In re Howell Enterprises, Inc.

Rice mill Howell Enterprises had granted the Bank (creditor) a security interest in its accounts receivable, but when a buyer refused to deal directly with Tradax America (plaintiff), Howell let Tradax use its name to sell rice to that buyer while Howell mistakenly logged the deal as its own account receivable. The buyer's letter of credit, payable to Tradax, ended up in Howell's possession when Howell entered Chapter 11; the Bank claimed the letter under its perfected security interest, and the bankruptcy court found Tradax held an equitable interest via constructive trust but still awarded the letter to the Bank as a bona fide purchaser for value.