*1 788 оpinion Consequently, since we are of the person.3 ex rel. Brothers See State 729, Zellar, qualify employee not as an N.E.2d that Goletz did 7 Ohio St.2d
v. 109/218 not (1966). Consequently, per- pursuant we are an to section appointment 732 position quali- 8-41-106(l)(a)(I)(A), (1986), coach pitching C.R.S. we suaded that 3B meaning the of to as an “office” within fies and remand with directions reverse “appointment.” order of appeals reinstate the court Appeals Panel. Industrial Claim “appointment” interpretation
This holding Lyttle our v. consistent with Fund, 137 Insurance Compensation
State (1958), P.2d where we
Colo. unpaid commissioner of
held that an and Fish Commission was Game
State coverage
employee the state within the Compensation Act. Workmen’s present in factors
There were several NINTH DISTRICT PRODUCTION present here. com- case are ASSOCIATION, Successor CREDIT appointed by governor missioner was As Mountain Plains Production Credit provision that statutory stat- pursuant to sociation, Petitioner, “The of this district shall ed: commissioner governor_” 62- appointed § v. added). 2-1, (1953) (emphasis 3 C.R.S. DUGGAN, INC., Respondent. ED right and his of the commissioner duties expenses incurred reimbursement No. 90SC129. ” duties were “discharge his official Colorado, Supreme Court of statutorily (emphasis defined. Id add- also En Banc. was, therefore, ed). The commissioner employee pub- he held a appointed because Dec. office, governor, had the lic who authority statutory appoint the commis-
sioner, discharge designated him to certain
statutorily defined duties. appeals inferred from
The court Parish, v. Francis Xavier
Stegeman St. (Mo.1981), Orphant v.
611 S.W.2d Hospital, Louis S.W.2d
St. State employee
(Mo.1969), was an that Goletz persuaded. The We
appointment. are Law, Compensation
Missouri Workmen’s decided, cases
in effect when these significantly from Colorado stat
differs pointed out, Missouri court we As the
ute. only statutory
need look to the definition
employee in the Colorado Act and not to compensation or the stat common law of other states to determine whether
utes
qualifies
employee.
as an
individual
See
Orphant, bers, 35-75-104(2)(a), gives speaker of the house of example, 14 C.R.S. § For authority appoint (1991 governor statutory representatives three mem- Supp.), gives 13-4-105, example, authority As an additional 6A appoint § member to the board bers. one (1987), justice gives agricultural chief of the su- C.R.S. of the Colorado devel- of directors authority appoint judge of authority, provides president preme opment court judge. authority appoint to serve as chief three mem- court with the senate
Duggan Corporation, an
business, and Ninth
of the feedlot
District
(PCA), a
Production Credit Association
pro-
creditor with
*3
of
accounts receivable.
ceeds
the feedlot’s
surrounding
summary
A
of the facts
dispute
necessary context for
provides the
legal
presented.
understanding the
issues
conflicting in a
Testimony at trial was
num-
summarizing
respects.
of
In
the rele-
ber
P.C.,
Hill,
Manges,
Hill
Hill
Alden V.
&
evidence,
presented
we
vant facts аs
Collins,
Hill,
petition-
Alden T.
Fort
for
attempt
of material
identify
the areas
er.
conflict.
P.C.,
Wood,
Bloom,
Herzog, Osborn &
Company
Norman Land & Livestock
Collins,
Bloom,
respon-
S.
Fort
for
Charles
(Norman
operated
Company) owned and
a
dent.
engaged
cattle feedlot and also was
in the
farming
general
business. Howard Nor-
opinion of
Justice LOHR delivered the
corporate
man
a
officer of Norman
was
the Court.
managed
operations.
also
Company and
granted
to re
certiorari in this case
We
supplied
The feedlot business
Norman
the decision of the Colorado Court
view
primary
in-
Company with its
source of
Appeals
Duggan,
v. Ninth Dist.
Ed
Inc.
Operating the feedlot involved car-
come.1
Ass’n,
(Colo.
P.2d
Prod. Credit
maturity
ing
fattening
for
cattle
jury
App.1990). At trial the
returned
slaughter.
Company
them for
Norman
defendant,
finding
special
that the
verdict
compensated
on the amount of
was
based
Associa
Ninth District Production Credit
weight
at
gained
the cattle while
tion,
unjustly
had been
enriched and award
growth
primary
feedlot. Corn was
Inc.,
ing
plaintiff,
damages
Duggan,
Ed
cattle,
component in the diet
$101,586.38.
The trial
the amount of
Duggan Corporation
principal
suppli-
was
judgment
entered
on the verdict
court
еr
feedlot.
appeals
con
the court
affirmed. We
Company’s operations
that the trial court erred in instruct
fi-
clude
Norman
ing
judg
reverse the
had
and therefore
nanced
PCA. PCA
made annual
operating
Company begin-
and direct that
to Norman
ment
court
loans
ning
perfected security
new
the case be remanded for a
trial.
1978 and held a
company’s
accounts receiva-
personal
property2
ble and other
secure
I.
prior
advances and
annual
indebted-
A.
moneys
ness.3 PCA would commit to loan
during
particu-
Duggan,
up
specified
of Ed
to a
amount
This case involves claims
compensa-
year
Company
re-
(Duggan Corporation)
lar
and Norman
would
Inc.
failing
quest
cattle
advances under the com-
tion for corn delivered to a
and obtain
time
necessary
on certiorari mitment from time to
feedlot business.
issues
rights
operations.
in its
are limited to the relative
bills incurred
PCA
review
ny’s
rights
Company provided
feeding
service
was situated. The
1. Norman
feedlot
throughout
of cattle
Federal Land Bank are not
issue in
case.
for several thousand head
great majority
of these
the fall of 1982.
partnerships, and
Compa-
were owned
various
cattle
of the size of Norman
3.It
indicative
feeding
supplied
Company
ny’s
the cattle
obligations
Norman
when the loan was
25, 1981,
agreements
part-
existing
with these
based on
services
nerships.
November
indebt-
renewed on
$1,568,403.61
prom-
edness
and the renewal
was
issory
provided for advances to increase
note
$2,110,133.62by
lien
Bank of Wichita held a
the indebtedness
ty
maturi-
2. The Federal Land
date,
Compa-
August
property on
Norman
on the real
guarantee for future or further
directly to Norman
exten-
supply
did not
advances
sion
credit:
Instead,
Company
Company.
Norman
against PCA to
sight drafts
would issue
PCA intended this memorandum be con-
then
pay specific
PCA would
review
bills.
fidential,
nothing
it contained
to indi-
but
by making
honor the drafts
the bills and
cate this intent.
loan
additional funds available
part
In
C.J.
the latter
Streit
return,
PCA would collect
commitment.
(Streit)
purchasing
interested
became
Company’s
of Norman
ac-
all
Company,
certain
of Norman
includ-
assets
against
in-
apply
counts
receivable
Although
Compa-
the feedlot.
Norman
arrangement
debtedness. This
stan-
owner,
ny
negotiations
for the sale
*4
farming
ranching
loans
dard for all
and
were conducted between Streit
PCA.
PCA to assure
made
PCA
enabled
that
controlled the
Streit
testified
PCA
collateral
that
a debtor’s
moneys
in
purchase
involved the
because of
applied to
the debtor’s
would be
reduce
position
as a
creditor of Nor-
obligations to PCA.
financing
Company
potential
man
and a
(John-
source
Johnson
for Streit. Roland
1982,
August
In
PCA reviewed Nor-
son),
president of PCA
who had been
dur-
and con-
Company’s
man
financial condition
ing
dispute,
the times relevant to this
testi-
deteriorating rapidly.
cluded that
it was
primary
fied
that
however
PCA’s
involve-
explor-
At that time Howard Norman was
as
po-
ment in the sale transaction was
possibilities
refinancing
for
or
various
tential
Johnson stated
lender
Streit.
sale of the feedlot business. PCA decided
from
that PCA would
have benefitted
Company to continue to
to allow Norman
operation
because
purchase
Streit’s
However, if
operate into December 1982.
approximately
PCA would have suffered
still be
the debt owed to PCA should
out-
loss on its loan to Norman Com-
same
time,
standing
planned to fore-
at that
PCA
or
sale
pany whether
between
close;
result in
such action would
closure
Company
Norman
was conclud-
Streit and
In connection
of the fеedlot business.
with
ed.
decision,
prepared a memoran-
PCA
negotiations for the sale
Shortly after
dum,
Norman on be-
executed
Howard
began,
approximately 750
moved
Streit
outlining
Company,
half of
certain
Norman
head of his own cattle onto
Norman
Company’s opera-
Norman
restrictions on
expressly
Company feedlot.
never
September into December 1982.
tions from
approved
addition
these cattle to the
memorandum,
17,
September
dated
feedlot,
Randall Ford
but Johnson and
1982,
pertinent part:
in
stated
(Ford),
loan officer
who had been the PCA
put I.
cattle to be
feed
No “new”
times,
manager
relevant
and office
at the
approved by
unless
[PCA]
that
cattle had
moved
aware
7. Prior
bursements
corn
bursements
statement
soon as
No
other
approval
possible
protein
feed
over
supported by invoice or
of September
from [PCA]
purchases
[4]
$500.00
—use
own corn as
except
on all dis-
20,
such
dis-
dry
purchase
fied
tle.
in and did not
the feedlot
request
Streit testified that he wanted to
negotiations because he
that the
Howard
operation
ongoing
feedlot
object
Norman.
business.
running throughout
kept open
additional сat-
preferred
Streit,
Ford testi-
keep
Nor-
man,
early
met
and Ford
December
agreed by the
sale.
testified that
II.
It is understood and
discuss the
Norman
being
during
meeting
and Streit re-
undersigned the
advanced
Ford
funds
room, and
quested
leave the
that at
preserve and.protect
are
collateral
he
point
meeting they
him
no
some
after the
told
way
is in
pledged to
[PCA]
feeding
dry corn of its own to the cattle
Company in
uted no
fact harvested all
4. Norman
silage;
operation after the date of the memorandum.
grown by
for
it contrib-
it in 1982
use as
addition,
open.5
payment
to remain
The PCA.
PCA received
the feedlot was
operation
$120,000
liqui-
lot
until total
approximately
continued
from Streit of
for
of 1983.
dation in March
The evidence
provided by
feedlot
Norman
services
Com-
parties
suggests
all
wished the feedlot
pany in
with the 750 cattle
connection
operation, principally
to facil-
continue
the lot in
Streit moved onto
December.
itate a sale to Streit.
operated
Duggan (Duggan)
Edmond
negotiations
began
with
After
Streit
trucking
Corporation, a
business
December, PCA did not commence fore-
supplied
Company
Norman
for
corn to
proceedings
рlanned
as it had
earli-
closure
Duggan Corporation
operation.
its feedlot
Instead,
Company
er.
it allowed Norman
regular supplier of corn
had been a
despite
operate
fact that
continue to
many years.
Company
Norman
Nor-
expired
commitment
on De-
PCA loan
representatives
Company
man
testified
also
1982. PCA
continued
cember
beginning
early
in late November
after December
even
disburse funds
1982, in
December of
accordance with the
loan
though the disbursements exceeded its
September 17
requirements of the
memo-
representatives
commitment limits.6 PCA
Compa-
randum
and Norman
between PCA
that,
exception,7
one minor
testified
*5
ny, PCA
informed each time that Nor-
was
only
were
for
these disbursements
made
from
Company
Duggan
man
ordered corn
preparing equipment
purpose of
Corporation.
Company
Norman
main-
property
paying
for sale and for
the sala-
initially it called PCA
tained that
before
Company employees,
ries
of Norman
ordering
that
corn to inform it
corn was
that therefore the disbursements were con-
approval
pur-
needed
for
and to obtain
Nor-
sistent with the decision wind down
chasе. After Streit became involved in the
Company’s operations.
man
There was
purchase negotiations,
began approving
he
conflicting testimony
during
peri-
that
this
Nevertheless,
purchases.9
the corn
testi-
pay
od
funds to
all
PCA advanced
almost
mony indicated that after Streit’s involve-
obligations except Duggan
of the feedlot’s
representative
Company
ment a Norman
Corporation’s
supplying
bills for
corn.
inform it
continued to call PCA to
that corn
began negotiating
after Streit
Sometime
being
Duggan
was
ordered.
testified that
began
purchase,
Company
for
Norman
being
he was
that PCA was
in-
aware
place proceeds
from
of its ac-
collection
purchases.
formed
advance of these
account,
in an
counts receivable
escrow
present
PCA loan
Ford was
officer
pursuant
agreement
to an
with Streit.8
during the
Company
period
Norman
feedlot
The escrow account was maintained until
Corporation
delivering
was
purchase
Duggan
when
not to
the Norman
Streit decided
corn,10and
aware that
February
in late
At
PCA was
cattle
Company assets
1983.
eating
the feedlot
corn that
that
time the escrow account balance of
had been
$250,000
Duggan Corporation to
approximately
by
was turned over to
delivered
Nor-
shortly
was
that PCA
account
5.
testified that Norman
never asked to
knew of the
after it
Ford
contrast,
during
meeting.
leave
this
was
Johnson
established.
testified
that PCA
of the account’s
learned
existence at
testimony
6.
differed on the amount of
February
the end
1983.
after the loan
ran
funds disbursed
commitment
$120,000
approximately
out. Ford testified
9. The office
manager
Company
of Norman
testi-
time,
spent
testi-
was
after
whereas Johnson
preferred
she
fied
PCA
"confront C.J.
$70,000
only
was advanced after De-
fied that
operating decisions after
Decem-
[Streit]”
15, 1982.
cember
ber
1982.
Payments
7.
were made to certain landlords
Company
property leased to Norman
farm
10. testimony
on how often Ford was
concerning compensation
disputes
for
resolve
present
Ford testified
in conflict.
that he
silage,
of corn cut for
deliv-
landlords’ shares
Company every other
visited Norman
However,
week.
Company,
commingled
Norman
ered to
Company’s
manager
Norman
office
silage.
Company’s
with Norman
present
days
"several
testified that Ford was
week.”
concerning
Testimony
when PCA learned of
is in conflict. Ford testified
the escrow account
Duggan Corporation and resold after
loan commitment
Company after the
man
During
arose.11
as defendants
dispute
out.
Ford’s visits
Named
run
had
indicating
feedlot,
reviewed records
and PCA.
Company,
he also
were Norman
Streit
delivering
Corporation
against
Duggan
Duggan Corporation
was
The claims
during
period
Company
Company
corn to Norman
as well as
Norman
and Streit
dispute.
president
in this
PCA
involved
asserted
counterclaims
cross-claims
testified, however, that no PCA
parties
Johnson
have
or dis-
those
been resolved
making operating deci-
was
representative
are not
to this certiora-
missed and
relevant
rather, How-
Company;
sions for Norman
ri review.
all
decisions for
Norman made
business
ard
Corporation sought
recovery
Duggan
through
company
February
express
against PCA based on theories of
paid for
Duggan Corporation was never
After tri-
contract and
enrichment.
Company
to Norman
dur-
supplied
corn
special
jury,
returned a
al to a
period from late November
finding
express
that there
no
verdict
was
early February 1983. Howard
through
pay for
agreed
which PCA
contrаct
Duggan copy
showed Edmond
Norman
Corporation
Duggan
corn delivered
early
September 17 memorandum
Company
there
Norman
but that
inquired
Duggan first
when
December
contract,”
theory of
“implied
based on
nonpayment. Duggan testified
about
enrichment,
Corpo-
and that
he
protected
because
that he believed
damages in the amount
had suffered
ration
contemplated continued
the memorandum
$101,586.38 by
failure
reason of PCA’s
corn,
past
dry
purchases
appeal,
the corn.
the Colora-
On
always provided
funds for
had
granted
Appeals
affirmed. We
do Court
sight
written
based
drafts
purchases
following issues:
to consider the
certiorari
*6
informed
Company. Norman also
Norman
correctly
the court
Whether
of
arrange-
the
account
Duggan of
escrow
as a
of law
ruled that
matter
[PCA]
December,
Duggan
ment sometime
so,
and,
unjustly enriched
that [PCA]
paid
escrowed
to be
from the
expected
Duggan [Corporation] even
to
liable
upon com-
they were released
funds once
security
though
perfected
held a
[PCA]
However,
sale
pletion of the
to Streit.
[Company’s]
in Norman
assets.
interest
supply
Corporation
to
Duggan
continued
trial
in not sub-
the
court erred
Whether
creditor. After
corn as an unsecured
the
theory of the
mitting
the
[PCA’s]
feedlot,
purchase
elected
Streit
per-
had a
was that
which
[PCA]
Company
financially
unable
Norman
security interest in Norman
fected
[Com-
pay.
the corn and Streit declined
pay for
pany’s] assets.
Corporation
sought payment
then
Duggan
part
of March
the latter
from PCA
II.
request was
April of
but this
early
that as a secured
PCA maintains
denied.
issue in
case is whether
The central
this
of
entitled
it is
security
perfected
holds
a
a creditor
re-
should not be
receivable and
accounts
held liable to
in collateral can be
interest
Duggan Corporation,
quired
theory of
creditor based on
unsecured
creditor,
of those funds.
out
en-
unjust enrichment for benefits
con-
We
the value
the collateral.
hance
B.
answer-
question cannot be
that this
clude
dispute involves
categorically. Such a
brought
in Lar-
ed
Corporation
suit
system
estab-
seeking
recov-
tension between
County District Court
imer
in Article 9 of the Uniform Commer-
$101,586.41
price of
lished
purchase
for
ery
Code)12
eq-
(UCC or
Company
cial Code
to Norman
com delivered
principles
enrichment.
repossеssed
for
uitable
deduction
less a
appears in
concerning
Uniform Commercial Code
presented
12. The
in this case
No issue is
'4,
(1973
Supp.).
2 C.R.S.
& 1991
propriety
repossession
and resale.
Title
applica-
underlying
provides
also
for the
Although
policies
UCC
UCC
uniform,
system prior-
gov-
support
equitable principles
reliable
tion of
cases
creditors,
unwilling
among
According
we are
4-
ities
erned Article 9.
to section
hierarchy
of that
1-103,
particular
hold that alteration
“[ujnless displaced by the
necessary
implement
priorities is never
title,
provisions
principles
of this
of law
equitable principles on
the doc-
supplement
provi-
equity
... shall
A
trine of
enrichment
based.
has
character-
sions.”
This section
system priorities and
sketch of the UCC
provi-
important single
ized as the “most
elements of a claim for
en-
in the
1 J. White & R. Sum-
sion
Code.”
background
as a
for
richment will serve
mers,
Code
Commercial
§
Uniform
grappled
of cases that have
consideration
prior
displace
was enacted to
UCC
relationship
between these two
princi-
principles,
prior equitable
legal
principles.
sets of
ples.
UCC, a creditor
“occupy
equity
Article 9 of the
Under
Cоde sections do not
may
security
payment
Rather,
for
of an
equitable princi-
obtain
general
field.”
obligation by acquiring
security
intact,
ples
largely
they
are
remain
in a debtor’s collateral. The basis of an
only rarely “particularly displaced.”
security
interest is a
enforceable
sense, then, they
are the main occu-
agreement between the debtor and the
pants of the relevant field. This follows
Normally,
agreement
creditor.
will be
gen-
from their
character. Unlike
basic
debtor,
writing signed by
will
legal principles, they
merely
eral
do not
description
contain a
of the collateral cover-
sections;
supplement Code
their function
-
4-9-201,
agreement.
ed
See §§
exceptions
is also to carve
from or other-
203(l)(a),
(1973
Supp.).
A
C.R.S.
&
sections,
modify Code
and the
wise
being
security interest does not come into
recognized
courts have
as much. These
given
has
and the
until the creditor
value
peculiar
bearing
functions are not
acquired rights in
debtor has
the collateral.
equitable principles
of 1-103
on Code
9—203(l)(b)
(c). A
creditor with a
rules;
§
they are characteristic of the bear-
4—
superior rights
interest has
equitable principles upon lеgal
against the
unse-
collateral as
debtor and
throughout
rules
the law.
*7
4-9-201, -203(1),
cured creditors. See §§
-301; 2
& R. Summers
J. White
Uniform
1-103 and related law on the
With
(3d pract.
24-6
ed.
Commercial Code §
books, judges
escape
can
the ancient di-
1988).
protect
In order to
its interest to
adhering
legal
lemma of either
fullest,
“perfect”
a creditor must
its
doing
inequity,
doing
rule and
or of
security interest.
4-9-312. This
See §
In-
equity but in an unlaw-like fashion.
filing
financing
a
normally entails
state-
deed,
imposes duty
judge
on the
1-103
a
appropriate governmental
in the
of-
ment
equitable
to reach the
result unless the
44-9-302,
A creditor
a
fice.
-401.
with
§§
general equitable principle
relevant
has
priority
perfected
interest has
over
particularly displaced.
been
subsequent competing
most other
claims to
may
equitable
Id.
doctrines
have
While
4-9-312; 2
the collateral.
J. White
See §
making
priority
the effect of
Article 9
law
Summers,
& R.
Commercial
Uniform
certain,
flexibility in
“they
less
offer
cases
undisputed in
24-7. It is
this case
Code §
applying
rigorously may
where
Code
perfected security interest
that PCA held a
result in an unfair outcome.” Id.
26-20.
§
receivable,
Company’s
accounts
Norman
enrichment,
Corporation
Unjust
sometimes re
that
was an unse-
inl-
quasi-contract
ferred to as
or contract
cured creditor.
fraud,
4-1-103,
(1973), provides
agent, estoppel,
misrepresentation,
2 C.R.S.
in full:
§
duress, coercion, mistake, bankruptcy, or oth
displaced by
particular provi-
Unless
title,
validating
invalidating
sup
principles
of law and
er
cause shall
sions
equity,
including
provisions.
plement
the law merchant and
its
contract,
capacity
principal
law relative to
795
upset the
law,
in circumstances where it will
plied
equitable
is an
doctrine that
priorities
order of
established under Article
recovery
plaintiff
permits
shows
when
The court cited Peerless
9
the UCC.
“(1)
a benefit was conferred on
that
Inc.,
Co.,
Packing
Hyde,
v.
Inc. Malone &
(2)
plaintiff,
that
by the
the ben
defendant
(W.Va.1988), and Evans
report
that
the secured creditor
asserting
unjust
creditor
enrichment
ordering
groceries
in
or other-
pated
the
against a
creditor
prevail
claim to
secured
encouraged
purchase
initiatеd
the
wise
Oil,
Cal.Rptr.
is Producers Cotton
groceries.
Packing, 376
of the
Peerless
a
In that
claim of
foreclosure
in
a
Similarly,
Evans Products
S.E.2d
security
grow-
in
holding
creditor
interest
plywood manufactur-
secured creditor of a
subject to
ing crops
proceeds
and
was held
plywood,
er,
pre-
finished
with
lien on
by
purchaser
reduction
a claim of
creditor
fur-
over an unsecured
who
vailed
theory
enrich-
crops
those
nished raw material to
manufacturer
in
spent by
purchaser
money
ment for
accepted
plywood
payment.
in
finished
and
crops
first obtain-
harvesting those
without
holding
creditor
In
for the secured
in a suit
ing
sub-
creditor’s consent and
secured
supplier’s
against
plywood,
to foreclose
ordination. The court stated:
rejected
per-
the court
the defense that to
position
pur-
agree
We
with
[the
requiring pay-
recovery
mit the
party pos-
hold that when a
chaser]
unjustly
for the
material would
ment
raw
security
crop
interest
sessing a
in a
enrich the secured creditor.
case re-
knowledge
and ac-
has
port contains no indication
the secured
quiesces
expenditures
in
which are
made
development
was
of the transactiоn
to the
necessary
creditor
even aware
ultimately
crop,
benefits from
supplier of
the unsecured
raw ma-
between
who,
expenditures,
party
through
mis-
Evans
terial
the manufacturer.14
take,
first
pays such costs without
ob-
Products,
7Q7
present
UCC makes the unsecured creditor aware
Viewing the
in the
case
evidence
risks,
Duggan
supplies
by
of the
which
to
Cor-
a means
light
in
most favorable
the
the
such a creditor can learn in advance of
Duggan
the
is more
poration,
situation
prior position by refer-
analogous
secured creditor’s
closely
to Producers Cotton Oil
gov-
ring
appropriate
line of
to the records
the
Packing
the
cases.
than to
Peerless
4-9-401,
offi-
Indeed,
involvement in ernmental office. See
the evidence of PCA
§
present in cial
stronger
is
than that
comment.
Oil,
agent
where an
Cotton
Producers
system
priority
thus reflects
UCC
simply in
field
creditor was
the
the secured
legislative judgment
of a
that the value
time
aware
a third
at harvest
and was
predictable
priorities ordinarily
system of
harvesting
crops.
party was
outweighs
sys
disadvantage
of the
inequities.
tem’s occasional
At the same
point of distinction be
The central
time, however,
recognizes that
Oil,
the Code
Duggan and Producers Cotton
tween
hand,
equitable
may require alteration
principles
Packing
the Peerless
on the one
other,
priority system particular
circum
on
is the
line of cases
extent
Although
in stances.
4-1-103.
case-
the secured creditor was involved
See
§
application
eq
concerning
law
transaction
which the unsecured
unjust
en
enrichment
supplied goods or services that
uitable doctrine
creditor
scarce,
have
Article
context
is
courts
the value of the secured collateral.
9
hanced
princi
frequently employed
equitable
does
other
a secured creditor
not itself
Where
ples
exceptions
create
to the established
encourage17
initiate or
the transaction
priority
obligation giving
system. Thompson
rise
v. United
creates
unsecured
States,
1075,
(8th
claim,
F.2d
Cir.
retention of
1081-85
to the
enrichment
(lack
1969)
good
part
faith on
of secured
any
realized
the secured creditor
benefit
govern
compensating
suрplier
creditor
the United States
towards
ment,
creditor,
proper
junior
thus
enrichment claim
held
basis
unjust and
Certainly
altering
priorities);
Article 9
Limor
supported.
secured
cannot be
Diamonds,
Christopher
v. D’Oro
creditor is benefitted whenever the collat
Inc.
709,
augmented
Michael,
Inc.,
F.Supp.
eral that secures its loan
(S.D.N.Y.1983) (secured
rights in
expense
party’s
to the
increased
value without
rights of
may
may
collateral
be subordinated to
secured creditor. Such a situation
on
supplies
junior
creditor
holder of
interest based
arise when
faith);
v.
good
lack of
Bank
goods
automatically
to a debtor that
be
Citizens State
(Ind.
Bank,
Peoples
collat
475 N.E.2d
326-28
part
come
secured creditor’s
principles
eral;
may
App.1985) (promissory estoppel
and in a
it
seem unfair to
sense
lien of a
accept
can be used to subordinate the
allow the secured creditor
creditor);
Foods, Inc. v.
having
its full cost.
senior
benefit without
Affiliated
However,
(Iowa App.1988)
priority system
McGinley,
encourage the transaction between the security agreement gives a secured You are instruсted that the Statutes of the ment and prior rights any State of Colorado in full force and effect at all corn delivered pertinent provide here that "the mere an unsecured creditor. times authority interest or PCA’s tendered Instruction No. 7. existence of given dispose of or use collat- The Production Credit Association was a se- to the debtor liability impose cured creditor under the laws of the State of eral does not contract or tort legally upon party the ac- for the debtor's acts or Colorado and was entitled to Company]. counts receivable [Norman omissions." charged [Duggan Corporation] Instruction No. 6. with such PCA's tendered furnishing knowledge corn without a financ- and in feed to [Norman A creditor who delivers security agreement Company], acted as an unsecured creditor. statement and financing No. 9. creditor. A filed state- PCA’s tendered Instruction that en- and an unsecured creditor debtor C. collateral, of the secured hances the value argues the trial PCA also initiates or encour- and the secured creditor jury on instruction to the erred court *13 transaction, ages the the address this of We the element benefit. the unsecured creditor can be held liable to may arise argument because the issue theory unjust enrichment. The on the again retrial. on here, however, instructions jury given court instructed that The trial the adequate jury to resolve enable upon another confers a benefit person [a] enrichment issue in accordance unjust of, possession or gives to the other he re- applicable law. We therefore with the in, property. He personal an interest judgment court of verse he only adds a benefit not where confers court and return the case another, but also property to the judgment of the directions to reverse expense he saves the other from where a the case for new trial court and remand therefore, “benefit”, or The loss. word trial. advantage. any form of denotes argues Jury No. 25. PCA Instruction VOLLACK, dissents, ROVIRA, J„ and given in error because this instruction ERICKSON, J., C.J., join in the and to find in favor of required dissent. Corporation if it found that PCA Duggan dissenting: VOLLACK Justice argu This any benefit. sort of received the instructions. ment mischaracterizes majority states that the central issue The are to “AH court’s instructions ... creditor that in case is a “[w]hether as a in deter and considered whole be read in security collat- perfected interest holds a necessary law has mining whether all the eral can be held liable an correctly jury.” to the Mont stated theory enrich- creditor based on 59, Kerns, v. 172 Colo. gomery & Co. Ward that enhance the value of ment for benefits (1970). 63, 34, 36-37 Instruction 470 P.2d collateral,” and then observes that “benefit” as it used 25 defines term dispute involves tension between “[s]uch 3 of In paragraph in and Instruction in Article 9 system established must clearly 23 states that PCA struction (U.C.C.) Code of the Uniform Commercial such cir “accepted have the benefit under principles enrich- equitable inequitable for cumstances that it would disagree I Maj. op. at 793-794. ment.” pay to retain the benefit [PCA] issue, a ten- neither this nor such because the corn.” reasonable value of ment of the sion, in this case. is raised the facts when the instruc question, The benefit is not a secured creditor PCA’s status as together, the benefit read tions are express implied or whether relevant corn was delivered. by PCA when derived Duggan PCA. contract exists between to continue permitted The the feedlot corn claiming priority or inter- is not Duggan receiv operation generated accounts held proceeds est in collateral or automatically subject that were then able agreement perfected security under We find PCA. Instead, claiming Duggan with Norman. context of 25 in the no error Instruction conduct, obligation that, by its PCA has the instruc presented evidence theory implied contract given. tions as Duggan the reasonable value Norman. delivered IV. persuaded that in certain circum- are We I. held lia- creditor can be stances a secured majority, which The cases cited on the basis of unsecured creditor ble to an relationship between notwithstanding addressed the its se- have unjust enrichment unjust enrich- U.C.C. and is Article 9 a secured creditor Where cured status. opinion apply ment, my not in do a transaction between benefitted 802 security interest in Producers had a valid those cases in this case because
facts or specific proceeds collateral that Amstar had a valid disputes over volved par proceeds in which one identified en- based claim Producers had a interest. See ties had to determine The court then richment. 197 Cal. Corp., Co. v. Amstar Cotton Oil prevailed over the other. claim (1988); 638, . Cal.Rptr. App.3d unjust enrichment claim held that the court Corp. v. Acceptance Valen Borg-Warner limited its decision to prevailed, but Ltd., Ga.App. tine Assoc. case.1 Id. at particular facts of the (1989). present case does S.E.2d Producers Cot- The distinction between pro dispute over collateral not involve *14 apparent. present case ton Oil and above, but, dispute over stated is a ceeds as Oil, parties were In Producers Cotton pay Dug- obligation has to PCA an whether in rights proceeds disputing their theory. implied an contract gan under interest, specifi- a secured Producers had Oil, ma- which the In Producers Cotton Amstar deducted cally, the amount that in this analogous to the facts jority finds present In crop proceeds.2 from the case, perfected security had a Producers Dug- case, dispute exists no such because proceeds of Bor- crops interest not assert gan’s implied contract claim does operation. contracted farm Borboa boa’s interest held PCA right any secured Amstar. When Produc- crop his to sell security agreement with Nor- sale, crop they informed of the ers was man.3 crop pro- assignment an sent Amstar assign pro- agreed tо ceeds. Amstar not assert complaint, Duggan did In his Producers, subject to deduction ceeds to priority or any for relief on a claim based Produc- of Borboa. indebtedness proceeds held in collateral or interest Oil, Cal.Rptr. at 916. ers Cotton Moreover, Duggan did not contest PCA. 1981, mistakenly paid har- In Amstar in as a secured creditor position PCA’s crop. The vesting expenses for Borboa’s Instead, Duggan based assets. Norman’s $231,108.76. crop yielded proceeds of Spe- relief on PCA’s conduct. his claim for $166,019.38to Producers assigned Amstar cifically, Duggan asserts harvesting other ex- deducting after relationship not an ordi- was PCA/Norman payment for demanded penses. Producers relationship because nary lender/debtor After Amstar refused these deductions. activities, of the feedlot’s PCA had control Producers, brought ac- Producers pay ordering delivery of corn. including the Amstar, claiming the deduc- against tion security interest and con- case, dispute some over a tions violated In this proceeds. at Id. item, stituted conversion that PCA was a the fact secured 917. to a deter- creditor is relevant obligated to PCA is mination of whether in Oil dispute The Producers Cotton theory оn a Duggan for the com based right party had the better concerned which unjust enrich- implied contract to avoid “proceeds” that were deducted creditor, anyone like ment.4 A secured The court concluded that Amstar. Id. Duggan enrich- did not claim Notably, a standard 3. While the court did not establish specific proceeds, as Amstar did to recover ment cases. for all future Oil, he did discuss PCA’s Cotton in Producers placed in escrow of the monies collection Borg-Warner Accept majority cites also example PCA re- of a benefit that Streit as an Corp., Corp. Associates Ltd. v. Valentine ance Duggan’s corn. ceived from (1989), Ga.App. 384 S.E.2d unjust enrich a claim for which a court allowed the trial court stated: 4. As party’s interest. prevail over a ment to giving is not the instructions The Court disputing parties who Borg-Wamer, In might appropri- aspects. be the U.C.C. That right and the to a mobile home type had the better was tried under another ate if the case attempting get home. theory. plaintiff the sale of the mobile from If the corn, question Borg-Wamer in both the would then had a back its pursuant law, possession lien or what proceeds. and the mobile home (or Assoc., express) else, implied dominium 649 P.2d 1096-97 into an can enter obligation pay. (Colo.1982). present case, the evi- contract that creates argument, closing clearly As PCA stated dence satisfies all three of these case is “whether the Produc- issue this elements. somehow
tion Credit Association [PCA] reasonably could conclude that agreement, in and took stepped made conferred a benefit PCA and obligation that never intended to on an appreciated that PCA the benefit. PCA added.) (Emphasis take on.” was informed each time that corn was or- objected, period for a
dered and never II. approved specifically time each order. present A representative Duggan’s claim for relief is one con- feedlot on several occasions when corn was instructed, Thus, as trial court tract. representative actively A PCA delivered. disposition controls the contract law records evidenced reviewed Com- and the Uniform issues being Norman. amount delivered to applicable. The trial mercial Code *15 open directed that the feedlot remain PCA 23,5 gave my No. which court instruction anticipation proposеd of a sale. correctly applicable opinion stated the law Duggan’s and asserted evidence ineq- that jury’s The verdict it would be The case was implied claim of contract. pay- to retain benefit without uitable the special interroga- the on jury to submitted supported by showing ment is Norman’s express implied as and contract.6 tories to September Duggan the 17 memorandum permit that indicated PCA’s intent Nor- theory implied In order to recover on a of Also, purchase dry corn. was man to PCA enrichment, Dug- contract to avoid operational of all funds for Nor- the source gan provided in instruction prove, had to as operations, pay- man’s feedlot controlled 23, (1) was conferred on No. benefit obligations, ments of all its and received (2) by plaintiff, defendant the the its accounts receivable. all defendant, appreciated by the benefit was by permitted PCA re- Norman was (3) by accepted that the benefit by collected the feed- expend tain or funds such circumstances that defendant under payment for corn Duggan lot. knew inequitable for it to be retained would be historically came deliveries to Norman payment value. Cаblevision by to Norman. v. from advances made Breckenridge, Inc. Tannhauser Con- rather, damages, any, rights, pursuant if the Uniform Com- 3. State amount have, Plaintiff, Inc., Duggan, might so Ed due mercial Code defendant incurred Defendant, applicable express interest to its contract with expressed implied issues shown or contract Credit Ninth District Production Association? $_ of this case. the evidence ANSWER NO. 3: "implied pay 4. Was there an contract” pattern jury 5. This instruction was based to Norman Land and Live- for corn delivered instruction CJI-Civ.3d 30:31. Plaintiff, Duggan, Company between Ed stock Inc., Defendant, Ninth District Produc- interrogatories, jury’s special with the 6. These no) (yes or Credit Association? tion responses, were as follows: NO. 4: Yes ANSWER "express there an contract” 1. Was Plaintiff, Inc., Duggan, Ed incur 5. Did to Norman Land and Live- for corn delivered damages implied contract result Plaintiff, Duggan, company between Ed stock you have existed between Plain- which found Defendant, Ninth District Production Inc. and Inc., Defendant, tiff, Duggan, Ninth Ed no) (yes or Credit Association? (yes Credit Association? District Production 1: No ANSWER NO. no) or Plaintiff, Inc., Duggan, Ed incur 2. Did Yes ANSWER NO. 5: damages express as a result of the contract any, damages, if 6. State amount you have found existed between Plain- Plaintiff, Inc., Duggan, Defendant, due tiff, Inc., Ed incurred Duggan, Ninth Ed Defendant, implied Ninth contract with (yes Production Credit Association? District no) Association? Production Credit District or $101,586.38 6: ANSWER NO. ANSWER NO. 2:
III. SERVICES, SCOTT WETZEL majority’s require- The new standard INC., Petitioner, given that an additional instruction be ment v. interrelation of to inform the James H. JOHNSON and Leuvenia F. the doctrine of enrichment and Arti- Swindall-Johnson, Respondents. misplaced.7 cle 9 of the U.C.C. given by instructions the trial court were SERVICES, WETZEL SCOTT supplemented proper and do not need to be INC., Petitioner, provide additional instructions to v. understanding jury with an law Georgia Edward TOZER and implied jury, applying contract. Tozer, Respondents. law, evidence to the instructions of conclud- damages. Duggan ed that was entitled to 90SC335, Nos. 90SC336. Colorado, Supreme The fact that PCA is a secured creditor Court En Banc. only would be relevant claiming junior PCA's Dec. implied his claim of an contract to avoid unjust enrichment. such a
court would have to decide whether PCA’s Duggan’s contract majority
claim controls. The does not iden- *16 any,
tify security, in which
claiming an interest. Without such dis-
pute, applica- Article 9 of the U.C.C. is not agree I with the trial court and the
ble.
court of the instructions any
should not include reference to PCA’s I
U.C.C. interest. would affirm the
verdict. say
I am authorized to that Chief Justice join in
ROVIRA and Justice ERICKSON
this dissent. Additionally, majority’s that does not exist in the § decision sets 4-1-103 statute. changes equity require plaintiff precedent future claims does not to meet a statute 4-1-103, (1973). brought special asserting § C.R.S. standard before one of these majority essentially adding requirement claims.