Arthur Glick Truck Sales v. Stuphen East Corp.

Arthur Glick Truck Sales, Inc. (Glick) (plaintiff) was a New York corporation that sold truck chassis. Wolverine Fire Apparatus Company (Wolverine) entered into contracts with Beaverkill Valley Fire District and the Forest Waverly Fire Department (collectively, fire districts) to sell each a completed fire truck. Travelers Casualty and Surety Company of America (Travelers) (defendant) provided surety bonds to the fire districts guaranteeing Wolverine’s performance. Wolverine ordered the chassis for each truck from Glick. In the normal course of conduct between Wolverine and Glick, Wolverine ordered the chassis, Glick delivered it, Wolverine paid Glick after selling the completed fire truck, and Glick then transferred the manufacturer’s certificate for the chassis to the fire district that bought the truck. In this case, however, before the trucks were finished, Wolverine filed bankruptcy. Travelers acquired the unfinished fire trucks and arranged for other companies to complete and deliver them. Glick was never paid and had never transferred the manufacturer’s certificates for the chassis to the fire districts. Glick filed suit in state court, claiming a superior interest in the chassis to Travelers’ interest and seeking monetary damages for the chassis. Travelers removed the suit to the United States District Court for the Southern District of New York. Travelers argued that it should prevail because under its surety bond, it became subrogated to the fire districts’ rights against Wolverine. Secondly, Travelers argued that the fire districts (and thus Travelers as their subrogee) qualified as buyers in the ordinary course of business, which enabled them to take free of the security interest of Glick. Glick argued that the fire districts never obtained title and were not buyers in good faith. Glick and Travelers each sought summary judgment.