Brodie Hotel Supply, Inc. v. United States
United States Court of Appeals for the Ninth Circuit
431 F.2d 1316 (1970)
Brodie Hotel Supply, Inc. (Brodie) (plaintiff) had repossessed restaurant equipment after an earlier buyer's bankruptcy but left it in the restaurant; new operator James Lyon began using the equipment in June 1964 while negotiating to buy it from Brodie over several months. Before that sale closed, Lyon borrowed $17,000 from a bank on November 2, 1964, pledging the equipment as collateral, and the bank filed a financing statement on November 4 (later assigned to the Small Business Administration (SBA) (defendant)). Brodie didn't issue a bill of sale to Lyon until November 12, entered a security agreement for the purchase price, and filed its own financing statement on November 23. Brodie sued to establish priority over the SBA's interest; the district court found Brodie's interest, as a purchase-money security interest (PMSI), was superior, and the government appealed.
Whether the 10-day period in UCC § 9-312(4) for perfecting a purchase-money security interest begins to run when the debtor has possession of the collateral and the debtor is actually indebted to the creditor.