## Facts

- Ned Maryott regularly sold cattle to Oconto Cattle Co., a commercial feedlot that bought and sold cattle in its own name and also custom fed and marketed cattle.
- Farm Credit Services of the Midlands, PCA financed Oconto and held perfected, cross-collateralized security interests covering Oconto’s livestock and inventory, including after-acquired cattle.
- In summer 1996, Maryott delivered 640 head of cattle to Oconto and was not immediately paid.
- Oconto issued two sight drafts drawn on its Farm Credit lines of credit as partial payment for the cattle.
- Before the drafts were presented, Farm Credit declared Oconto in default, canceled Oconto’s credit lines, and refused to honor the drafts.
- Maryott attempted to retake the cattle from the feedlot, but Farm Credit prevented removal, anticipating a dispute over ownership and priority.
- Oconto later filed bankruptcy; Maryott sought the cattle’s value rather than the cattle themselves.
- Maryott did not file a financing statement or otherwise perfect any security interest in the delivered cattle, though he claimed a practice or custom that title would not pass until payment.

## Issues

1. Under the Nebraska Uniform Commercial Code, is an unpaid cash seller’s interest in goods delivered to the buyer superior to, or subordinate to, a lender’s perfected security interest in the buyer’s inventory/livestock?
2. Does a seller’s attempted reservation of “title” after delivery operate as ownership or as a security interest governed by Article 9?
3. If the seller’s interest is a security interest (including a possible purchase-money security interest), what perfection steps are required to obtain priority over a preexisting perfected secured creditor?

## Decision

- The Nebraska Supreme Court reversed the district court.
- The court held Farm Credit’s perfected security interest in Oconto’s livestock and inventory had priority over Maryott’s interest in the delivered cattle.
- The court treated Maryott’s claimed retention of title as a security interest, not continued ownership.
- Because Maryott did not perfect any security interest as required by Article 9, he could not defeat Farm Credit’s perfected interest.

## Legal Principles

- Under the UCC, a seller’s attempt to reserve title in delivered goods is recharacterized as a security interest; priority is governed by Article 9, not by title-based ownership concepts.
- A perfected security interest generally takes priority over a conflicting unperfected security interest in the same collateral.
- An unpaid seller claiming a purchase-money security interest must comply with Article 9 perfection (and, where applicable, timing/notice requirements) to obtain priority over a prior perfected inventory or livestock lender.
- A secured lender’s properly perfected interest can extend to after-acquired livestock and inventory when covered by the security agreement and filings.

## Conclusion

The court held that once the cattle were delivered, Maryott’s claimed “no payment, no title” arrangement amounted only to an unperfected security interest, which was subordinate to Farm Credit’s perfected Article 9 security interest in Oconto’s livestock and inventory; the judgment for Maryott was therefore reversed.


Maryott v. Oconto Cattle Co., 607 N.W.2d 820 (Neb. 2000)