## Facts

- Trico Steel Company, L.L.C. (debtor) contracted to buy about 35,000 metric tons of pig iron from Cargill Incorporated on “CIFFO New Orleans, Louisiana” terms.
- Cargill procured the pig iron from Brazil and shipped it to New Orleans.
- After arrival, Trico arranged inland barge transport from New Orleans to Decatur, Alabama through Celtic Marine Corporation, which subcontracted with Volunteer Barge & Transportation.
- Under Trico’s agreement with Celtic, Trico was responsible for loading in New Orleans and unloading in Decatur, and for freight charges; Volunteer would be liable for loss or damage during barge transportation.
- Trico resold about 10,000 tons; approximately 25,000 tons were loaded onto barges for Decatur.
- While the 25,000 tons were in transit on the Mississippi River, Cargill learned Trico was insolvent and notified the intermediary that it was stopping delivery, then sought a declaration entitling it to immediate possession.
- Trico and its secured lender, JPMorgan Chase Bank, argued Trico “received” the iron in New Orleans (terminating stoppage); Cargill argued Trico had not taken physical possession and the goods remained with independent carriers.

## Issues

1. Whether the seller’s UCC right to stop delivery for buyer insolvency remained available because the buyer had not “received” the goods under UCC §§ 2-705 and 2-103(1)(c).
2. Whether stevedores and the inland transport entities functioned as the buyer’s agents so their possession constituted the buyer’s “receipt.”
3. Whether a secured lender’s claimed interest in the goods could defeat the seller’s stoppage-in-transit right where the buyer had not received the shipment.

## Decision

- The court granted Cargill’s motion for summary judgment and denied Trico and Chase’s cross-motion.
- Trico had not “received” the 25,000 tons because it had not taken physical possession, and possession by the intermediaries was not attributable to Trico as agency receipt.
- The stevedores, Celtic, and Volunteer were independent intermediaries/carriers, not Trico’s agents for purposes of UCC “receipt.”
- Cargill validly exercised stoppage in transit due to Trico’s insolvency and was entitled to immediate possession, superior to Trico and Chase.

## Legal Principles

- Under UCC § 2-705, a seller may stop delivery of goods in the possession of a carrier or other bailee upon discovering the buyer’s insolvency, and the right continues until the buyer “receives” the goods.
- “Receipt” under UCC § 2-103(1)(c) means the buyer’s taking physical possession of the goods.
- A buyer may “receive” through an agent, but possession by independent carriers/bailees is not imputed to the buyer absent sufficient control consistent with agency.
- Trade terms allocating costs, risk of loss, or shipping obligations do not, by themselves, change the UCC’s physical-possession meaning of “receipt” for stoppage purposes.
- A secured creditor’s interest attaches to the debtor’s property rights and does not override a seller’s effective stoppage right when the debtor has not received the goods.

## Conclusion

The bankruptcy court held that the unpaid seller’s stoppage-in-transit right remained effective because the buyer had not taken physical possession of the goods and the intermediaries were not the buyer’s agents; the seller therefore had a superior right to immediate possession over the debtor and its secured lender.


In re Trico Steel Co., L.L.C., 282 B.R. 318 (Bankr. D. Del. 2002)