From our private database of 35,400+ case briefs...
Shelby County State Bank v. Van Diest Supply Company
United States Court of Appeals for the Seventh Circuit
303 F.3d 832 (2002)
Hennings Feed & Crop Care, Inc. (Hennings) was an Iowa company that sold agricultural chemicals and related products. Over the years, some of Hennings’s suppliers entered into security agreements with Hennings to protect their interests. Van Diest Supply Company (Van Diest) (defendant) was one such creditor. Van Diest executed two security agreements with Hennings. A financing statement filed in 1981 gave Van Diest a security interest in all Hennings’s inventory and contained an after-acquired clause. However, the language of a new security agreement, in 1983, was ambiguous. Although the agreement had an after-acquired clause and said it covered all inventory, qualifying language could be read as limiting the security interest to inventory that Van Diest had sold to Hennings. This ambiguity presented a problem for later creditors. Years later, Van Diest filed a civil claim against Hennings. Hennings then filed for Chapter 11 bankruptcy. Another of Hennings’s creditors, Shelby County State Bank (the bank) (plaintiff), filed a claim in bankruptcy court against Van Diest and the bankruptcy trustee to establish its claim. In 1997 the bank had extended Hennings $500,000 in credit and extended that amount to $4,000,000 in 1998. Hennings signed a security agreement giving the bank a secured interest in Hennings’s inventory and its general intangibles. Because the extent of Van Diest’s security interest in inventory affected the bank’s interest, the bank named Van Diest as a defendant along with the bankruptcy trustee. Both parties moved for summary judgment. The bankruptcy court found that the language in Van Diest’s agreement was ambiguous and could be read in the two ways described above. After reviewing the agreement, the bankruptcy court ruled that Van Diest had an interest only in the inventory it sold to Hennings, not in all inventory. Van Diest appealed. A district court determined that the after-acquired clause meant Van Diest’s interest extended to all Hennings’s inventory, and it reversed the bankruptcy court. The bank appealed.
Rule of Law
Holding and Reasoning (Wood, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 617,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 617,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 35,400 briefs, keyed to 984 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.