(2) The bankruptcy court's findings are not clearly erroneous.
The record supports the findings and legal conclusions of the bankruptcy court and shows its decision to be not "clearly erroneous."
Thermo's basic set of cookware, which is manufactured by Vita, consists of 21 pieces, of which seven are made from bonded metal. Clad Metals is a supplier of bonded metal. From time to time Thermo directs Vita to manufacture a particular piece of the 21 piece set. That piece is manufactured in lots of 1000 to 2000 items. The bonded metal obtained from Clad is used for part of some of the pieces; other metal for the cover and the handle are obtained from other sources.
Vita then stores the finished pieces until Thermo requests delivery. Delivery is made either in complete sets of 21 pieces, or in groups of pieces of a particular type. At the rate Thermo requested finished pieces from Vita, as much as six months may have elapsed between the time Clad shipped the metal discs until Thermo received the last of the finished cookware fabricated from that shipment of metal.
Thermo acquired the metal from Clad by placing an order with Clad directing it to deliver the metal to Vita. Clad would ship the metal and send Thermo invoices reading "sold to" Thermo-Sentinel and "shipped to" Vita Craft, the terms of sale being "net 30 days." Clad kept a running account of Thermo's indebtedness and billed Thermo on a monthly basis for all unpaid balances, including a service charge for past due invoices.
Thermo's indebtedness to Clad reached a point to cause Clad concern, so that about September 15, 1971 a three-party agreement was reached. Under this oral agreement, Thermo would pay $25 (later increased to $35) each time Thermo ordered a complete set of cookware from Vita. The cookware would be delivered C.O.D. to Thermo by Vita for $110, of which $25 would be remitted from Vita to Clad. In addition, Thermo made substantial payments "on account" directly to Clad to reduce its indebtedness. The Bankruptcy Court found that the amount of metal supplied by Clad in any one set of cookware was unascertainable, as metals were also obtained from Allegheny Ludlum and other suppliers, and that the sum of $25 or $35 per set collected by Vita for Clad were to reduce the entire past due indebtedness and had no relation to the metal actually used in the manufactured set.
The trial transcript reveals the following additional facts. Clad imposed a 1% per month carrying charge on the outstanding balance. Thermo carried property insurance on the metal in Vita's possession. Also, the invoices issued by Clad reflect a sales transaction upon order and shipment. All of these factors indicate ownership in Thermo.
The bankruptcy court relies on In the Matter of Samuels & Co. Inc., 526 F.2d 1238, 1248 [5th Cir. 1976] and In re Kravitz, 278 F.2d 820 [3d Cir. 1960] for the conclusion that the rights of an unpaid cash seller are subservient to the rights of a secured creditor or the lien of a trustee in bankruptcy as an ideal execution creditor under Section 70(c) of the Bankruptcy Act. Clad would distinguish these cases on the grounds that they apply only when the goods have been delivered to the buyer, and that here the goods were delivered to, in Clad's opinion, Clad's agent Vita. Clad particularly notes U.C.C. § 2-401(1) where it is stated, inter alia, that "title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties."
In the fact of an oral agreement with many terms left undefined, it is naturally difficult for Clad to show an "explicit" agreement as to when title passes. U.C.C. § 2-401(2) is more to point, and contrary to Clad's position:
(2) Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by a bill of lading