Rex Financial Corp. v. Great Western Bank & Trust
Court of Appeals of Arizona
532 P.2d 558 (1975)
Rex Financial Corp. (Rex) (plaintiff) financed Liberty Mobile Home Centers' (Liberty) inventory of mobile homes, taking a security interest and holding the manufacturer's certificates of origin. Liberty sold four mobile homes and took back security agreements (chattel paper) from the buyers, then sold those chattel paper agreements to Great Western Bank & Trust (Great Western) (defendant), a bank that regularly purchased such paper. Liberty never paid Rex the proceeds it owed from those sales. Rex claimed its security interest in the chattel paper outranked Great Western's, even though Rex still held the certificates of origin. The trial court granted summary judgment to Great Western under UCC § 9-308, and Rex appealed.
Whether under UCC § 9-308, a purchaser of chattel paper who takes possession of it has priority over a prior creditor whose security interest is based solely on the chattel paper being proceeds of inventory.