In re Western Iowa Limestone, Inc.

Western Iowa Limestone, Inc. (WIL) (plaintiff) sold agricultural lime to a group of dealers who paid up front, but left the lime stored at WIL's quarry rather than physically taking it. WIL later entered chapter 11 bankruptcy while United Bank of Iowa held a perfected security interest in WIL's inventory; when the lime was liquidated in bankruptcy, the Dealers argued they were buyers in the ordinary course of business (BIOC) with priority over United Bank's security interest. The bankruptcy court initially found the Dealers were not BIOC because they never took physical possession, then reversed itself on reconsideration to find they held constructive possession and did qualify as BIOC; the Bankruptcy Appellate Panel (BAP) reversed again, finding no constructive possession at all and not reaching whether constructive possession could even support BIOC status. The Dealers appealed.