# Stowers v. Mahon

> Court of Appeals for the Fifth Circuit · February 17, 1976 · 526 F.2d 1238

URL: https://www.frixlaw.com/law-library/cases/8898108

## Case

- **Full name:** In the Matter of SAMUELS & CO., INC., Bankrupt. Curtis R. STOWERS v. James S. MAHON, Trustee, and C.I.T. Corporation
- **Court:** Court of Appeals for the Fifth Circuit
- **Decided:** February 17, 1976
- **Citations:** 526 F.2d 1238; 7 Collier Bankr. Cas. 2d 369; 18 U.C.C. Rep. Serv. (West) 545; 1976 U.S. App. LEXIS 12817
- **Precedential status:** Published
- **Opinion:** Concurrence by Gee
- **Judges:** Ainsworth, Bell, Brown, Clark, Coleman, Dyer, Gee, Gewin, Godbold, Goldberg, Ingraham, Morgan, Roney, Thornberry, Wisdom
- **Cited by:** 177 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/8898108

## How later opinions describe it (automated extraction)

- stating that "[l]ack of knowledge of outstanding claims is necessary to the common law BFP” and finding that this requirement is expressed in many provisions of the UCC, including the priority provisions found in Article 9
- stating rule in case involving cash sale of cattle to packing house (buyer) and claim of seemed creditor and sellers to packaged meat
- finding no evidence that the lender acted in bad faith

## Opinion text

GEE, Circuit Judge
(specially concurring):
Troubled by the seeming harshness of the result, I nevertheless concur, despite its effect to force a cash seller to act like a credit seller to protect his interest. It asks much of these small cattle dealers, selling their cattle for cash, that they wrangle with the complicated provisions of art. 9 to protect themselves against an insufficient funds check, but this seems to be the clear demand of the Texas Code. In the normal course of dealing, such a check will give a seller an action on the instrument as well as for breach of the contract of sale, all in addition to the remedy of reclamation read into the Code by some courts. This protection is adequate except in cases such as this, where the buyer writes a bad check and subsequently declares bankruptcy. All sellers who accept checks run the same risk — some take out insurance against such a loss by the simple procedure of drawing up and filing a security agreement giving them rights in the goods sold to secure the purchase price.
Such an agreement can be filed in advance,. so there is no need to wait until one receives a check to fill out a security agreement and race to file it before the bank dishonors the check. The very nature of this transaction recommended taking this simple additional precaution *1249 of filing a purchase money security interest — the cows were immediately slaughtered, making it impossible to recover the “goods” if the deal fell through, and, too, the delayed pricing arrangement transformed the “cash sale” into a credit transaction for all commercial purposes regardless of how the two parties characterized it. Comment 6 to art. 2-511 says acceptance of a check postdated by even one day “insofar as third parties are concerned, amounts to a delivery on credit and the [seller’s] remedies are set forth in the section on buyer’s insolvency (§ 2-702).” As Judge Hughes pointed out in the district court opinion, Stowers’ delivery of livestock to the bankrupt without perfecting a security interest therein placed the bankrupt in such a position that it could transfer good title to a good faith purchaser for value, which is precisely what Samuels did.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/8898108. Public record. Not legal advice.