7 U.S.C. § 196

Statutory trust established; livestock

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(a) Protection of public interest from inadequate financing arrangements

It is hereby found that a burden on and obstruction to commerce in livestock is caused by financing arrangements under which packers encumber, give lenders security interest in, or place liens on, livestock purchased by packers in cash sales, or on inventories of or receivables or proceeds from meat, meat food products, or livestock products therefrom, when payment is not made for the livestock and that such arrangements are contrary to the public interest. This section is intended to remedy such burden on and obstruction to commerce in livestock and protect the public interest.

(b) Livestock, inventories, receivables and proceeds held by packer in trust for benefit of unpaid cash sellers; time limitations; exempt packers; effect of dishonored instruments; preservation of trust benefits by seller

All livestock purchased by a packer in cash sales, and all inventories of, or receivables or proceeds from meat, meat food products, or livestock products derived therefrom, shall be held by such packer in trust for the benefit of all unpaid cash sellers of such livestock until full payment has been received by such unpaid sellers: Provided, That any packer whose average annual purchases do not exceed $500,000 will be exempt from the provisions of this section. Payment shall not be considered to have been made if the seller receives a payment instrument which is dishonored: Provided, That the unpaid seller shall lose the benefit of such trust if, in the event that a payment instrument has not been received, within thirty days of the final date for making a payment under section 228b of this title, or within fifteen business days after the seller has received notice that the payment instrument promptly presented for payment has been dishonored, the seller has not preserved his trust under this subsection. The trust shall be preserved by giving written notice to the packer and by filing such notice with the Secretary.

For the purpose of this section, a cash sale means a sale in which the seller does not expressly extend credit to the buyer.

(Aug. 15, 1921, ch. 64, title II, § 206, as added Pub. L. 94–410, § 8, Sept. 13, 1976, 90 Stat. 1251.)

Notes of Decisions

Cited in 54 cases (1 in the last 5 years), 1978–2021 · leading case: In Re Frosty Morn Meats, Inc., 7 B.R. 988 (M.D. Tenn. 1980).

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In Re Frosty Morn Meats, Inc., 7 B.R. 988 (M.D. Tenn. 1980). · cites it 82× “The court postponed the beginning of the 15-day notice period specified in 7 U.S.C. § 196 (b) pending receipt of the accounting.”

Fillippo v. S. Bonaccurso & Sons, Inc., 466 F. Supp. 1008 (E.D. Pa. 1978). · cites it 17× “§ 228 authorizing the Secretary of the Department of Agriculture to enforce the provisions of the Act, nor 7 U.S.C. § 196 which creates a statutory trust for the benefit of unpaid cash sellers could be interpreted as granting plaintiff a cause of action.”

Hedrick v. S. Bonaccurso & Sons, Inc., 466 F. Supp. 1025 (E.D. Pa. 1978). · cites it 14× “It appearing that plaintiff is an “unpaid cash seller” entitled to participate in a statutory trust created by the Packers and Stockyards Act, as amended, 7 U.S.C. § 196 , but that the Court cannot determine all the claims of all the parties by these motions, plaintiff’s motion…”

In Re Gotham Provision Co., Inc., Debtor/debtor in Possession, the First State Bank of Miami v. Gotham Provision Co., Inc., 669 F.2d 1000 (1st Cir. 1982). · cites it 5× “Section 206 of the amended Act, 7 U.S.C.A. § 196 (West 1980), 1 requires that *1003 packers who purchase livestock on a cash basis hold such livestock and accounts receivable and proceeds derived from the resale of the livestock in trust for the benefit of unpaid cash sellers.”

Monfort, Inc. v. Kunkel (In Re Morken), 182 B.R. 1007 (Bankr. D. Minn. 1995). · cites it 7× “In addition, they contend that they are beneficiaries of a statutory trust pursuant to the Packers and Stockyards Act, 7 U.S.C. § 196 2 , and a constructive trust created by Spring Grove’s improper transfer of the cattle to the plaintiff.”

Bast v. Orange Meat Packing Co. (In Re G & L Packing Co.), 41 B.R. 903 (N.D.N.Y. 1984). · cites it 4× “Section 206 of the amended Packers & Stockyards Act, 7 U.S.C. § 196 , provides, in pertinent part: § 196.”

Bast v. Orange Meat Packing Co. (In Re G & L Packing Co.), 20 B.R. 789 (Bankr. N.D.N.Y. 1982). · cites it 7× “00; (7) that pursuant to P & S Act § 206(b), 7 U.S.C. § 196 (b), the Bast Group has given written notices to Orange that they were unpaid, were preserving their P & S Act statutory trust interests; and (8) the Bast Group had duly filed such notices with the United States…”

Pennsylvania Agric. Coop. Mktg. Ass'n v. Ezra Martin Co., 495 F. Supp. 565 (M.D. Penn. 1980). · cites it 5× “7 U.S.C. § 196 . 1 On September 21, 1979 we denied' the Bank’s motion for a preliminary injunction in No.”

Cent. Trust Co. v. B & L LEASING, 669 F. Supp. 828 (S.D. Ohio 1987). · cites it 11× “Plaintiff brought this action under the Packers and Stockyards Act of 1921, 7 U.S.C. § 196 and asserts pendent Ohio claims.”

In Re Fresh Approach, Inc., 48 B.R. 926 (Bankr. N.D. Tex. 1985). · cites it 3× “See 7 U.S.C. § 196 ; H.R.Rep. No. 98-543, 98th Cong.”

Gibson v. Arbogast & Bastian, Inc. (In Re Arbogast & Bastian, Inc.), 42 B.R. 633 (Bankr. E.D. Pa. 1984). · cites it 11× “It is undisputed that if the sales of the livestock in question were “cash sales” within the meaning of section 206 of the Act, 7 U.S.C. § 196 , the plaintiff is a beneficiary of the statutory trust.”

Jsg Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75 (2d Cir. 1990). “Congress apparently thought it unnecessary to include this term in the statutory language in light of the fact that a similar trust provision in the Packers and Stockyards Act, 7 U.S.C. § 196 (b) (“[a]ll livestock purchased by a packer in cash sales, and all inventories of, or…”

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— 7 U.S.C. § 196(b) — 1 case

Liberty Mut. Ins. v. Bankers Trust Co., 768 F. Supp. 70 (S.D.N.Y. 1991).

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