Snap-On Tools Corporation v. Rice
Arizona Court of Appeals
781 P.2d 76 (1989)
Relevant factsFree
Neal financed tools from Snap-On (plaintiff) with an unperfected security interest (no financing statement filed), and later sold his tire business, including those tools, to his employee Rice (defendant); Rice knew Neal owed Snap-On money generally but had no actual knowledge of the security interest, believing Neal would pay off the balance himself. After Neal went bankrupt without paying, Snap-On sued to repossess the tools from Rice, and the trial court ordered the tools returned to Rice.
IssueFree
Whether, under the UCC, a buyer who pays for goods without knowledge of a security interest in those goods takes them free of any unperfected security interest.