Opinion ID: 1298626
Heading Depth: 3
Heading Rank: 2

Heading: whether mallard was protected as a buyer in ordinary course of business

Text: Alaska Statute 45.09.307(a) provides that a buyer in the ordinary course of business takes his or her purchase free of a security interest created by the seller: A buyer in ordinary course of business (AS 45.01.201(9)) ... takes free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of its existence. A buyer in the ordinary course of business is defined by AS 45.01.201(9) as: A person who, in good faith and without knowledge that the sale to that person is in violation of the ownership rights or security interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind. Mallard contends that it is a buyer in the ordinary course, and that AS 45.09.307(a) protects it from NC's security interest. In order to establish that this section applies, Mallard, as the buyer claiming to be protected, bears the burden of proving the necessary elements of that section of the statute. Matter of Gary Aircraft Corp., 681 F.2d 365, 373 (5th Cir.1982), cert. denied, 462 U.S. 1131, 103 S.Ct. 3110, 77 L.Ed.2d 1366 (1983). It must prove essentially two elements. First, that Cobb was in the business of selling goods of that kind. [6] Second, that it acted in good faith, with no knowledge that the sale violated the security agreement. In order to claim the protection of AS 45.09.307(a) Mallard must show that Cobb was a dealer in heavy equipment. Mallard introduced as evidence an affidavit signed by Les Cobb. In the affidavit, Cobb stated that he had been a dealer in vehicles and equipment since approximately May, 1985. He further stated that during that time he had continuously displayed a large sign which reads Cobb Truck and Equipment Sales  Rental  Lease in a prominent location on his display lot; that he had periodically advertised in the classified advertisements section of the Fairbanks Daily News-Miner; and that he had obtained an Alaska Motor Vehicle Dealer Registration Certificate. [7] Finally, he stated that he had sold fifteen to twenty other items before he sold the loader to Mallard, and continued to sell vehicles and equipment after the sale. Mallard also submitted the affidavit of William J. Beaman, president of Mallard Leasing Company. Beaman stated that before he purchased the loader he personally visited Cobb's business to ascertain whether Cobb was a dealer. Beaman stated that he relied on the aforementioned large sign, and the fact that Cobb had many pieces of equipment in inventory. In fact, Beaman stated that [t]he inventory was larger than that of some other dealers with whom I have done business over the years. These affidavits do not resolve the issue of whether Cobb was a dealer in heavy equipment. The fact that Cobb was licensed as a motor vehicle dealer is not conclusive as to his dealership status. Kaw Valley State Bank v. Stanley, 514 S.W.2d 42, 45 (Mo. App. 1974). This is particularly so where the question is not whether Cobb was a dealer of motor vehicles, but whether he was a dealer in heavy equipment. The affidavits contain no specific facts which would prove or disprove that Cobb was a dealer. The statement that Cobb had sold fifteen to twenty other items does not necessarily lead to the conclusion that these items were similar to the loader, or that Cobb was a dealer in heavy equipment. Further, Beaman's affidavit is undermined by his own admissions in other contexts. In a deposition he admitted that he had conducted business in Fairbanks since 1973, but had never heard of Cobb's company. He also admitted to Tom Kleinschmidt that he had originally been leery about Cobb's status but that Cobb had produced a piece of paper as proof that he was a dealer. For these reasons, we find that a material question of fact exists as to whether Cobb was in fact a dealer in heavy equipment. Summary judgment therefore would be inappropriate on this issue.