Opinion ID: 1180370
Heading Depth: 1
Heading Rank: 2

Heading: Guy Martin Buick's Interest

Text: When the certificates of title to the automobiles were delivered to the bank, Mark III's voidable title came into existence, and the bank's security interest attached. It was only after the certificates of title were delivered that Guy Martin Buick presented Mark III's check for collection. Mark III's check was subsequently dishonored and, according to the provisions of C.R.S.1963, XXX-X-XXX(2), a right to reclaim the automobiles arose immediately in favor of Guy Martin Buick. In an effort to establish priority in the automobiles over the bank's unperfected security interest, Guy Martin Buick contends that its right to reclaim is a species of security interest recognized by the Colorado Uniform Commercial Code which was perfected by possession whey Guy Martin Buick physically reclaimed the automobiles. C.R.S.1963, XXX-X-XXX. Guy Martin Buick further contends that since its security interest in the automobiles was perfected and, therefore, superior to the bank's unperfected security interest, that the Court of Appeals' decision should be reversed. If the right to reclaim created by C.R.S. 1963, XXX-X-XXX(2) were a security interest, we would be compelled to agree with Guy Martin Buick's argument. However, in our view, the right to reclaim goods sold in a cash sale transaction, as set forth in the Colorado Uniform Commercial Code, is not and was not intended to be a security interest. Re Helms Veneer Corp., 287 F. Supp. 840 (W.D.Va.1968); Braucher, Reclamation of Goods From a Fraudulent Buyer, 65 Mich.L.Rev. 1281 (1967); 2 Anderson, Uniform Commercial Code §§ 2-507; 8 and 13 (2d ed. 1970); Nordstrom, Law of Sales §§ 166, 170, and 171 (1970). The right to reclaim created by C.R.S.1963, XXX-X-XXX(2) is a right to undo the transaction, not a right to secure payment of the price as required by the definition of security interest under C.R.S.1963, XXX-X-XXX(37). Cf. Bloch v. Mill Factors Corp., 119 F.2d 536 (2d Cir. 1941). See 1 Gilmore, Security Interests in Personal Property § 11.1 (1965). The right to reclaim is not a species of interest in the goods which is the result of a transaction intended to create a security interest and is not created by contract as contemplated within the meaning of C.R.S.1963, XXX-X-XXX. Moreover, C.R.S.1963, XXX-X-XXX(3) states that successful reclamation excludes all other remedies, and the creation of a security interest out of the right to reclaim might allow recovery which would be greater than the mere recovery of goods originally transferred. Therefore, Guy Martin Buick's interest in the automobiles, if any, is limited to a right to reclaim upon the dishonor of Mark III's check. See Nordstrom, Law of Sales §§ 165-170 (1970).