RESPONDENT:Kimbell Foods, Inc.
LOCATION:Metropolitan Correctional Center
DOCKET NO.: 77-1359
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Fifth Circuit
CITATION: 440 US 715 (1979)
ARGUED: Jan 08, 1979
DECIDED: Apr 02, 1979
Howell Hollis, III – for Zac A
Stephen R. Barnett –
Vernon O. Teofan – for Kimbell Foods, Inc
Media for United States v. Kimbell Foods, Inc.
Audio Transcription for Opinion Announcement – April 02, 1979 in United States v. Kimbell Foods, Inc.
Warren E. Burger:
Mr. Justice Marshall will announce the judgment and opinion of the Court in United States against Kimbell Foods and the consolidated case, United States against Crittenden.
This case is here on certiorari to the United States Court of Appeals for the Fifth Circuit.
At issue here is whether state or federal law should be used to establish a relative priority of private items, private liens and federal contractual liens.
The federal liens arise from lending activities of the small business administration and the farmers’ own administration.
These loan programs are authorized by a statute that do not, in any ways, specify priority rules to govern such liens.
The Court of Appeals rejected the Government’s argument that the rules developed by this Court for determining the priority of federal tax liens should also apply when the United States acts as a commercial lender.
Instead, it fashioned a special federal rule based largely on the model, Uniform Commercial Code.
In an opinion filed today, we hold that choice of law for assessing the priority of these competing liens is federal.
However, a national rule is unnecessary in order to protect federal interest underlying the loan programs.
Accordingly, we adopt the state commercial law as the appropriate federal rule of decision, leaving Congress free to establish uniform priority rules through legislation.
Because the Court of Appeals in Number 1359 found that the Texas law gave the private lien preference over the federal lien, we affirm that judgment.
We remand 16044 for the Court to determine whether the private or federal lien involved in that case is superior under Georgia law.
Warren E. Burger:
Thank you, Mr. Justice Marshall.