Gaming the system

The interesting case law for today could also be known as the Tale of the Collections Attorney Who Was Too Clever By Half:

J. I. Case Co. v. United Virginia Bank, 232 Va. 210 (1986) - Plaintiff filed an action in detinue (requesting return of specific personal property rather than just its value) seeking the recovery of unsold heavy equipment in the possession of its debtor's bank, who had seized the equipment from the debtor's inventory under a UCC lien. It sought and obtained a prejudgment attachment of the property, and posted a bond which was "void unless the right of possession ultimately was judged against" the Plaintiff. The sheriff went out, collected the equipment, and handed it over to the Plaintiff. The Plaintiff then removed the equipment from Virginia, and ultimately distributed the equipment across the country for retail sale. Thinking it had accomplished everything it had set out to do by getting the equipment away from the bank, an (allegedly) secured creditor with an inferior claim to the equipment, the Plaintiff filed a nonsuit of right under Virginia Code § 8.01-380, dismissing the action before the bank and the debtor had an opportunity to present their full defense to the Plaintiff's claim or obtain the judgment needed to collect on the bond.

HELD: without completing a final judgment on the detinue action, the plaintiff had no adjudicated right to the property, and the defendants had a right to its return without any further proceedings. Because the equipment had been disposed of by the Plaintiff, judgment was entered for the value of the equipment against the Plaintiff.

Unsaid in the opinion is that by trying to pull a fast one like this, it sounds like the Plaintiff disposed of the only property in which it had a security interest, which demoted it to an unsecured creditor fighting for whatever scraps might be left over after the bank and other secured creditors took out their portions. Also unresolved (but left for the trial court) was whether the bond was satisfied by such a judgment.