Sweetwater Cattle Co. v. Murphy, No. 16-6029 (8th Cir. 2017)
Annotate this CaseLeigh Murphy d/b/a Murphy Cattle Co. appealed the bankruptcy court's orders holding that Sweetwater's lien in certain cattle was superior to Murphy's rights as an unpaid seller of the cattle. The panel concluded that the result in this case would be the same under either Colorado or Nebraska law and thus relied on cases from both states interpreting the relevant provisions of the UCC; Murphy signed a document transferring ownership of the cattle to Debtor Leonard, such that others could reasonably rely on Leonard's claim of ownership; Moffat County State Bank v. Producers Livestock Marketing Assoc. does not stand for the proposition that Article 2 is inapplicable here as to the passage of title, and the bankruptcy court did not err in turning to Article 2 of the UCC; pursuant to section 2-401, title passed to Leonard at the moment the cattle were shipped; Murphy's right to have title re-vest in him when the checks were dishonored was limited to his reclamation rights; under section 2-403, when Leonard received title from Murphy at the time of shipping, he received all the title Murphy had, as well as the power to transfer good title to a good faith purchaser for value (Sweetwater in this case); the panel denied Sweetwater's request to strike Murphy's electronic record filing; and the panel denied Sweetwater's oral request for sanctions. Accordingly, the court affirmed the judgment.
Court Description: Federman, Author, with Kressel and Shodeen, Bankruptcy Judges] Bankruptcy Appellate Panel. Title to cattle passed from Murphy to debtor and Sweetwater's after-acquired property lien attached to the cattle and was superior to Murphy's right to reclaim the cattle after debtor's checks were dishonored; defects in the bill of sale did not prevent the transfer of ownership; title to the cattle did not revest in the seller and his rights were limited to reclamation procedures; Sweetwater was a good faith purchaser. [ February 23, 2017
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