In the Matter of William Guy Munger, Bankrupt. Ernest J. Pombo v. Jack A. Ulrich, Trustee

In a contest between the trustee in bankruptcy and the holder of an assignment of an agreement to assign farm subsidy payments “upon receipt” and several security agreements covering crops and proceeds, the referee in bankruptcy and the district court found for the trustee. We reverse.

Appellant claims the funds under either (1) security agreements executed between 1966 and 1969 between appellant’s predecessor in interest, the Stockton Production Credit Association, and the bankrupt, Munger, or (2) a 1969 agreement in which Munger agreed to assign upon receipt any federal subsidy payments he might receive.

The two issues raised are (1) whether perfected security agreements held by the Association covering “all crops” and the “proceeds” thereof included within their term certain federal farm subsidy payments to which the debtor may become entitled; and (2) whether the 1969 agreement to assign upon receipt any subsidy payments is itself a security agreement giving appellant priority to such payments as against the trustee. Because we conclude that, under the facts of this case, the term “proceeds” as used in the security agreements includes the subsidy payments in dispute, we need…