## Facts

- First National Bank in Munday (the Bank) loaned money to cattle operator John Cox and claimed a perfected security interest in all livestock owned by Cox, wherever located and whenever acquired.
- After Cox defaulted, the Bank sued Cox (and related obligors) for amounts due on multiple notes and sought to sequester Cox’s livestock, including cattle located in Lubbock County.
- Lubbock Feeders, L.P. (Lubbock Feeders), a commercial feed yard, intervened and asserted a superior security interest in the Lubbock County cattle and their sale proceeds.
- Cox fed cattle at Lubbock Feeders under a “cattle and feed financed” program in which Lubbock Feeders advanced credit to finance cattle purchases (and later feed and yardage), and Cox signed loan/security documents granting Lubbock Feeders a security interest in the cattle.
- Cox purchased cattle from third-party vendors at sale-barn auctions. For each purchase, Cox provided Lubbock Feeders with invoices identifying the cattle, and Lubbock Feeders documented the advance with loan certificates tied to specific sets of cattle.
- The cattle were delivered directly from the auctions to Lubbock Feeders’ yard; Cox did not take physical possession of the cattle.
- Lubbock Feeders presented summary-judgment evidence (including the yard manager’s affidavit and business records) that it made 20 advances connected to particular cattle purchases and that the advances enabled Cox to complete those purchases.
- The Bank argued Lubbock Feeders did not have a purchase-money security interest (PMSI) because Cox technically bought the cattle shortly before receiving Lubbock Feeders’ loan proceeds, so the proceeds did not “enable” the acquisition.
- The parties also disputed whether Lubbock Feeders perfected its interest and whether it satisfied the requirements for PMSI priority in livestock, including any statutory notice requirement.
- The trial court granted summary judgment for Lubbock Feeders, declaring it had a PMSI in the cattle and proceeds with priority over the Bank’s security interest, and severed the Bank–Lubbock Feeders dispute into a final judgment.

## Issues

1. Did the trial court apply the correct traditional summary-judgment standard rather than making improper “implied findings of fact”?
2. Did Lubbock Feeders establish, as a matter of law, that its advances gave rise to a PMSI in the cattle even though the auction purchases occurred shortly before the advances were funded?
3. Did Lubbock Feeders prove it perfected its security interest in the cattle and met the statutory requirements for PMSI priority in livestock (including any required notice to the Bank)?
4. Was the yard manager’s affidavit competent summary-judgment evidence (personal knowledge, nonconclusory statements, and adequate support from records) sufficient to support summary judgment?

## Decision

- The court of appeals affirmed the summary judgment for Lubbock Feeders.
- The court held Lubbock Feeders proved as a matter of law that it held a perfected PMSI in Cox’s Lubbock County cattle and their proceeds.
- The court rejected the Bank’s argument that the timing of the purchases and advances prevented the advances from “enabling” Cox’s acquisition of rights in the cattle.
- The court concluded Lubbock Feeders established priority over the Bank’s earlier blanket lien, and the Bank failed to raise a genuine issue of material fact on perfection or the livestock PMSI priority requirements.
- The court held the yard manager’s affidavit was competent and sufficiently detailed, and it supported Lubbock Feeders’ proof of the transactions, the collateral identification, and the security-interest claim.

## Legal Principles

- A traditional summary-judgment movant must show no genuine issue of material fact and entitlement to judgment as a matter of law; courts view evidence in the light most favorable to the nonmovant and draw reasonable inferences in the nonmovant’s favor.
- A security interest is a PMSI to the extent it secures an obligation incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in the collateral, if the value is in fact used for that purpose.
- In determining whether value “enabled” acquisition, courts may consider the substance of the overall transaction; a short timing gap between a purchase and the related advance does not, by itself, defeat PMSI status when the advance is tied to that purchase and functions as purchase financing.
- A secured party may perfect a security interest in goods through methods authorized by Article 9, including filing a financing statement and, where applicable, perfection by possession.
- Priority for a PMSI in livestock is governed by the specific Article 9 priority provisions for livestock PMSIs, including any notice conditions; a movant seeking PMSI priority must prove satisfaction of the statute’s requirements on the summary-judgment record.
- Summary-judgment affidavits must be based on personal knowledge and set out facts that would be admissible in evidence; an affiant’s job responsibilities can support personal knowledge of business transactions and records.
- Affidavit statements that use legal labels do not defeat summary judgment when the affidavit also provides detailed underlying facts and supporting documents showing how the transactions were conducted and how the collateral and advances were connected.

## Conclusion

The court affirmed summary judgment that Lubbock Feeders had a perfected purchase-money security interest in Cox’s Lubbock County cattle and their proceeds, with priority over the Bank’s earlier blanket security interest, because Lubbock Feeders’ documented advances functioned as purchase financing for identified cattle delivered directly to its yard and the Bank did not raise a material fact dispute on perfection or PMSI priority requirements.


First National Bank in Munday v. Lubbock Feeders, L.P., 183 S.W.3d 875 (2006)