Citizens and Southern Factors, Inc., Plaintiff-appellant, v. Small Business Administration, an Agency of the Unitedstates, et al., Defendants-appellees, 609 F.2d 239 (5th Cir. 1980)

The result in this case rests on the answers to two questions which we certified to the Supreme Court of Alabama.¹  On September 7, 1979, the Supreme Court of Alabama answered the certified questions. Ala., 1979, 375 So. 2d 251. The Court ruled: (1) that the conveyance of title to returned goods to an accounts receivable purchaser results simply in the retention of a security interest in favor of that purchaser, and (2) that the Uniform Commercial Code provision governing the priority dispute involved in the case is § 7-9-312(5), not § 7-9-306(5).

The Government concedes as it must and then only after a dying gasp that the Alabama Supreme Court's holding "flies in the face of" § 7-9-306(5) and is clearly wrong that the Alabama Supreme Court's rulings demonstrate that Citizens and Southern Factors' motion for summary judgment should have been granted by the District Court. Accordingly, the judgment of the District Court is reversed and the case is remanded to the District Court with directions that judgment be entered in favor of Citizens and Southern Factors.

REVERSED and REMANDED WITH DIRECTIONS.