Peerless Packing Company v. Malone & Hyde Inc.
Supreme Court of Appeals of West Virginia
376 S.E.2d 161 (1988)
Malone & Hyde (defendant) subleased a grocery store to John Kizer and financed $387,000 in equipment and inventory secured by a properly perfected interest in Kizer's present and after-acquired inventory; Peerless Packing and eleven other wholesalers (plaintiffs) also supplied Kizer inventory on open account credit without obtaining any purchase-money security interests of their own. When Kizer's store failed and defaulted on payments, he transferred all rights in the store, equipment, and inventory to Malone in exchange for a release of liability, and Malone took possession while declining to pay the wholesalers for inventory it never financed; the wholesalers sued for unjust enrichment, and the trial court granted Malone a directed verdict, ruling unjust enrichment inapplicable to UCC-governed transactions, prompting the wholesalers' appeal.
Whether unsecured creditors who supplied inventory without perfecting a security interest may use an equitable unjust-enrichment theory to override a competing creditor's properly perfected UCC security interest in the same collateral.