## Facts

- Arthur Glick Truck Sales, Inc. supplied fire-truck chassis to Wolverine Fire Apparatus Company on a recurring consignment arrangement.
- Under the parties’ practice, Glick delivered chassis to Wolverine while retaining the manufacturer’s certificates of origin; Wolverine would pay Glick after selling completed fire trucks to end purchasers, and Glick would then transfer the certificates.
- Two fire districts contracted with Wolverine to purchase completed fire trucks, and Travelers issued performance bonds guaranteeing Wolverine’s performance.
- Wolverine began construction using Glick-supplied chassis but entered bankruptcy before completing the trucks; Glick was never paid for the two chassis.
- After the districts made bond claims, Travelers acquired the unfinished trucks from the bankruptcy estate and arranged for completion and delivery (including work by Stuphen East).
- Glick sued seeking damages for the value of the chassis and a determination that its interest was superior to Travelers’ claimed rights.

## Issues

1. Whether the fire districts qualified as buyers in the ordinary course of business under the UCC with respect to the chassis incorporated into the contracted-for fire trucks.
2. Whether a buyer in the ordinary course (and a subrogee asserting that buyer’s rights) takes free of a consignor’s Article 9 interest in goods delivered to a manufacturer-dealer.
3. Whether Travelers, as surety that performed after the principal’s default, was subrogated to and could assert the fire districts’ UCC rights against the consignor.
4. Whether Glick’s retention of the certificates of origin and nonpayment prevented buyer-in-ordinary-course protection or altered priority.

## Decision

- The court granted summary judgment to Travelers and denied Glick’s cross-motion.
- The court held the fire districts were buyers in the ordinary course under the UCC in their purchase of the fire trucks, including the chassis used to build them.
- The court held Travelers, after performing under the bonds, was subrogated to the fire districts’ rights and could assert their interests in the chassis.
- The court held the fire districts’ buyer-in-ordinary-course rights, and thus Travelers’ derivative rights, were superior to Glick’s consignment-based interest under Article 9.
- The court later denied Glick’s motion for reconsideration, concluding the motion was procedurally improper and did not show legal or factual error warranting alteration of the judgment.

## Legal Principles

- A consignment that falls within UCC Article 9 is generally treated like a security interest for priority purposes, and the consignor’s interest can be cut off by a buyer in the ordinary course purchasing from the consignee.
- A buyer in the ordinary course may take goods free of certain competing interests connected to the seller’s (or consignee’s) rights, even where an upstream supplier remains unpaid, so long as statutory conditions for ordinary-course buying are met.
- A surety that satisfies or performs the bonded obligation may be subrogated to the obligee’s rights and may assert those rights against third parties in priority disputes.
- Possession of title-related documents (such as certificates of origin) does not, by itself, control UCC priority where Article 9 and buyer-in-ordinary-course rules govern the parties’ rights in the goods.

## Conclusion

The court ruled that the fire districts’ ordinary-course purchase of fire trucks from the manufacturer-dealer gave them UCC buyer protections that defeated the unpaid consignor’s Article 9 interest in the chassis, and that Travelers, as performing surety, could assert those buyer rights by subrogation, entitling it to priority and summary judgment.


Arthur Glick Truck Sales, Inc. v. Stuphen E. Corp., 914 F. Supp. 2d 529 (S.D.N.Y. 2012)