McCarty, J L

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Boston College Law ReviewVolume 1 | Issue 2 Article 224-1-1960Bankruptcy—Quaker CityDoctrine—Pennsylvania Uniform CommercialCode: — Matter of Einhorn Bros., Inc.J L. McCartyFollow this and additional works at: http://lawdigitalcommons.bc.edu/bclrPart of the Bankruptcy Law Commons, and the Commercial Law CommonsThis Casenotes is brought to you for free and open access by the Law Journals at Digital Commons @ Boston College Law School. It has been acceptedfor inclusion in Boston College Law Review by an authorized administrator of Digital Commons @ Boston College Law School. For more information,please contact nick.szydlowski@bc.edu.Recommended CitationJ L. McCarty, Bankruptcy—Quaker City Doctrine—Pennsylvania Uniform Commercial Code: —Matter of Einhorn Bros., Inc., 1 B.C.L. Rev. 267 (1960), http://lawdigitalcommons.bc.edu/bclr/vol1/iss2/22CASE NOTESBankruptcy—Quaker City Doctrine—Pennsylvania Uniform Commer-cial Code.—In the Matter of Einhorn Bros., Inc.,' a creditor loaned moneyto Einhorn Eros., Inc., and obtained a perfected security interest in itsmerchandise inventories under UCC of Pennsylvania § 9-302 in January1957. Ten months later in November 1957 the landlord levied a distraint forrent against Einhorn's property. Subsequently the debtor went into bank-ruptcy. The referee ordered the landlord's lien satisfied ahead of that of thesecured creditor. The secured creditor appealed to the District Court main-taining that under the UCC of Pennsylvania, its perfected security interestwas superior to that of the landlord and therefore it was improperly sub-ordinated to the landlord's lien. The Court affirmed the referee's Order forFinal Distribution. The doctrine of In re Quaker City Uniform Co., Inc.,2requires that priorities under state law as between a chattel mortgage and alandlord's lien be observed in a bankruptcy proceeding. 5 The Pennsylvanialaw existing before adoption of the UCC provided that on any sale follow-ing a distraint for rent the landlord's lien should be satisfied first. 4 TheUCC § 9-104(b) had excluded the landlord's lien from the purview of thearticle on secured transactions. The "rational conclusion" was that theprevious Pennsylvania law was left undisturbed by the enactment of theCode.In affirming the referee the Court appears correct. It is plain fromthe language of UCC § 9-104 and the comment thereto that the Code ex-pressly intended to plaCe the landlord's lien outside the coverage of thearticle. This being so, the existing state law must govern. It is interesting,however, that the Court took occasion to disapprove a construction of thePennsylvania UCC § 9-310.5 This construction argued(' that a landlordwas one who in the ordinary course of his business furnishes services togoods kept on the rented premises. Since the landlord had a lien for rentin Pennsylvania by settled rule of law, having furnished services, he metthe requirement of § 9-310, and therefore took priority, under the Code,over other perfected security interests. The Court relied on the comment1 171 F. Supp. 655 (E.D. Pa. 1959).2 238 F.2d 155 (3d Cir. 1956).67c(1), 11 U.S.C.A. § 107c(1).4 Pa. Stats. Ann. Tit. 68, § 322 (Purdon Supp. 1958) ; In re Quaker City UniformCo., supra note 2; Reinhart v. Gerhardt, 152 Pa. Super. 229, 31 A.2d 737 (1943);National Cash Register Co. v. Anse11, 125 Pa. Super. 309, 189 Atl. 738 (1937).6 § 9-310 of the Pennsylvania UCC states: When a person in the ordinary courseof his business furnishes services or materials with respect to goods subject to a securityinterest, a lien given by statute or rule of law for such materials or services takespriority over a perfected security interest unless the lien is statutory and the statuteexpressly provides otherwise.6 Pa. Bar Association Notes to UCC § 9-310; Schwartz, Pennsylvania ChattelSecurity & the Commercial Code, 98 U. Pa. L. Rev. 530, 540-41 (1950).267BOSTON COLLEGE INDUSTRIAL AND COMMERCIAL LAW REVIEWto this section stating that § 9-310 meant to provide liens for work doneto enhance or preserve the value of collateral. The act of leasing the premisescould hardly be thought to bear this relation to the value of the goods situatedthereon.In so construing § 9-310 the Court may have been influenced by therevised text of this section as it appears in the enacted laws of the fourother states having adopted the UCC at this time. 7 Under this, it isspecifically provided that the goods for which services and materials arefurnished must be in the possession of such person before his lien interestwill take priority over a Code security interest. It is quite clear, therefore,that the service rendered by the landlord in leasing the premises couldnot be covered by this section in any state having enacted the revisedtext. The Court properly gave to the language of § 9-310 its naturalconstruction and refused to give to it a strained meaning.J. LAURENCE MCCARTYBreach of Warranty—Recovery Allowed by Third Party in the Absenceof Privity—Scope of Liability Extended by Uniform Commercial Code.—B. F. Goodrich Co. v. Hammond.'—Decedent husband and wife werekilled in their automobile as a result of a "blow-out" of a "blow-out proof"tire purchased by the husband from defendant manufacturer's retail outlet.Suit for wrongful death 2 predicated upon claims of breach of express war-ranty, implied warranty, and negligence in manufacture was brought by theadministratrix of both decedents in the U. S. District Court for the Districtof Kansas. Judgment was rendered for the plaintiff on the basis of breachof an express warranty. Affirmed by the U. S. Court of Appeals for theTenth Circuit. HELD: Although breach of express warranty was a properground of decision on the claim of the decedent purchaser, that of the wifeshould have been based upon breach of implied warranty of fitness, whicharises in Kansas by operation of law despite the lack of privity of contract.The decision is not only in accord with recent Kansas cases, 8 but alsowith those of other common law states which have not enacted the USA. 4The theory of the case is that when a manufacturer advertises and intro-9-310 of the UCC as enacted in Massachusetts, Kentucky, Connecticut andNew Hampshire states: When a person in the ordinary course of his business furnishesservices or materials with respect to goods subject to a security interest, a lien upongoods in the possession of such person given by statute or rule of law for such materialsor services takes priority over a perfected security interest unless the lien is statutoryand the statute expressly provides otherwise.1 269 F.2d 501 (10th Cir. 1959).2 Kan. Gen. Stat. Ann. 60-3203.3 Graham v. Bottanfield's, Inc., 176 Kan. 68, 269 P.2d 413 (1954) ; Nichols v. Nold,174 Kan. 613, 258 P.2d 317 (1953); Swengel v. F.&E. Wholesale Grocery Co., 147 Kan.555, 77 P.2d 930 (1938).4 Worley v. Procter & Gamble Mfg. Co., 241 Mo. App. 1114, 253 S.W.2d 532 (1952),and cases cited therein; Baxter v. Ford Motor Co., 168 Wash. 456, 12 P.2d 409 (1932).268

Bankruptcy—Quaker City Doctrine—Pennsylvania Uniform Commercial Code: — Matter of Einhorn Bros., Inc.

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