Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 5

Jim and Kathy Shafer formed Sunbelt Grain WKS, ILC (Sunbelt), which operated grain storage facilities, purchased grain from local farmers and resold it, and stored grain for farmers for a fee. Sunbelt had executed promissory notes to Security State bank (SSB) and had a line of credit loan with it. The indebtedness was secured by mortgages. Sunbelt contracted to sell Whitham Farms Feedyard L.P. (Whitham) 100,000 bushel lots of corn. They executed Confirmation of Sale and Purchase (CSP) forms, which stated that Whitham would prepay for the corn. There was no record of how much corn Sunbelt had at that time. Whitham received no bills of sale or warehouse receipts for the corn it paid for and neither charged nor paid any storage fees to Sunbelt for the corn to be sold. Sunbelt was in default of the terms of its loans, so SSB closed its line of credit. A week later, SSB began foreclosure on Sunbelts's grain inventory, so Sunbelt had to stop delivering corn to Whitham, Sunbelt went into bankruptcy, and the court ordered its grain inventory sold. There was $3.875 millon for creditors and SSB claimed $3.2 million and Whitham claimed $2.2 million. Whitham claimed it had constructive possession of the corn thus it should be paid from the sale of it. To have constructive possession, the court said the goods had to be identified to the contract Were they identified in this case?