Supreme tool die

There is no dispute about the facts. Peco never filed a financing statement under the Uniform Commercial Code. On April 28, , Hartbauer, being insolvent, executed an assignment for the benefit of creditors to defendant Glen E. The assignee held a liquidating auction on August 18, , and intended to sell the machine leased by Peco to Hartbauer. Peco brought this suit to enjoin the assignee from selling the machine for the benefit of Hartbauer's creditors.

The trial court held that the lease was not a security interest and enjoined the sale. The assignee appealed and we reverse. ORS That section provides:. At first glance the provisions of the above section may be somewhat confusing, probably because they are stated in the inverse order of importance. However, upon a careful reading of the entire section it is clear that the first question to be answered is that posed by clause b whether the lessee may obtain the property for no additional consideration or for a nominal consideration.

If so, the lease is intended for security. The cases construing the above section have uniformly held that if the lessee, upon compliance with the lease, has the option to purchase the property for no additional consideration, or for a nominal consideration, the lease is a security interest as a matter of law.

In re Vaillancourt, 7 U. In the cases decided under U. The more frequently used test is a comparison of the option price with the value of the property at the time for exercising the option. In re Washington Processing, 3 U.

See, also, In re Crown Cartridge Corp. The courts also hold that the consideration is nominal if the option price leaves the lessee no "sensible alternative" to the exercise of the option or if completing the purchase is the "only sensible course".

In some cases there has also been a comparison of the option price with the original list price or with the total rentals required under the lease. We agree that the best test is a comparison of the option price with the market value of the equipment at the time the option is to be exercised.

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