Sequoia MacHinery Inc., a Corporation, and Kaweah Company, a Corporation v. J. Roderick Jarrett, Trustee of the Estate of James C. Clark, Bankrupt

This bankruptcy case involves the interpretation of § 9401(1) of the California Uniform Commercial Code. Appellants sold combines to James C. Clark by conditional sales contracts which were filed in the office of the California Secretary of State, but not in the office of the County Recorder. The combines are specialized equipment usable only for harvesting grain. Clark was not a farmer. He owned no land. Instead, he was a “custom harvester” who used the combines in harvesting the crops of various farmers in Tulare and King Counties on a contract basis.

After Clark filed a voluntary petition in bankruptcy, appellants repossessed and sold the combines for $30,200, which has been stipulated to be their present fair value. Appellee trustee in bankruptcy then petitioned for an order that the moneys received from the sale be turned over to him. The referee held that the harvesting combines were “equipment used in farming operations,” and that the trustee was therefore entitled to the moneys, because the appellants’ failure to record their security interests in the office of the County Recorder rendered them invalid as against the trustee. The District Court affirmed. So do…