Rayfield Inv. Co. v. Kreps - 35 So. 3d 63 (Fla. Dist. Ct. App. 2010)

Rule:

The Florida Uniform Commercial Code explicitly provides that a perfected security interest in goods takes priority over all subsequently perfected and un-perfected security interests in the same goods. Fla. Stat. § 679.322(1) (2009). Florida law also explicitly provides that a consignor's interest in goods placed for sale with a consignee who routinely sells such goods is merely an un-perfected security interest subject to the claims of those with prior perfected security interests. Fla. Stat. § 679.319 and § 679.322(1)(b) (2009). As to consigned goods, the presumption is that goods are held by a consignee on sale or return basis subject to claims of consignee's creditors.

Facts:

Appellant lender had a perfected security interest in a series of loans on a debtor's art gallery. When the debtor defaulted, the lender obtained a judgment and a writ of replevin for the gallery's inventory. Appellee consignor intervened in the replevin suit and claimed a painting. The evidence showed that the appellee placed the painting with the gallery after lender’s security interest had been perfected by the filing of a UCC-1 financing statement. The appellee did not attach any tag or legend to the painting to indicate that it was on consignment or file a UCC-1 financing statement regarding his prior interest in the painting. The Circuit Court entered judgment awarding appellee the painting, and appellant sought review.

Issue:

Under the circumstances, did the consignor have priority over the lender?

Answer:

No.

Conclusion:

The Court noted that the Florida Uniform Commercial Code, Fla. Stat. § 679.322(1) (2009), explicitly provided that a perfected security interest in goods took priority over all subsequently perfected and un-perfected security interests in the same goods. Florida law also explicitly provided that a consignor's interest in goods placed for sale with a consignee who routinely sold such goods was merely an un-perfected security interest subject to the claims of those with prior perfected security interests. Fla. Stat. § 679.319 and § 679.322(1)(b) (2009). Thus, the Court held that consignor did not perfect his security interest in the painting or show that the debtor's was substantially engaged in consignment sales or that a majority of the debtor's creditors knew that it was substantially engaged in consignment sales.