Document: 416 U.S. 100 94 S.Ct. 1626 40 L.Ed.2d 79 James S. MAHON, Trustee, and C.I.T. Corporationv.Curtis R. STOWERS et al. No. 73—1131. April 15, 1974. [Syllabus from pages 100-101 intentionally omitted] PER CURIAM. 1 This litigation arose out of the bankruptcy Samuels & Co. a large meat packing concern with plants in various parts Texas. Respondents had sold cattle to Samuels, for which they received checks payment, but ensued before been paid by drawee bank. With consent all parties receiver trustee bankrupt estate continued sell that slaughtered packaged held proceeds such sales subject disposition referee. sought reclamation asserted concomitant right sale meat. Corporation, perfected lien on bankrupt's inventory other property, opposed respondents' claim. 2 The referee made findings fact conclusions law sustained position. District Court upheld referee's fact, reversed judgment grounds under applicable provisions Texas Business Commercial Code claims were superior respondents. Appeals Fifth Circuit, however, agreed because it read Packers Stockyards Act, 42 Stat. 159, 7 U.S.C. § 181 seq., certain regulations issued Secretary Agriculture thereunder, as establishing superiority claim notwithstanding law. We disagree this reading therefore grant certiorari reverse Appeals. 3 * uncontested facts case are contained found respondents, period some ten days filed Chapter XI petition Bankruptcy selling live slaughter 'grade yield' basis, was recognized custom usage trade. Under contract price is left open at time delivery purchaser, who slaughters livestock allows carcasses chill approximately 24 hours. At graded United States Department determined. purchaser then gives seller check established amount. further question delivered its plant Mount Pleasant, Texas, where Agriculture. 4 Until actually yield determined, sellers can identify their particular livestock, once processed packaged, identification no longer possible. When case, none respondents able his own least Samuels' premises time. also determined could be identified realized 5 Examining competing claims, times material action holder duly security interest animal carcasses, unpackaged meat, materials, owned or may have an interest. indebted amount excess $1,800,000. advancing sums weekly precipitated May 23, 1969, when C.I.T., deeming itself insecure, refused make advance $184,000 needed continue operations. 'knew should known' method bought grade-and-yield basis. He respondent agreement financing statement reflecting transactions Samuels. 6 reasoned these intended transact business cash, rather than credit, title 'did not pass plaintiff until payment plaintiff.' Therefore, he concluded, C.I.T.'s attach subsequently honored. Any decision would, said, 'a species involuntary creditor against wishes intent,' although complied normal arrangements Act. unnecessary specific delivered, placed duty show funds laid furnished accepted Turning Code, largely counterparts Uniform court retained only those animals therefrom.1 It taken perfect interest2 nor attempted utilize any might law.3 Delivery basis enabled transfer good good-faith value, category persons included both bankruptcy.4 unable 'establish possession ownership . (by) identify(ing) positively property reclaimed either original substituted form.' turn divided Circuit. Although conceded would transaction governed solely along promulgated thereunder relevant usages trade, stated: 8 'The reasoning cases impact Act convinces more unperfected reserved seller. Not statute regulation packer lacks full dominion over has paid. Where defaults issuance bad (and destroys identity processing into fungible products), beneficiary trust imposed remedial statute.'5 9 thus specifically benefit deemed general inventory. II 10 previously ordinary debtor-creditor relationship requires post-bankruptcy disappointment convert relationship. See McKee v. Paradise, 299 119, 57 124, 81 L.Ed. 75 (1936). employees employee association trust, 11 debtor failed pay debt. know principle upon failure treated conversion trust. throughout whole there fund res. No segregated set up special deposit manner. wages became due, assets employer obligation acute expecially regrettable claimant employees, cannot avail change enable obtain preference estate.' Id., 122—123, S.Ct., 125. 12 entitled share position unsecured creditor. 13 Similarly, we believe Appeals, concluding existed between weight corresponding practices, will properly bear. For does regulate methods record-keeping procedures defined 'packers' must remember 'chief evil' aimed 'the monopoly packers, enabling them unduly arbitrarily lower prices shipper sells, increase consumer buys.' Stafford Wallace, 258 495, 514—515, 397, 401, 66 735 (1922). find evidence packers hold cash given each sale. 14 note outset 'packer'6 'stockyard owner,'7 'market agency,'8 'dealer.'9 difference important, regulates different manner enumerated categories. Thus, example, bonding requirements 204 give private cause stockyards, market agencies, dealers. 209. An implicit fiduciary override state commercial establish priority bankruptcy, exist here extracted sections relating few categories 15 dealing impose duty.10 section possibly question, 192, deals generally unlawful practices placing heavy emphasis considered restraint Enforcement responsibility Agriculture, authority hearings enter binding orders. But indication that, lurking within intention control deceptive monopolistic industry, lies guarantee favored regard packers' assets. Nor do intent.11 Those primarily concerned recordkeeping, allocation Federal Trade Commission, promulgate appropriate rules carry 16 did rest itself, two first regulation, CFR 201.43(b),12 'before close next day following purchase determination price, transmit deliver authorized agent unless otherwise expressly livestock.' second 201.99,13 'purchasing carcass grade basis' 'maintain seller's therefrom' and, after 'true written account purchase' incorporating pertinent terms. regulations, conjunction, provide protection forced deal grade-and-weight fashioned packer, derived provisions. conclusion erroneous. 17 think fair 201.99 reveals overriding sellers, having hands purchasing prior actual receive accurate accounting A operating without clearly face substantial risk mingled lesser value thereby become indistinguishable arbitrary weighing part packers. Regulation insures observe principles determining maintain sufficient records so exercise proper supervision. record comply 201.99. complained, commingled pricing, intervened concededly cleared bank drawn. And simply address problem. 18 201.43, though point, likewise fails support imposition dealers one meet whether seller, failing time, defaulting payor. argue strongly prompt prohibited practice While contention well true, necessarily designed buyer determine rights third holding valid packer's Whatever policy reasons insuring take advantage purposes, hard see automatically require stand better footing extended secured credit packer. way suggests strike balance. 19 desired relationships chosen language effectuates purpose. 201.42, custodial accounts, provides subsection (a) payments agency licensee payee full. Subsection (b) engaged 'on commission proceeds. (e) establishment accounts agencies licensees representing buyers misuse entrusted 20 Had lawful desirable behalf received, provision easily regulations. Its absence expected making course business, assume risks insolvency situation assumes. Their interests, like similarly situated depend taking steps business. 21 cited conclusion. most heavily relied on, Bowman 363 F.2d (CA5 1966), proposition fiduciary, dealt all, person stockyard owner, agency, dealer. discuss person, discussion occurred context test insolvency. concluded definition relation current liabilities instance, since ability obligations necessary effect beneficial purposes relationships, occurs separate matter accounts. As discussed above, 201.42 refrain commingling whom act. packers,14 totally presented here.15 None holds even intimates trustees sellers. III 22 undisputed nothing overrides respective trustee. note, isolated passage end Appeals' opinion states 'Packers Regulations comprise trade known financed period.' 483 557, 563. ex proprio vigore priorities mean say conduct mandated not, just conduct, dispositive Judge, herself longtime practitioner judge federal bench, here. To extent appealing challenged determination, adjudication remand. 23 granted, reversed, remanded proceedings inconsistent opinion. ordered. Tex.Bus. Com.Code §§ 1.201(37) 2.401(a) (1968), V.T.C.A. 9.312(c) (1968). 2.702(b) noted event, affected demand Code. 2.702(c). 2.403(a) 191. id., 201(a). 201(c). 201(d). 191—195. 221—229. Title 201.43(b) reads: '(b) Purchasers promptly livestock. Each dealer shall, shall disclosed purchaser's documents transaction. construed permit 201.61(a) basis.' '(a) grade, weight, pur- chase, agent, details contract. Such include, applicable, date place slaughter, condemnation terms, description trim, grading used, accounting, conditions. therefrom true showing number, (identifying grade) ungraded explanation condemnations, information affecting final accounting. substantiate settlement '(c) purchased price. paragraph apply purchases guaranteed '(d) Settlement (hot) weights. hooks, rollers, gambrels similar equipment used connection same uniform weight. tare include equipment: Provided, That July 1, 1968, shroud average shrouds pins. '(e) USDA official (final preliminary) grade. If based grades grades, forth detailed specifications available agent. slaughtered.' Glover Livestock Comm'n Hardin, 454 109 (CA8 1972). Bruhn's Freezer Meats Chicago, Inc. 438 1332 1971); Swift States, 393 247 (CA7 1968).

Category: 11