Cloud
American National Bank v. Cloud
Opinion
Opinion
Franson, J.
The Case
Appellants Ronald Cloud, Jasmine Cloud, Steve Volpe, Gloria Volpe, Madera Raisin Company, and Madera Raisin Packing Company (all referred to herein as appellants or MRC) appeal from a money judgment rendered against them in an action for conversion of crop proceeds. Because of a fraud perpetrated by the debtor-farmer, MRC mistakenly paid crop proceeds to a third party in derogation of American National Bank’s (ANB) security interest in the proceeds. The major issues on appeal are whether appellants were buyers in the ordinary course of business under California Uniform Commercial Code section 9307 and, if so, whether such status provided a defense to the bank’s conversion claim.
We conclude appellants were not buyers in the ordinary course of business, but even if they were, such status provided no defense to ANB’s action for conversion of crop proceeds.
The Facts
Kirpal Singh Sidhu (Kirpal), a farmer, gave ANB a demand promissory note in the amount of $284,930 on December 27, 1982, in exchange for financing for crop year 1983. Kirpal also signed a security agreement, financing statement and assignment in ANB’s favor which covered his 1983 raisin crop and the…