Opinion ID: 1231525
Heading Depth: 1
Heading Rank: 1

Heading: rights of the cash seller under article 2 of the uniform commercial code

Text: Baja's first argument is based on its rights as an aggrieved cash seller under the Uniform Commercial Code's Article 2 (A.R.S. § 44-2301 et seq.) on sales. At common law, a cash seller had greater rights than a credit seller by virtue of the cash seller's retention of title until the price of the goods was paid for. A cash purchaser who was somehow able to snatch the goods from the seller without paying or who more likely paid for the goods with a bad check, was treated no better than a thief. As Professor Gilmore has stated: The courts have held    in the cash sale situation that something more serious than `mere' fraud is involved, something approaching theft  `larceny by trick or device' as the time-honored phrase runs  and that consequently the defaulting cash sale buyer gets no title, and can transfer none to a good faith purchaser. The Commercial Doctrine of Good Faith Purchase, 63 Yale L.J. 1057, 1060 (1954). The cash seller had the power to reclaim goods even though they had been resold by the buyer to a good faith purchaser because the buyer could receive no greater rights than his seller. A credit seller, however, gave his buyer voidable title to the goods in the buyer's possession, and a credit seller could not reclaim the goods from a bona fide purchaser, but could only sue the buyer for the purchase price. The preference given to a cash seller resulted in unfairness to the subsequent purchasers from defaulting cash buyers. Time and effort had to be taken in order to obtain documentation of the title to the goods in question and this restricted the free flow of trade, something the Uniform Commercial Code sought to prevent. See Note, The Rights of Reclaiming Cash Sellers When Contested By Secured Creditors of the Buyer, 77 Columbia L.Rev. 934 (1977); Note, The Cash Seller's Right of Reclamation Versus the Secured Party's Floating Lien: Who Is Entitled to Priority?, 35 Wash. & Lee L.Rev. 277 (1978). The Uniform Commercial Code abolished this common law distinction between cash and credit sales, providing that a purchaser gains voidable title even though the transaction is a cash sale. A.R.S. § 44-2348 [U.C.C. § 2-403]. The Uniform Commercial Code has changed this rule by favoring the good faith purchaser over the aggrieved seller, A.R.S. § 44-2348(A), and the defaulting buyer has the power to transfer title to a good faith purchaser even though he lacks the right to do so. A.R.S. § 44-2355(B).    General Elec. Credit Corp. v. Tidwell Industries, supra, 115 Ariz. at 365, 565 P.2d at 871. A.R.S. § 44-2381(B) [U.C.C. § 2-702(2)] provides that an aggrieved seller is entitled to reclaim only if the buyer has received goods on credit while insolvent and the seller has exercised his right to reclaim within ten days after the buyer has received the goods. Although A.R.S. § 44-2381(B) [U.C.C. § 2-702(2)] deals with credit sales, the rights of a cash seller are likewise bound by the insolvency and ten day limitations. See A.R.S. § 44-2355 and Official Comment 3 to U.C.C. § 2-507. Although Arizona Imports later became insolvent, the record does not show that Arizona Imports was insolvent when it took delivery of the van. It would also appear that Baja did not reclaim the van within the ten day time period. Baja then had no rights arising out of Article 2 that would allow Baja to assert a superior interest in the van against First National as a good faith purchaser after the ten day period had expired. A.R.S. § 44-2381(B) [U.C.C. § 2-702(2)]. Baja is not entitled to relief under Article 2 (A.R.S. § 44-2301 et seq.) of the Uniform Commercial Code.