Title: Bank of Beaver City v. Barretts' Livestock, Inc.

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

BANK OF BEAVER CITY v. BARRETTS' LIVESTOCK, INC.2012 OK 89Case Number: 109190Decided: 10/30/2012THE SUPREME COURT OF THE STATE OF OKLAHOMA
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN 
THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR 
WITHDRAWAL. 

THE BANK OF BEAVER CITY, Plaintiff/Appellee,v.BARRETTS' 
LIVESTOCK, INC., Defendant/Appellant,
And TRI-STATE FEEDERS, INC., Defendant/Third-Party 
Plaintiff,v.JON DANE MORRIS Third-Party Defendant.
CERTIORARI TO THE COURT OF CIVIL APPEALS DIVISION IV
Honorable Greg A. Zigler, Trial Judge
¶0 The trial court found the interest of plaintiff/appellee Bank of Beaver 
City (Bank) in the livestock of cattle operation and debtor Lucky Moon Land and 
Livestock, Inc. (Lucky Moon) to be superior to that of another creditor of Lucky 
Moon, defendant/appellant Barretts' Livestock, Inc. (Barretts). We granted 
certiorari to address a case of first impression. We hold, as did the Court of 
Civil Appeals, that the trial court should be affirmed because Bank's interest 
is superior to that of Barretts.
CERTIORARI PREVIOUSLY GRANTED;COURT OF CIVIL APPEALS OPINION 
VACATED;TRIAL COURT AFFIRMED.
Douglas L. Jackson, Julia C. Rieman, Enid, Oklahoma, for 
Defendant/Appellant.Michael C. Bigheart, W. Blake Hulse, Enid, Oklahoma, for 
Plaintiff/Appellee.
KAUGER, J.: 
¶1 The dispositive issue presented is whether the good faith requirement of 
12A O.S. 2011 §2-403 extends to third 
parties--in this case an unpaid seller of cattle--and requires that the third 
party be notified of a debtor's financial condition.1 
We hold that it does not. 
¶2 Bank alleges that on August 9, 2004, it perfected a security interest in 
all of Lucky Moon's livestock, including all after-acquired livestock, giving it 
a superior claim to cattle purchased by Lucky Moon from Barretts to satisfy the 
debt owed by Lucky Moon to Bank of approximately $2,000,000 as of May 20, 2010. 
Barretts asserts that Bank does not have priority over it because Bank was not a 
good faith secured creditor. The trial court granted Bank's motion for summary 
judgment, finding that Bank's perfected security interest had preference over 
Barretts' unperfected security interest. 
¶3 Barretts appealed, contending that Bank did not have a superior security 
interest because: 1) Bank's security interest never attached; and 2) Bank had 
not acted in good faith. The Court of Civil appeals affirmed the judgment of the 
trial court. Bank seeks certiorari, contending that: 1) the case presents an 
issue of first impression as to when good faith under 12A O.S. 2011 §2-403 should be determined; 2) 
Bank's security interest never attached; and 3) the Court of Civil Appeals' 
decision was inconsistent with a different decision of the Court of Civil 
Appeals on which the court relied. We granted certiorari on February 21, 2012, 
to address the novel issue of whether the good faith requirement of 
12A O.S. 2011 §2-403 extends to third parties 
and requires that they be notified of a debtor's financial condition.
FACTS
¶4 Barretts had been selling cattle to Lucky Moon for several years. 
Typically, it would deliver the cattle, submit an invoice, and then give Lucky 
Moon a few weeks to pay. Barretts did not file a financing statement or perfect 
any security interest in the cattle. Between August 28, 2009, and December 11, 
2009, Barretts made sales and deliveries totaling 903 head of cattle to Lucky 
Moon. Lucky Moon made two separate payments towards the total amount, one by 
wire transfer from Bank on October 13, 2009, and one by check paid by Bank on 
October 29, 2010. The remaining balance after payment was $214,533.52, 
representing 393 head of cattle. At this point, Lucky Moon wrote four separate 
checks totaling $176,234 in partial payment of the remaining debt which were 
dishonored by Bank for insufficient funds. Both Bank and Barretts claimed an 
interest in the cattle. On or about January 13, 2010, the parties agreed to 
auction the cattle and deposit the payments into escrow pending a determination 
of which claim was superior. 
¶5 Bank filed a petition seeking declaratory relief arguing that it possessed 
priority over the sale proceeds based in its perfected security interest. 
Barretts, which had no perfected security interest, asserted that the Bank's 
conduct deprived it of a superior security interest because it had not acted in 
good faith by continuing to cover Lucky Moon's overdrafts despite knowledge of 
its deteriorating financial condition; and that one of the co-owners lied about 
the cattle transactions. Barretts also argued that it would not have delivered 
the cattle had it known that Bank was not going to honor Lucky Moon's 
checks.
THE GOOD FAITH OBLIGATION OF 12A O.S. 2011 §2-403 DOES NOT EXTEND TO THIRD 
PARTIES
A.Bank of Beaver City's Security Interest
¶6 The Uniform Commercial Code, 12A O.S. 2011 §1-9-322(a)(2), provides that a 
perfected security interest or agricultural lien has priority over a conflicting 
unperfected security interest or agricultural lien.2 A perfected security 
interest in after-acquired property takes precedence over an unperfected 
security interest. We must determine whether the Bank perfected a security 
interest in 2004, which applied to all of the livestock including all 
after-acquired cattle.
¶7 Barretts does not dispute the creation of Bank's security interest in all 
of Lucky Moon's after acquired cattle, but it asserts that Bank's security 
interest was never perfected because Bank was not a good faith purchaser for 
value and therefore could not acquire rights to the collateral sufficient to 
permit attachment. Pursuant to 12A O.S. 2011 §1-9-308, a security interest is 
perfected if it has attached and all the applicable requirements for perfection 
in Sections 1-9-310 through 1-9-316 of Title 12A have been satisfied.3 Barrett's contends that 
Bank's security interest was never perfected pursuant to 12A O.S. 2011 §1-9-308 
because it never attached. Pursuant to 12A §1-9-203, a security interest 
attaches to collateral when it becomes enforceable against the debtor with 
respect to that collateral.4 A security interest becomes enforceable against the 
debtor and third parties only if: 1) value has been given; 2) the debtor has 
rights in the collateral or the power to transfer rights in the collateral to a 
secured party; and 3) certain formalities regarding the security agreement are 
satisfied.5 
¶8 Barretts argues that even if Lucky Moon had possession of the cattle it 
did not pay for them. Therefore, it could not transfer rights to the cattle 
pursuant to 12A O.S. 2011 §1-9-203(b)(2), making perfection of Bank's security 
interest in the cattle impossible. This situation is anticipated by the language 
of 12A O.S. 2011 
§2-403(1), which provides that a person with voidable title has the power to 
transfer good title to a good faith purchaser for value even if the delivery was 
in exchange for a check which was later dishonored.6 Barretts delivered 393 
cows to Lucky Moon and Lucky Moon paid for those cattle with checks which were 
later dishonored. Under these facts, Lucky Moon had voidable title, allowing the 
bank's security interest to attach if the bank were a good faith purchaser for 
value.7 
¶9 Pursuant to 12A O.S. 2011 
§2-403(1), for a security interest to attach to after-acquired property, the 
purchaser must have acquired its interest as a good faith purchaser for value to 
have priority over an unpaid seller. The bank is a purchaser, because it 
possesses a security interest.8 Whether the Bank acted in good faith as a purchaser 
hinges on the definition of good faith and whether the good faith requirement 
extends to a third party such as Barretts. Good faith is defined in Title 
12A O.S. § 1-201(20) as honesty in fact 
and the observance of reasonable commercial standards of fair dealing.9 
B.Duty of Good Faith
¶10 Barretts asserts that the Bank became intimately involved in Lucky Moon's 
operations and spoke with Lucky Moon at least weekly about its deteriorating 
financial condition.10 The duty of good faith exists between the lender and 
debtor, and one court has found a lender not to be a good faith purchaser due to 
its conduct, regardless of whether that duty is extended to third parties. In 
Monsanto Co. v. Heller, 449 N.E.2d 993 (Ill. App. 1983), 
Heller had a deep relationship with its debtor, Ilikon, and exercised 
considerable control over its business practices.11 Heller continued to cover Ilikon's checks to Monsanto 
Co. despite detailed knowledge of Ilikon's insolvency.12 However, Barretts does not allege that Bank exercised 
the kind of detailed control over Lucky Moon's business for its own profit that 
the court in Monsanto Co. found to be in bad faith.13 
¶11 Here, the dispositive issue is whether Bank owed any duty to Barretts, a 
third party. The Court of Appeals held that it knew of no controlling authority 
to support the proposition that the Bank owed a duty of good-faith under 
12A O.S. 2011 §2-403 to Barretts, a third 
party. We agree. Although this is a case of first impression in Oklahoma, our 
holding is consistent with the Court of Civil Appeals and the case law of other 
states interpreting the application of their versions of U.C.C. §2-403 to 
disputes between unpaid sellers and lenders with a perfected security interest 
in a debtor's inventory.
¶12 A decision of the Fifth Circuit Court of Appeals, Shell Oil 
Co. v. Mills Oil Co., Inc., 717 F.2d 208 (5th 
Cir. 1983), is on point. In a diversity action interpreting Mississippi's 
version of U.C.C. §2-403, the court held that:
1) knowledge of the existence of an unpaid seller does not impair a lender's 
good faith; and 
2) no agreement, express or implied, obligated the lender to disclose its 
debtor's financial condition to an unpaid seller.14 
¶13 Other cases do not state the second proposition directly. They do, 
however, bolster the argument that knowledge of outstanding third-party claims 
which have not been paid does not prevent a lien creditor from being a good 
faith purchaser within the meaning of U.C.C. §2-403. For example, in 
Matter of Samuels & Co., Inc., 526 F.2d 1238, 1243-44 (5th Cir. 1976), the court held that lack of knowledge of 
outstanding claims was necessary to acquire status as a bona fide purchaser 
under the common law and was required in many U.C.C. provisions, but the Code's 
definition of an Article Two good faith purchaser did not expressly or impliedly 
include lack of knowledge of third-party claims as an element.15 
¶14 The court in Maryott v. Oconto Cattle Co., 
607 N.W.2d 820, 828 (Neb. 2000), another case concerning rights to cattle, 
agreed with that analysis, holding that a lender's duty of good faith did not 
require that the lender be ignorant of third party claims. In Maryott, 
the lender did not notify any other parties of its actions before cancelling the 
cattle company's line of credit, and like this case, prevented payment for the 
cattle by dishonoring drafts.16 In Cooperative Finance Ass'n v. 
B & J Cattle Co., 937 P.2d 915 (Colo. 
App. 1997), the court determined that a secured party may prevail over an unpaid 
seller even when the secured party terminates advances on a line of credit 
without notice and then dishonors drafts drawn in reliance on that line of 
credit.17 
¶15 Good faith does not require a lender go out of its way to finance a 
troubled debtor purely for the benefit of affected third parties. The Code's 
good faith provision requires honesty in fact, but it does not require a secured 
party to continue financing a doomed business enterprise.18 These cases collectively imply that under similar 
circumstances and facts, the secured party lender will prevail despite knowledge 
of its debtor's negative financial condition and the competing claims of third 
parties. As long as the decision concerning the funding was commercially 
reasonable, the secured creditor with a floating lien remains a good faith 
purchaser even if it terminates funding with the knowledge that sums are owed to 
third parties.19 
CONCLUSION
¶16 Summary judgment comes to this court as a de novo review when it involves 
only legal questions.20 Inferences and conclusions are to be drawn from the 
underlying facts contained in the record and are to be considered most favorably 
to the party opposing summary judgment.21 Granting a motion for summary judgment is only proper 
when one party is entitled to judgment as a matter of law because there are no 
material disputed factual questions.22 The underlying facts are not in dispute in this appeal. 

¶17 Under the facts, pursuant to 12A O.S. 2011 §2-403, Bank is a secured party 
which qualifies as a good faith purchaser for value. It is entitled to priority 
over an unpaid credit seller.23 The good faith requirement does not extend to unpaid 
sellers such as Barretts. The Bank did not violate such a duty by deciding to 
terminate its funding of Lucky Moon, and to dishonor its checks without 
notifying Barretts of Lucky Moon's shaky financial situation. 
CERTIORARI PREVIOUSLY GRANTED;COURT OF CIVIL APPEALS OPINION 
VACATED;TRIAL COURT AFFIRMED.
Taylor, C.J., Kauger, Winchester, Edmondson and Combs, JJ., concur;
Colbert, V.C.J., Watt, Reif and Gurich, JJ., dissent. 
FOOTNOTES
1 Title 12A O.S. 2011 §2-403 is Oklahoma's codified 
provision of U.C.C. §2-403 (to which it is identical). It states: 
(1) A purchaser of goods acquires all title which his transferor had or had 
power to transfer except that a purchaser of a limited interest acquires rights 
only to the extent of the interest purchased. A person with voidable title has 
power to transfer a good title to a good faith purchaser for value. When goods 
have been delivered under a transaction of purchase the purchaser has such power 
even though 
(a) the transferor was deceived as to the identity of the purchaser, or 
(b) the delivery was in exchange for a check which is later dishonored, or 
(c) it was agreed that the transaction was to be a "cash sale", or (d) 
the delivery was procured through fraud punishable as larcenous under the 
criminal law. 
(2) Any entrusting of possession of goods to a merchant who deals in goods of 
that kind gives him power to transfer all rights of the entruster to a buyer in 
ordinary course of business. 
(3) "Entrusting" includes any delivery and any acquiescence in retention of 
possession regardless of any condition expressed between the parties to the 
delivery or acquiescence and regardless of whether the procurement of the 
entrusting or the possessor's disposition of the goods have been such as to be 
larcenous under the criminal law. 
(4) The rights of other purchasers of goods and of lien creditors are 
governed by the articles on Secured Transactions (Article 9) and Documents of 
Title (Article 7).
2 Title 12A O.S. 2011 §1-9-322(a) provides: 
(a) Except as otherwise provided in this section, priority among conflicting 
security interests and agricultural liens in the same collateral is determined 
according to the following rules:
(1) Conflicting perfected security interests and agricultural liens rank 
according to priority in time of filing or perfection. Priority dates from the 
earlier of the time a filing covering the collateral is first made or the 
security interest or agricultural lien is first perfected, if there is no period 
thereafter when there is neither filing nor perfection;
(2) A perfected security interest or agricultural lien has priority over a 
conflicting unperfected security interest or agricultural lien; and
(3) The first security interest or agricultural lien to attach or become 
effective has priority if conflicting security interests and agricultural liens 
are unperfected.
3 Title 12A O.S. 2011 §1-9-308(a) provides:
(a) Except as otherwise provided in this section and Section 1-9-309 of this 
title, a security interest is perfected if it has attached and all of the 
applicable requirements for perfection in Sections 1-9-310 through 1-9-316 of 
this title have been satisfied. A security interest is perfected when it 
attaches if the applicable requirements are satisfied before the security 
interest attaches.
4 Title 12A O.S. 2011 §1-9-203(a) provides: 
(a) A security interest attaches to collateral when it becomes enforceable 
against the debtor with respect to the collateral, unless an agreement expressly 
postpones the time of attachment.
5 Title 12A O.S. 2011 §1-2-203(b) provides:
(b) Except as otherwise provided in subsections (c) through (i) of this 
section, a security interest is enforceable against the debtor and third parties 
with respect to the collateral only if:
(1) value has been given;
(2) the debtor has rights in the collateral or the power to transfer rights 
in the collateral to a secured party; and
(3) one of the following conditions is met:
(A) the debtor has authenticated a security agreement that provides a 
description of the collateral and, if the security interest covers timber to be 
cut, a description of the land concerned;
(B) the collateral is not a certificated security and is in the possession of 
the secured party under Section 1-9-313 of this title pursuant to the debtor's 
security agreement;
(C) the collateral is a certificated security in registered form and the 
security certificate has been delivered to the secured party under Section 8-301 
of this title pursuant to the debtor's security agreement; or
(D) the collateral is deposit accounts, electronic chattel paper, investment 
property, letter-of-credit rights, or electronic documents, and the secured 
party has control under Section 7-106, 1-9-104, 1-9-105, 1-9-106, or 1-9-107 of 
this title pursuant to the debtor's security agreement.
6 Title 12A O.S. 2011 §2-403(1) provides:
(1) A purchaser of goods acquires all title which his transferor had or had 
power to transfer except that a purchaser of a limited interest acquires rights 
only to the extent of the interest purchased. A person with voidable title has 
power to transfer a good title to a good faith purchaser for value. When goods 
have been delivered under a transaction to purchase the purchaser has such power 
even though 
(a) the transferor was deceived as to the identity of the purchaser, or
(b) the delivery was in exchange for a check which is later dishonored, 
or
(c) it was agreed that the transaction was to be a "cash sale", or
(d) the delivery was procured through fraud punishable as larcenous under the 
criminal law.
7 Title 12A O.S. 2011 §2-403; Wolfe v. 
Faulkner, 1981 OK 
48, ¶21, 628 P.2d 700. See In Re Matter of Samuels & 
Co., 526 F.3d 1238, 1242-44 (5th Cir. 1976); Maryott v. 
Ocanto Cattle Co., 607 N.W.2d 820, 827 (Neb. 2000) 
(Nebraska has adopted UCC Section 2-403 as well).
8 Title 12A O.S. 2011 §1-201(29) and (30) define 
"purchaser" and "purchase" as 
(29) 'Purchase' means taking by sale, discount, negotiation, mortgage, 
pledge, lien, security interest, issue or reissue, gift, or any other 
voluntary transaction creating an interest in property.
(30) 'Purchaser' means a person who takes by purchase. (Emphasis added.)
9 Good faith is an overriding purpose of the code. See 
Grant Gilmore, The Good Faith Purchase Idea and the Uniform Commercial Code: 
Confessions of a Repentant Draftsman, 15 Georgia L. Rev. 605, 629 
(1981).
10 Appellant's Petition for Writ of Certiorari, 2.
11 Monsanto Co. v. Heller, 449 N.E.2d 993, 994-95 (Ill. App. 1983).
12 Monsanto Co., note 11 at 998-99, supra. 
The court held:
While we agree that a secured lender is not expected to extend unlimited 
credit for an indefinite period in the absence of an express agreement, "good 
faith" under the Code has been held expressly to require that parties engage in 
"reasonable commercial standards of fair dealing." 
….
Given the course of dealing between the parties, [Lender's] direct 
involvement with the operation of Ilikon and with Ilikon's transactions with its 
suppliers, we believe … the trial court correctly concluded that Heller was not 
entitled to the priority of a "good faith purchaser for value" under section 
2-403(1).
13 The relationship in Monsanto Co. involved 
daily telephone conversations about:
Ilikon's sales of the prior day; the amount collected in Heller's lockbox and 
the prior day's balances in Ilikon's accounts at the Bank; the amount of checks 
previously written by Ilikon that had not yet cleared the Bank and the amount of 
cash required to cover checks previously written that were to clear the Bank 
that day, as well as general business information concerning Ilikon and 
Monsanto…. Heller monitored its loans to Ilikon by auditing Ilikon's books and 
records and examining its and facilities from time to time. Heller also required 
regular written financial reports from Ilikon including daily reports of bank 
balances, sales collections and accounts receivable, raw materials and monthly 
inventory reports.
Monsanto Co., note 11 at 995, supra.
14 Shell Oil Co. v. Mills 
Oil Co., Inc., 717 F.2d 208, 213-14 (5th Cir. 1983). The 
Court held: 
Shell argues only that Citizens Bank's knowledge that Shell was unpaid 
creates a genuine issue as to the bank's good faith. We reject Shell's 
argument….
Shell Oil Co., 717 F.2d  at 214. The Court, in discussing 
Mills' claim that the bank had a duty to protect him against the consequences 
flowing from his contingent liability as a guarantor of Shell Oil Company, also 
held that: 
[m]ills contends that the bank officers should have notified Mills that Mills 
Oil Company's overdrafts were being honored. Mills' contentions are 
meritless. No precedent is cited which establishes any such duties. No 
agreement, express or implied, obligated the bank to notify or advise Mills 
regarding the financial affairs of Mill Oil Company. [Emphasis supplied.]
Shell Oil Co., 717 F.2d  at 214. At this point the court was 
not interpreting claims related to good faith and U.C.C. §2-403, but since the 
court found no duty to notify Mills, period, it is implied that none existed 
under U.C.C. §2-403 either.
15 In Re Matter of 
Samuels & Co., Inc., note 7 at 1243-44, 
supra.
16 Maryott, note 7, supra.
17 Cooperative Finance Ass'n v. 
B & J Cattle Co., 937 P.2d 915, 921 
(Colo. App. 1997), citing In Re Matter of Samuels, 
note 7, supra. The court held:
[a] secured creditor with an after-acquired property clause is frequently a 
line-of-credit lending institution which can, and sometimes does, elect without 
notice to terminate advances on the line of credit and then dishonors drafts 
issued in reliance on the line of credit. In that instance, the secured creditor 
may well enhance its secured position at the expense of the unpaid cash-seller. 
Even under these circumstances, however, the secured party prevails.
18 In Re Matter of 
Samuels & Co., Inc., note 7 at 1243, supra.
19 In Re Matter of 
Samuels & Co., Inc., note 7 at 1244, supra.
20 Welch v. Crow, 2009 OK 20, ¶9, 206 P.3d 599, 602-603; EOG Res 
Mktg., Inc. v. Oklahoma State Bd. of 
Equalization, 2008 OK 95, ¶13, 196 P.3d 511, 518-19; Carmichael v. 
Beller, 1996 OK 
48, ¶2, 914 P.2d 1052, 1053.
21 K & K Food 
Services, Inc. v. S & H, Inc. 
2000 OK 31, ¶16, 3 P.3d 705, 711; Vance v. Federal 
Nat. Mortg. Ass'n, 1999 OK 73, ¶6, 988 P.2d 1275, 1276; Shelly v. Kiwash 
Elec. Co-op., Inc., 1996 OK 44, ¶15, 914 P.2d 669, 674.
22 Jennings v. Badgett, 2010 OK 7, ¶4, 230 P.3d 861, 864; Lowery v. Echostar 
Satellite Corp., 2007 OK 38, ¶11, 160 P.3d 959, 963-64; Vance v. Federal 
Nat. Mortg. Ass'n, 1999 OK 73, ¶6, 988 P.2d 1275, 1276.
23 It is worth noting that Colorado has amended its 
version of U.C.C. §2-403 to specifically exclude its application to cattle that 
have not been paid for. Colo. Rev. Stat §4-2-403 states in pertinent part:
(1.5) Notwithstanding any other provision of this section, when livestock 
have been delivered under a transaction of purchase and on the accompanying 
brand inspection certificate or memorandum of brand inspection certificate the 
seller has conspicuously noted that payment of the consideration for the 
transaction has not been received, the buyer does not have power to transfer 
good title to a good faith purchaser for value until payment is 
made.

COMBS, J., with whom TAYLOR, C.J., and KAUGER, J., join concurring:
¶1 I concur in the majority opinion but write to express my concern as to 
Barretts' ability to protect its interest prior to the attachment of the lien. 
Barretts argue without being paid for the cattle, even though possession has 
transferred to Lucky Moon, title could not have been transferred and therefore 
the lien could not attach. An additional issue presented would be how Barretts 
could as the seller protect its interest after physical transfer of the 
livestock but prior to payment for the sale of the cattle. I note with interest 
the majority's identification of the legislative amendment to the Uniform 
Commercial Code made by the Colorado legislature as reflected in footnote 
23.
¶2 Specifically, Colorado has amended its version of UCC §2-403 seemingly to 
address the very issue presented in the facts of this case. The Colorado 
lawmakers provided:
"Notwithstanding any other provision of this section, when livestock have 
been delivered under a transaction of purchase and on the accompanying brand 
inspection certificate or memorandum of brand inspection certificate the seller 
has conspicuously noted that payment of the consideration for the transaction 
has not been received, the buyer does not have power to transfer good title to a 
good faith purchaser for value until payment is made." Emphasis 
applied.
See, Colo. Rev. Stat §4-2-403.
¶3 Under such a provision Barretts as seller of the cattle would have been 
able to protect its interest until such time as payment had been made by Lucky 
Moon. In commercial transactions such as these where the parties have rolling 
inventory and thus rolling collateral, in order to protect the free market 
enterprise the seller must be assured that title does not pass nor does the 
ability to attach a lien interest under 12A O.S. 2011 §2-403 accrue until payment has 
been made. To do otherwise exposes the seller to the risk of stop payment orders 
and insufficient remedies to be compensated for the 
transaction.

WATT, J., with whom COLBERT, V.C.J. and REIF, J. join, dissenting:
¶1 The majority correctly parrots the Uniform Commercial Code's statements on 
security interests and their priorities. Thereafter, with two sentences at the 
end of the opinion, reaches a result that invades the province of the fact 
finder about what duty is owed to the livestock company. The issue, as framed, 
is whether the Bank owed any duty to a third party. The opinion goes on to hold 
that, under these "contested facts," it does not. Admittedly, this is the 
general rule under the Uniform Commercial Code. Because I would return this 
cause to the trier of fact for resolution, I dissent.
¶2 The majority sets forth the Code's definition of "good faith" dealing as 
"honesty in fact and the observance of reasonable commercial standards of fair 
dealing."1 It does not provide the added input found in the 
Uniform Commercial Comments to the same section where the definition of good 
faith is found. It provides in pertinent part:
[T]he definition of 'good faith' in this section requires not only honesty 
in fact but also 'observance of reasonable commercial standards of fair 
dealing.' Although 'fair dealing' is a broad term that must be defined in 
context, it is clear that it is concerned with the fairness of conduct rather 
than the care with which an act is performed. . . . [Emphasis 
provided.]
Oklahoma Comments to the 2001 version of the same section providing that 
"good faith" was honesty in fact in the conduct or transaction concerned"2 are even more 
instructive. They provide in pertinent part:
. . . (19) 25 Okl.St.Ann § 9 provides: "Good faith consists in an honest 
intention to abstain from taking unconscientious advantage of another, even 
through the forms or technicalities of law, together with an absence of all 
information or belief of facts which would render the transaction 
unconscientious." The term was also used, but not defined, in the Negotiable 
Instruments Law [48 Okl.St.Ann. §§ 122(3), 126 now repealed.] The Commercial 
Code definition is briefer, but the spirit of the two definitions are the same. 
[Emphasis provided.]
¶3 Most certainly, under either of the two definitions of "good faith," 
supra, there are material issues of fact which remain unresolved. Here, even the 
uncontested facts leave a reasonable person to ponder whether: the secured 
creditor (the Bank), is in bed with the debtor (2nd party), through knowledge of 
their poor financial condition and that they are selling cattle out of trust. 
With this knowledge, they honor numerous overdraft checks written to the 
livestock company (3rd party). Once the Bank realizes that the debtor really is 
"going belly up" and still has in its possession some 300 plus cattle does it 
dishonor checks to the livestock company in an attempt to increase its own 
collateral and financial position. 
¶4 If the Bank did act in the way described, they owe a duty to the 3rd 
party. Under these facts, most certainly, reasonable people could conclude that 
the Bank "hid behind the log" to improve its position and abandoned its duty of 
good faith in the commercial setting. We cannot assume, as does the majority, 
that the facts are as either party presents them. The livestock company should 
have the opportunity to prove that the Bank abandoned its position of priority 
by acting in bad faith.
¶5 I cannot concur in an opinion which makes assumptions resulting in the 
reward of devious behavior by the Bank while ignoring the rights of the innocent 
3rd party. Admittedly, the livestock company was sloppy 
in not filing a financing statement. Nevertheless, I would prefer to reward the 
careless rather than the devious. Therefore, I dissent. 
FOOTNOTES
1 Title 12A O.S. 2011 §1-201(19). 
2 Title 12A O.S. 2001 §1-201(19). 

GURICH, J., with whom COLBERT, V.C.J. and REIF, J. join dissenting:
¶1 The majority holds that the good faith requirement of 12A O.S. 2011 § 2-403 does not extend to third 
parties. Such a holding is not supported by the Uniform Commercial Code,1 and case law interpreting 
the Code,2 and goes too far--it bars all future third parties from 
defeating a secured lender's interest under § 2-403 regardless of how 
egregiously the lender has acted. 
¶2 To be a good faith purchaser for value, a party must act honestly in fact 
and observe reasonable commercial standards of fair dealing.3 Barretts' Livestock 
submitted evidence that created an issue of material fact as to whether the bank 
acted in good faith.4 As such, summary judgment should not have been granted. 

FOOTNOTES
1 Section 2-403 states that 
"[a] person with voidable title has power to transfer a good title to a good 
faith purchaser for value." 12A O.S. 2011 § 2-403(1). Third parties are not 
precluded under § 2-403 from asserting that the purchaser lost its priority 
because it did not act in good faith. "Good faith is an overriding purpose of 
the Code." Monsanto v. Walter E. Heller Company, Inc., 449 N.E.2d 993, 
1000 (Ill. App. 1983). 
2 Manheim Auto. Fin. Servs., Inc. v. Guthrie, No. 
06-2298-KHV, 2007 WL 3054184, at *9 (D. Kan. Oct. 19, 2007) (finding that 
Manheim presented no evidence regarding reasonable commercial standards of fair 
dealing or whether it followed those standards and had not established as a 
matter of law that it acted in good faith so as to qualify as a good faith 
purchaser for value under § 2-403); Chrysler Credit Corp. v. Ferguson 
Pontiac-GMC, Inc., 1993 OK CIV APP 43, ¶¶ 11-12, 
853 P.2d 1282, 1284 (holding that for 
Chrysler's security interest to defeat Ferguson's reclamation right, Chrysler 
had to be a good faith purchaser for value but that evidence of Chrysler's good 
faith was either conflicting or absent and so summary judgment was 
inappropriate); Iola State Bank v. Bolan, 679 P.2d 720, 731-32 (Kan. 
1984) (holding that the bank failed to act in good faith and so it was not a 
good faith purchaser and its security interest did not attach against the 
sellers); Monsanto, 449 N.E.2d  at 1000 (holding that the course of 
dealings between the parties and Heller's direct involvement with the operation 
of Ilikon's transactions with its suppliers precluded Heller from claiming 
priority as a good faith purchaser for value because Heller did not act in good 
faith); In re American Food Purveyors, Inc., 1974 WL 21665, 17 U.C.C. 
Rep. Ser. 436 (N.D. Ga. 1974) (finding that the secured party had to act in good 
faith and have no notice of the debtor's insolvency condition to prevail over 
the reclaiming rights of the seller). 
The cases relied on by the majority do not hold that the good faith 
requirement of § 2-403 does not extend to third parties. Rather, these cases 
find that either no evidence of bad faith was presented or the evidence 
presented did not rise to the level of bad faith. See Maryott v. 
Oconto Cattle Co., 607 N.W.2d 820, 828 (Neb. 2000) (finding that Maryott had 
not specifically alleged bad faith in either of its petitions and had not met 
its burden of proving bad faith on the part of Farm Credit); Cooperative 
Finance Ass'n, Inc. v. B & J Cattle Co., 937 P.2d 915, 921 (Colo. App. 
1997) (finding that the lender's terminating advances on a line of credit and 
dishonoring drafts issued in reliance on the line of credit was not bad faith so 
as to defeat the lender's priority); Shell Oil Co. v. Mills Oil Co., 
Inc., 717 F.2d 208, 213 (5th Cir. 1983) (rejecting Shell's argument that the 
bank's knowledge that Shell was unpaid was enough to create a material issue as 
to the bank's good faith); Matter of Samuels & Co., Inc., 526 F.2d 1238, 1243 (5th Cir. 1976) (finding no evidence that the lender acted in bad 
faith).
3 12A O.S. 2011 § 1-201(20). 
4 Defendant's Response to Plaintiff's Motion for Summary 
Judgment at 28-37.