Marine Midland Bank v. United States, 46 N.Y.2d 758 (1978)
A party claiming to be a “buyer in the ordinary course of business” under UCC § 9-307(1) must present evidentiary material demonstrating that the seller was in the business of selling goods of that kind.
Summary
Marine Midland Bank sought summary judgment against the United States, claiming priority as a buyer in the ordinary course of business. The New York Court of Appeals affirmed the Appellate Division’s decision denying the bank’s motion. The court held that the bank failed to provide sufficient evidence that the seller was actually in the business of selling the type of goods purchased, a requirement to qualify as a buyer in the ordinary course of business under UCC § 9-307(1). The court also noted that it could not grant summary judgment to the defendant (United States) because the defendant had not filed a cross-appeal.
Facts
Marine Midland Bank purchased goods from a seller. The bank then claimed priority over the United States’ security interest in the goods, arguing it was a buyer in the ordinary course of business. The bank moved for summary judgment based on this claim. The seller involved in the case was also the seller in the prior case, Tanbro Fabrics Corp. v. Deering Milliken.
Procedural History
The lower court denied Marine Midland Bank’s motion for summary judgment. The Appellate Division affirmed that decision. Marine Midland Bank appealed to the New York Court of Appeals.
Issue(s)
Whether Marine Midland Bank presented sufficient evidence to demonstrate that the seller was in the business of selling goods of the kind purchased, thereby entitling the bank to the status of a “buyer in the ordinary course of business” under Uniform Commercial Code § 9-307(1), and thus priority over a prior security interest.
Holding
No, because Marine Midland Bank failed to provide evidentiary material supporting its claim that the seller was in the business of selling goods of the kind purchased. The court also could not grant summary judgement for the defendant as it had not filed a cross-appeal.
Court’s Reasoning
The court emphasized that to succeed on a motion for summary judgment, the moving party must present evidentiary proof to support its allegations. In this case, Marine Midland Bank presented only a conclusory assertion that the seller was in the business of selling such goods, which was insufficient to establish its status as a buyer in the ordinary course of business under UCC § 9-307(1). The court referenced UCC § 1-201, subd [9] and § 9-307, subd [1] regarding the definition of “buyer in ordinary course of business.” The court distinguished this case from Tanbro Fabrics Corp. v. Deering Milliken, noting that the finding that the seller was a seller in the ordinary course in Tanbro was a factual finding supported by sufficient evidence in that specific case. The court stated, “In this motion for summary judgment there is no evidentiary material in the record to support plaintiff’s allegation, and conclusory assertion, that the seller from whom he purchased the goods was in the business of selling goods of that kind (Uniform Commercial Code, § 1-201, subd [9]; § 9-307, subd [1]), or that the defendant was unjustly enriched. This alone is sufficient to sustain the Appellate Division’s determination that the plaintiff is not entitled to summary judgment.” The court also noted it could not grant summary judgement to the defendant because it had not filed a cross-appeal, citing precedent: “Finally we note that we are unable to grant summary judgment to the defendant because the defendant has not taken a cross appeal to this court (City of Rye v Public Serv. Mut. Ins. Co., 34 NY2d 470, 474; People v Consolidated Edison Co. of N. Y., 34 NY2d 646, 648; Kelly’s Rental v City of New York, 44 NY2d 700, 702).”