In re Seaway Express Corporation
United States Court of Appeals for the Ninth Circuit
912 F.2d 1125 (1990)
National Bank of Alaska (creditor) provided Seaway Express Corporation (debtor) with a line of credit secured by Seaway’s inventory and accounts receivable as well as any proceeds from the sale of either. Seaway promised to not dispose of any of the secured assets without the bank’s approval. Anchorage Fairbanks Freight Service, Inc. owned one of Seaway’s accounts receivable. Anchorage failed to pay its account with Seaway. When Seaway took action to collect, the parties reached a settlement in which Anchorage gave Seaway a parcel of real property in exchange for closing out the account. The bank was aware of the settlement but did not consent or object. The bank asked Seaway to record a deed on the property in the bank’s favor but Seaway refused. Seaway later declared bankruptcy and sold the parcel of real property. The bank claimed it had a priority interest in the proceeds of the sale of the real property as proceeds of the Anchorage account. The bankruptcy trustee argued the bank did not have a perfected interest in the real property. The bankruptcy appellate panel rejected the bank’s claim of a priority interest and granted summary judgment to the bankruptcy trustee. The bank appealed.
Rule of Law
Holding and Reasoning (Beezer, J.)
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