Commercial Law - The Uniform Commercial Code - The Right of an Unpaid Cash Seller to Reclaim Goods is Superior to the Floating Lien of an Inventory Financer

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Authors
Pirruccello, Jeffrey J.
Issue Date
1976
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INTRODUCTION|The Fifth Circuit Court of Appeals recently held in the case of In re Samuels & Co. that the reclamation right of an unpaid cash seller defeated the floating lien of an inventory financer. The principal reasons given for the holding were that 1) the ten day limitation on reclamation should not be strictly applied, and 2) the inventory financer could not qualify as a good faith purchaser. Furthermore, the court held that even if the cash seller's interest were merely an unperfected security interest, the debtor never acquired rights in the goods to which the inventory financer's floating lien could attach. The Fifth Circuit's decision was unexpected since that court's previous opinion seemed to concede that the inventory financer had priority if the principles of the Uniform Commercial Code applied. Shortly before In re Samuels & Co. was adjudicated, the Tenth Circuit Court of Appeals in United States v. Wyoming National Bank denied a petition of reclamation by an unpaid cash seller (feedlot) as against an inventory financer (the bank). Additionally, law review articles dealing with this issue seem to point out that an inventory financer's floating lien is superior to the unpaid cash seller's right to reclaim the goods...
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9 Creighton L. Rev. 412 (1975-1976)
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Creighton University School of Law
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