Slide 2 Slide 3 Federal Deposit Insurance Corp. v. W. Hugh Meyer
& Associates, Inc., 864 F.2d 371 (5th Cir. 1989) Slide 4 Items
we will discuss: A pledge (also sometimes called a pawn) is a form
of possessory security, and accordingly, the assets which are being
pledged need to be physically delivered to the beneficiary of the
pledge (the pledgee). Pledges are in commercial contexts used in
trading companies (especially, physically, commodity trading), and
are still used by pawnbrokers, which, contrary to their old world
image, remain a regulated credit industry. THREE REQUIREMENTS : 1.
Secured Party must give Debtor something of value; 2. Debtor must
have rights in the collateral ; 3. Secured party must take
possession of the collateral set forth; must be signed and
authenticated. Pledge : Slide 5 Is a legal document that certifies
ownership of a specific number of shares of stock in a corporation.
According to Cornell Law... "Certificated security" means a
security that is represented by a certificate. Perfect(ion) -
relates to the additional steps required to be taken in relation to
a security interest in order to make it effective against third
parties[1] or to retain its effectiveness in the event of default
by the grantor of the security interest. Alleged; supposed; reputed
Stock Certificate : Certificated Stock : Perfecting A Security :
Putative Slide 6 Facts of the Case Hugh Meyer regularly entered
into financing agreements with First National Bank of Midland Bank.
In 1982, he and the bank executed a Separate Collateral Agreement,
wherein he pledged 5 Power Test Stock Certificates as collateral.
The Agreement also referenced that dividends would be part of the
collateral. While Midland took possession of the stock
certificates, they never registered the stock in their name nor did
they put a stop transfer on dividends. In September1983 various
notes owed and personally guaranteed by Meyer became due to
Midland. In October 1983 Midland became insolvent and appointed the
FDIC as receiver of the funds. The F DIC immediately came after
Meyer who hired attorneys Grambling & Mounce. In April 1985
Meyer received a dividend check from Power Test Stock. In May 1985
Meyer gave the check Grambling as security for his promise to pay
their retainer fees. Slide 7 The Issue : Whether the Code
recognizes a security interest in stock shares more precisely, in
the language of the code, "certificated securities"[1] if the
holder of the putative security interest has never possessed the
shares. [1] Both the base stock and the dividend stock in this case
were represented by certificates i.e., were certificated. The UCC
speaks of "security interests in securities." For the sake of
clarity, we will refer to the contested dividend stock as stock, or
as stock shares, except where it is necessary to invoke the exact
language of the UCC. Slide 8
