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Boers v. Payline Systems, Inc – Case Brief Summary (Oregon)

In Boers v. Payline Systems, Inc., 145 Ore. App. 1, 928 P.2d 1010 (Or. App. 1996), a judgment debtor gave a law firm a security interest in his accounts at several brokerages to secure payment of appellate legal fees. Id. at 1011.

The judgment debtor did not stay enforcement of the judgment during appeal, and the judgment creditor sought to garnish the brokerage accounts, thereby becoming a lien creditor under Oregon law. Id.

The law firm asserted it had a perfected security interest in the assets in the accounts that had priority over the lien created by the garnishment. Id.

The question before the Oregon Court of Appeals was whether the law firm, by virtue of its security interest, had priority over assets in the accounts with respect to legal services rendered to the judgment debtor after service of the garnishment.

The court concluded the term "advance" under the Oregon UCC should be read broadly to include value other than money. Id. at 1013.

The court also concluded the law firm's legal services constituted an advance provided pursuant to a commitment to the judgment debtor predating the lien created by the garnishment and, therefore, the law firm's security interest had priority over the lien. Id.

The Boers court was addressing section 79.3010(4) of the Oregon UCC, which, at the time, stated:

A person who becomes a lien creditor while a security interest is perfected takes subject to the security interest only to the extent that it secures advances made before the person becomes a lien creditor or within 45 days thereafter or made without knowledge of the lien or pursuant to a commitment entered into without knowledge of the lien. (Boers, 928 P.2d at 1012.)