First National Bank of Highland v. Merchants Mutual Insurance

OPINION OF THE COURT

Kane, J. P.

The issue to be resolved on this appeal is whether the holder of a perfected security interest in an automobile is entitled to payments arising from a policy of collision insurance upon destruction of the vehicle as the "proceeds” of collateral, pursuant to section 9-306 of the Uniform Commercial Code.

The pertinent facts are not disputed. On July 23, 1974, Lucy and Dennis Brady executed an installment note in favor of the plaintiff bank and, as collateral for the loan, Lucy Brady also executed a security agreement covering a 1970 Volkswagen owned by her. Among…