United States v. Kimbell Foods

440 U.S. 715, 99 S. Ct. 1448 (1979)

 

RULE:

Undoubtedly, federal programs that by their nature are and must be uniform in character throughout the nation necessitate formulation of controlling federal rules. Conversely, when there is little need for a nationally uniform body of law, state law may be incorporated as the federal rule of decision.

FACTS:

In the first case, first appellee supermarket borrowed money from second appellee wholesaler and third appellee bank that assigned its security interest to the government. Three appellees perfected a security agreement in the same inventory. In the second case, a debtor obtained loans from the government and gave a security interest in crops and equipment. Fourth appellee repairman obtained a lien in the same property. Appellant United States was granted certiorari from orders of the United States Court of Appeals finding in favor of four appellees in determining priority of liens over secured property. Appellant asserted that effective administration of lending programs required uniform federal rules of priority and any rules other than "first in time" would conflict with program policies. The Supreme Court of the United States affirmed the judgment for second appellee in the first case because state law gave preference to appellee's lien. The court vacated and remanded the second case to determine the priority of the liens under state law.

ISSUE:

Could contractual liens arising from certain federal loan programs take precedence over private liens, in the absence of a federal statute setting priorities?

ANSWER:

No.

CONCLUSION:

Federal law controlled the government's priority rights, and absent a congressional directive to the contrary, the relative priority of private liens and consensual liens on personal property arising from the government lending programs was to be determined under nondiscriminatory state laws. 

Click here to view the full text case and earn your Daily Research Points.