Rudiger Charolais Ranches, a Canadian Corporation v. Van De Graaf Ranches, a Washington Corporation

OVERVIEW

Plaintiff Rudiger Charoláis Ranches (“the Gang Ranch”) appeals from a judgment resulting from the district court’s grant of a directed verdict in favor of the defendant, Van De Graaf Ranches, Inc. The issue presented on appeal is whether a merchant who buys cattle from a person holding voidable title can be a “good faith purchaser for val ue” when the industry custom the buyer observed in the transaction conflicts with a statute regulating the industry.

In this diversity action, we apply the Uniform Commercial Code (“UCC”) as enacted in the State of Washington. We have jurisdiction under 28 U.S.C. § 1291 . We vacate the judgment and remand.

FACTS

The Gang Ranch is a British Columbia cow-calf operation which sells calves to cattle buyers. In February 1989, Ernest Etherton contacted the Gang Ranch and represented that he was a cattle buyer. The Gang Ranch manager assumed this meant that Etherton was a licensed and bonded cattle buyer. Etherton negotiated to buy 306 head of cattle from the Gang Ranch for $244,347.95. Etherton was not a licensed cattle buyer.

Payment for the cattle was to be by wire transfer into the Gang Ranch’s bank account on the same day the cattle…