 P.S. Docket No. MD-98

 12/10/90

 Grant, Quentin E., Chief Administrative Law Judge

 APPEARANCE FOR G. I. SUPPLY, INC.: Ronald U. Carter, Esq.,
 1601 F Street, Bakersfield, CA  93301-5018 

 APPEARANCE FOR AMERICAN FUNDING CORPORATION: Daniel E. Budorick Esq.,
 Law Offices of Byron G. Nelson, P.C., 220 Avenue I, Redondo Beach,
 CA 90277-5617

INITIAL DECISION

This mail dispute has been forwarded by the Office of Field Legal Services, Western Division, pursuant to Domestic Mail Manual (DMM) $S157.72 and 39 C.F.R. Part 965. The parties dispute the right to delivery of mail addressed to G. I. Supply, Inc., 456 "I" Street, San Bernardino, CA 92410-2626 and RE-CY-KLEEN, Inc., 3136 Twelfth Street, Riverside, CA 92507-4905.

Both parties have filed submittals and comments pursuant to the Rules of Practice and supplemental comments pursuant to my order dated November 5, 1990.

FINDINGS OF FACT

1. The disputants are G. I. Supply, Inc. (Supply), 456 "I" Street, San Bernardino, CA 92410 and American Funding Corporation (American), 1111 Bayside Drive, Corona Del Mar, CA 92625.

2. The mail in dispute is that addressed to:

3. On February 27, 1990, American entered into a Security Agreement with Re-Cy-Kleen, Inc. (RCK) under which RCK granted American a security interest in all accounts and accounts receivable, and instruments evidencing the same, and all proceeds relating thereto.

4. Pursuant to subparagraph 13b and d of the Security Agreement, RCK granted American a special power of attorney, in the event of RCK's default, to notify the U. S. Post Office to change the address for delivery of mail addressed to RCK to an address designated by American and to receive, open, and dispose of any mail addressed to RCK.

5. On March 1, 1990, American filed with the California Secretary of State a form UCC-1 naming RCK as debtor to perfect its security interest under the Security Agreement.

6. In early July 1990, RCK breached the Security Agreement and American, on July 12, placed RCK on notice of default and made demand for payment of all outstanding indebtedness.

7. By letter dated July 25, 1990, American made demand on George I. Jones for the sum of $12,484.18 based on his personal guarantee of the Security Agreement between RCK and American. Jones was the owner of 88% of the stock of RCK and chairman of its board of directors.

8. Sometime in July 1990 Mr. Jones, as owner of RCK, transferred RCK's assets to himself as a "voluntary repossession" by reason of RCK's default under certain leases of assets by Jones to RCK and UCC-1 filings by Jones with the California Secretary of State naming RCK as debtor and Jones as the secured party. The UCC-1s were filed in September 1985. Jones is the president of G. I. Supply, Inc.

9. On July 23, 1990, American filed with the California Secretary of State a form UCC-2 adding to RCK's name as debtor (under the 2/27/90 Security Agreement) the "additional trade name of G. I. Supply, Inc." The reason shown on the UCC-2 for adding Supply was that RCK had changed its name, identity or corporate structure to Supply so as to make the UCC-1 against RCK, filed on March 1, 1990, seriously misleading, thus requiring an amendment, pursuant to California Commercial Code, § 9402(7)n1 to perfect American's security interest in collateral.

n1 § 9402. Formal Requisites of Financing Statement: Amendments

***

(7) A financing statement sufficiently shows the name of the debtor if it gives the individual, partnership or corporate name of the debtor, whether or not it adds other trade names or names of partners. Where the debtor so changes his or her name or in the case of an organization its name, identity or corporate structure that a filed financing statement becomes seriously misleading, the filing is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the change, unless a new appropriate financing statement or an appropriate amendment to the filed financing statement is filed before the acquisition of the collateral by the debtor. A filed financing statement remains effective with respect to collateral transferred by the debtor even though the secured party knows of or consents to the transfer. [emphasis supplied]

10. In early August 1990, this mail dispute was generated as the result of conflicting orders for delivery of the disputed mail by American and Dr. George I. Jones, as owner of RCK (through repossession) and as president of Supply, based on the various documents described above.

11. The UCC-2 filed by American on July 23, 1990, adding to RCK's name as debtor the additional trade name of G. I. Supply, Inc. was later rejected by the office of the Secretary of State on the ground that it merely attempted to add a trade name, and did not assert that there had been a change in the name, identity or corporate structure of RCK to G. I. Supply, Inc. (Ltr. Nov. 6, 1990 Holden to Nelson).

CONCLUSIONS OF LAW AND DECISION

The purpose of this proceeding is to determine the right to delivery of the disputed mail, not the ownership thereof. The submittals of the parties, including legal argument, involve many complex, conflicting security interest claims in various categories of property asserted under security agreements, leases, promissory notes (some made part of the record, others only referred to) and the effect on such claims of certain filings and rejection of filings of commercial code forms with the California Secretary of State.

The only submitted document directly affecting the right to delivery of mail is the Security Agreement between American and RCK giving American the right to direct the delivery of RCK's mail upon its default under the Agreement which admittedly occurred.

G. I. Supply, Inc., a corporation separate and distinct from RCK, was not a party to the American/RCK Security Agreement, although Dr. George I. Jones personally, and not as president of Supply, guaranteed RCK's performance thereof. American's attempt to make Supply the debtor under the Security Agreement through the filing of a UCC-2 failed on the rejection of that instrument by the Office of the Secretary of State and for the reasons given by that office. There is no separate security agreement or other agreement between American and Supply (or other evidence) giving the former the right to direct the delivery of Supply's mail under any circumstances. Therefore, American has failed to establish that right and Supply's mail is to be delivered as addressed pursuant to Domestic Mail Manual $S153.51 ("Mail addressed to corporations is delivered as addressed ***").

American is entitled to direct the delivery of mail addressed to RE-CY-KLEEN, Inc. at 3136 Twelfth Street, Riverside, CA 92507-4905. American has no right to direct the delivery of mail addressed to G. I. Supply, Inc., 456 I Street, San Bernardino, CA 92410-2626. Such mail is to be delivered as addressed or in accordance with the direction of George I. Jones, president of that corporation.

The attached proposed mail delivery instruction should be issued.