Crocker National Bank v. Ideco Division of Dresser Industries, Inc.

This diversity case presents the question whether under the Texas U.C.C. a sale of a debtor’s inventory has occurred when (1) the alleged buyer is an affiliate of the debtor, (2) the debtor takes delivery of the inventory from its seller at a facility it shares with the affiliate, (3) the debtor never pays its seller and the affiliate never pays the debtor, and (4) the debtor later transfers the inventory back to its seller in exchange for a release. We must resolve this question in order to determine whether the debtor’s secured party here has priority over the unpaid seller with respect to…