Needle

This case involves an extremely close question of first impression in California.

Andy’s Lumberland, Inc. (hereinafter the retailer), was being supplied with fiberglass panels for sale to its customers by Lasco Industries, Inc. (hereinafter the wholesaler), on a consignment basis in 1965. The retailer sold some of the panels without paying the wholesaler whereupon the wholesaler ceased to provide any more panels.

In July 1966 a representative of the wholesaler met with the president of the retailer to discuss the delinquent account. The wholesaler offered to deliver additional merchandise to the retailer provided that the retailer furnished security in the form of its “inventory and accounts receivable.” The retailer agreed to do so whereupon the wholesaler filled in the blanks of a document entitled “Financing Statement.” That document was executed on behalf of the retailer by its president and vice-president and on behalf of the wholesaler by its secretary. It was filed in the office of the Secretary of State on July 22, 1966.

The wholesaler resumed supplying merchandise to the retailer. The retailer’s business continued to be poor and on February 15, 1967, the…