In re JUDITH RIVER RANCHES, INC., Debtor. COLUMBIA PACIFIC BANK AND TRUST COMPANY, Plaintiff, v. JUDITH RIVER RANCHES, INC., Jerry D. Smith, U-JIN Enterprises, Inc., Nana Development Corporation, Inc., and Bar El Sky Ranch, Inc., Defendants

In re JUDITH RIVER RANCHES, INC., Debtor. COLUMBIA PACIFIC BANK AND TRUST COMPANY, Plaintiff, v. JUDITH RIVER RANCHES, INC., Jerry D. Smith, U-JIN Enterprises, Inc., Nana Development Corporation, Inc., and Bar El Sky Ranch, Inc., Defendants. Bankruptcy No. 81-01984-214. Adv. No. [ AXX-XXXX-XXX ]. United States Bankruptcy Court, E. D. Washington. March 1, 1982. Stephen English and Irving Potter of Wolf, Griffith, Bittner, Abbott & Roberts, Portland, Or., Dan O’Rourke of Malott, Southwell & O’Rourke, Spokane, Wash., for plaintiff, Columbia Pacific Bank and Trust Co. Thomas Glover of Quigley, Hatch, Lover-idge & Leslie, Seattle, Wash., for defendant Judith River Ranches, Inc. Foster De Reitzes of Wilkinson, Cragun & Barker, Washington, D. C. and Dan P. Hungate of Bogle & Gates, Seattle, Wash., for defendants U-Jin Enterprises, Inc. and Nana Development Corp. [MAJORITY — L. WARDEN HANEL, Bankruptcy Judge.] DECISION L. WARDEN HANEL, Bankruptcy Judge. This matter having come before the Court for trial on the plaintiff’s, Columbia Pacific Bank and Trust Company, complaint to lift the automatic stay pursuant to 11 U.S.C. § 362 and testimony having been heard and exhibits properly entered, the Court makes the following: FINDINGS OF FACT I. On or about February 22, 1978 Jerry D. Smith personally purchased approximately 250 elk from Clifford Wolfs winkle, Ponde-rosa Ranch, Oregon. II. On March 1, 1978 Jerry D. Smith transferred ownership of the elk he purchased to Columbia Pacific Resources by Bill of Sale. III. Early in 1978 Jerry D. Smith personally purchased .Judith River Ranch located in Fergus County, Montana. IV. On or about March 21, 1978 Articles of Incorporation for Judith River Ranches, Inc. were filed with the Secretary of State, Helena, Montana. V. The 250 elk owned by Columbia Pacific Resources, Inc. were transferred from Ponderosa Ranch, Oregon to Judith River Ranch, Montana between March, 1978 and January 1, 1980. VI. On or about April 15, 1978 an agreement was entered into between Judith River Ranches, Inc. and American Deer Industries & Trading Company for the sale of antlers of elk located on Judith River Ranch with Columbia Pacific Resources as beneficiary of a letter of credit having an expiration date of July 30, 1978. VII. Subsequent letters of credit were provided by American Deer Industries & Trading Company with Columbia Pacific Resources, Inc. as beneficiary thereon. VIII. On August 1, 1978 an Application for License to Breed and Propogate Gamebirds, Game and Fur Bearing Animals was received by the Montana Department of Fish and Game from Judith River Ranches, Inc. IX. On January 1, 1979 the Montana Department of Fish and Game issued a License to Breed and Propogate Gamebirds, Game, and Fur Bearing Animals to Judith River Ranches, Inc. X. Columbia Pacific Resources, Inc. changed its name to Columbia Pacific Development, Inc. sometime between January 1,1979 and November 1, 1979. XI. On or about November 1, 1979 Jerry D. Smith and Lucinda J. Smith, by Deed transferred and conveyed Judith River Ranch from themselves to Judith River Ranches, Inc. XII. On or about November 8, 1979 a mortgage in favor of Travelers Insurance Company from Judith River Ranches, Inc. was recorded by the Fergus County Auditor, Montana, encumbering the Judith River Ranch real property. XIII. On or about February 4, 1980 an agreement was entered between Judith River Ranches, Inc., Columbia Pacific Development, Inc., Nana Development Corporation, and U-Jin Enterprises, Inc. providing financing from Nana Development Corporation and U-Jin Enterprises. XIV. As part of the agreement of February 4, 1980 Columbia Pacific Development (CPR) signed a security agreement granting Nana Development Corporation and U-Jin Enterprises, Inc. a security interest in all elk owned by Columbia Pacific Development, Inc. located on Judith River Ranch. XV. Nana Development Corporation and U-Jin Enterprises filed a UCC-1 Statement covering said elk with the Fergus County Auditor and the Montana Secretary of State on or about February 19, 1980. XVI. As part of the agreement of February 4, 1980 Judith River Ranches, Inc. granted a mortgage in favor of Nana Development Corporation and U-Jin Enterprises, encumbering the Judith River Ranch real property. XVII. Nana Development Corporation and U-Jin Enterprises recorded said mortgage on or about February 15, 1980 with the Auditor of Fergus County, Montana. XVIII. On or about March 10, 1980 Columbia Pacific Development, Inc., f/d/b/a Columbia Pacific Resources, sold the elk it owned located on Judith River Ranch to Judith River Ranches, Inc. subject to the encumbrances of Nana Development Corporation and U-Jin Enterprises, Inc. XIX. On or about June 17,1980 Jerry D. Smith, as an individual, and Columbia Pacific Bank and Trust Company entered into a settlement agreement. XX. As part of the agreement between Jerry D. Smith and Columbia Pacific Bank and Trust Company, Columbia Pacific Bank and Trust Company was granted a security interest in 125,000 shares of common stock in Judith River Ranches, Inc., a mortgage subject to the existing encumbrances on the real property held by Judith River Ranches, Inc., and a security interest in all livestock now or hereafter located on the Judith River Ranch, including various species of elk, deer, sheep and goats located thereon. XXI. During the negotiations between Jerry D. Smith and Columbia Pacific Bank and Trust Company leading up to the settlement of June 17, 1980, Columbia Pacific Bank and Trust Company was informed several times either by Jerry D. Smith or his attorneys of a prior existing security interest in the elk in favor of Nana Development Corporation and U-Jin Enterprises. XXII. During the negotiations between Jerry D. Smith and Columbia Pacific Bank and Trust Company, Columbia Pacific Bank and Trust Company received a copy of the mortgage between Judith River Ranches, Inc. and Nana Development Corporation and U-Jin Enterprises, Inc. XXIII. Prior to the entry of the settlement between Jerry D. Smith and Columbia Pacific Bank and Trust Company, Irving Potter, attorney for Columbia Pacific Bank and Trust Company, flew to Fergus County Montana to search the County Auditor’s UCC index. XXIV. On or about June 15, 1978 Mr. Potter searched the grantor’s index under the names of Jerry D. Smith and Judith River Ranches, Inc. and found no evidence of any security interest. XXV. On or about June 18, 1980 Columbia Pacific Bank and Trust Company filed a UCC-1 financing statement with the County Auditor of Fergus County, Montana covering their security agreement with Judith River Ranches, Inc., entered June 17, 1980. XXVI. On or about June 18, 1980 Columbia Pacific Bank and Trust Company recorded its mortgage with Judith River Ranches, Inc. with the County Auditor of Fergus County, Montana, encumbering the Judith River Ranch real property. XXVII. In 1978 through 1980 Jerry D. Smith’s customary operating procedure was to buy assets individually and transfer that asset to one of his corporations as soon as financing could be arranged by the corporation. XXVIII. During 1978 through 1980 Jerry D. Smith was the main shareholder in numerous corporations to which he left the day-to-day operations under the control of others. From the foregoing Findings of Fact, the Court, without considering the questions as to any of the other collateral issues raised, and based on the stipulation of counsel as indicated on the record prior to the commencement of argument, this decision is confined to the question of the priority of the UCC-1 financing statements, the Court makes the following: CONCLUSIONS OF LAW I. At the time Columbia Pacific Development, Inc. entered into the February 4,1980 agreement with Nana Development Corporation and U-Jin Enterprises, Columbia Pacific Development Corporation was the true and legal owner of all the elk located on Judith River Ranch. II. Nana Development Corporation and U-Jin Enterprises, Inc. properly perfected its security interest on February 19, 1980 in the elk pursuant to Article 9 of the Uniform Commercial Code as adopted by Montana. III. At the time Judith River Ranches, Inc. granted a security interest to Columbia Pacific Bank and Trust Company in all the livestock, etc., located on Judith River Ranch, Judith River Ranches, Inc. was the true and legal owner of all the elk located thereon subject to the encumbrance of Nana Development Corporation and U-Jin Enterprises, Inc. IV. Columbia Pacific Bank and Trust Company properly perfected its security interest on June 18, 1980 in the elk located on Judith River Ranch pursuant to Article 9 of the Uniform Commercial Code as adopted by Montana. V. The security interest of Nana Development Corporation and U-Jin Enterprises, Inc. is superior to the security interest of Columbia Pacific Bank and Trust Company in the elk on the Judith River Ranch. From the Foregoing Conclusions of Law, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the security interest of Nana Development Corporation and U-Jin Enterprises, Inc. in the elk located on Judith River Ranch in Fergus County, Montana is first in time and superi- or to the security interest of Columbia Pacific Bank and Trust Company, further IT IS ORDERED, ADJUDGED AND DECREED that the complaint of Columbia Pacific Bank and Trust Company to lift the stay pursuant to 11 U.S.C. § 362 is hereby denied.