Trust Company Bank v. The Gloucester Corporation

643 N.E.2d 16 (1994)

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Trust Company Bank v. The Gloucester Corporation

Massachusetts Supreme Judicial Court
643 N.E.2d 16 (1994)

Facts

Fleet National Bank (Fleet Bank) and Cooperative Centrale Raiffeisen-Boerenleenbank, B.A. (Cooperative Bank) (defendants) held perfected security interests in all of Gloucester Corporation’s (Gloucester) tangible and intangible personal property, including after-acquired property. Thereafter, Sigma International, Inc. (Sigma) agreed to sell scallops to Gloucester. On January 16, 1992, Sigma delivered $143,391 worth of scallops to Gloucester. The invoice for the scallops stated that the sale was pending FDA release, specified that payment was due within 30 days after the FDA-release date, and indicated that Sigma assigned its right to payment to Trust Company Bank (Trust Bank) (plaintiff). On January 24, 1992, Fleet Bank and Cooperative Bank determined that Gloucester was in default and seized and liquidated the scallops. Trust Bank sued Fleet Bank and Cooperative Bank for conversion. Fleet Bank and Cooperative Bank moved for summary judgment on the grounds that they held perfected security interests in the scallops. Trust Bank argued that Fleet Bank’s and Cooperative Bank’s interests never attached to the scallops because Gloucester did not have rights in the collateral until the FDA release occurred and, therefore, Trust Bank had a superior interest in the scallops. The lower court granted summary judgment in Fleet Bank’s and Cooperative Bank’s favor. Trust Bank appealed.

Rule of Law

Issue

Holding and Reasoning (Greaney, J.)

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