source: Caselaw Access Project

author: MANSMANN, District Judge.

license: Public Domain

text:
    CBS INC., Warner Bros. Records Inc., Atlantic Recording Corporation, Elektra/Asylum/Nonesuch Records, WEA Records, B.V., Polygram Records, Inc., Sire Records Company and Quincy Jones d/b/a Quest Records, Plaintiffs, v. PENNSYLVANIA RECORD OUTLET, INC. and Pennsylvania Record Outlet, Inc. d/b/a the Record Outlet and/or Record Outlet, Norton Kalinsky, and George Kalinsky, Defendants.
    Civ. A. No. 84-1894.
    United States District Court, W.D. Pennsylvania.
    Dec. 14, 1984.

      Robert L. Byer, Eckert, Seaman, Cherin & Mellott, Pittsburgh, Pa., and Bancroft D. Haviland, Nancy L. Schultz, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., for plaintiffs.
    Stanley Makoroff, and Joseph F. McDonough, Pittsburgh, Pa., for defendants.
   OPINION

MANSMANN, District Judge.

This matter comes before the Court on Plaintiffs’ Motion for Civil Contempt and also for findings by this Court following a hearing on the ex parte seizure of various infringing recordings. For the reasons and to the extent set forth below, the Plaintiffs’ Motion is granted. Accordingly, in conformity with this Opinion, the Plaintiffs are awarded $57,000 as well as reasonable attorneys’ fees and costs attributable to the contempt aspect of this matter.

The following Findings of Fact are the result of hearings held in connection with the Plaintiffs’ Motion for Civil Contempt on September 19, 20, and 25, 1984 as well as the October 29, 1984 hearing regarding the ex parte seizure of infringing recordings on October 19, 1984.

FINDINGS OF FACT

1. Plaintiffs in this action are various corporate entities which are engaged in the business of producing, manufacturing, distributing and selling sound records of which they own the United States copyrights and/or the distribution rights for the recordings at issue. Defendant Pennsylvania Record Outlet, Inc. (“Record Outlet”) is a Pennsylvania corporation with seven stores engaged, inter alia, in the retailing of sound recordings. Defendant Norton Kalinsky is the treasurer of Record Outlet, and his brother, Defendant George Kalinsky, is its vice-president. Both brothers are involved in the day-to-day operations of Record Outlet.

2. On August 23, 1984 the parties appeared before this Court for a hearing on Plaintiffs’ Motion for a Preliminary Injunction. At that time Norton Kalinsky admitted to the importing of various copyrighted recordings from Canada on behalf of Record Outlet, in violation of 17 U.S.C. § 602, which provides in pertinent part:

[ijmportation into the United States, without the authority of the owner of copyright ... of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies of phonorecords____

3. On that date before the Court, the parties discussed and negotiated a Consent Decree and Defendants were aware of its provisions at that time, although the final written version was not signed by parties and filed until August 31, 1984. However, as of August 23, 1984, the Defendants were enjoined from the further importation and/or sale of Plaintiffs’ copyrighted recordings, and were otherwise clearly aware of the prohibitions and terms of the Consent Decree.

4. The consent decree also provided, inter alia:

(b) Within ten days hereof, defendant shall furnish to plaintiffs’ attorneys a statement under oath listing by title and number of units all phonorecords made outside the United States which reproduce sound recordings covered by United States copyrights, or exclusive distribution rights under copyright, owned by any of the plaintiffs and which have been imported into the United States or acquired by defendant, all such phonorecords which have been sold by defendant, and all such phonorecords which remain in defendants’ possession, together with copies of all invoices, purchase orders, customs documents, and other documentation regarding defendants’ purchase and importation of those phonorecords.
(c) Defendant may try, within the next twenty days, to make arrangements to return any such phonorecords remaining in its possession to the foreign vendors from which defendant purchased them. If defendant makes any such arrangements, it shall notify plaintiffs’ attorneys, and the return of the phonorecords concerned to the foreign vendor or vendors will be effected by defendant at defendant’s expense under plaintiffs’ supervision in such manner as plaintiffs may deem appropriate to assure themselves that the phonorecords have actually been returned to those vendors. All such phonorecords which have not been returned, as prescribed in the preceding sentence, within the period of twenty days from the date of this Order shall be surrendered by defendant to the plaintiffs, without compensation for destruction.
(d) As used herein, “Phonorecords” includes, but is not limited to, disks, cassettes and any other configurations.
4. Damages are hereby awarded to the plaintiffs against the defendant in the amount of $5,000.00, to be paid by defendant to plaintiffs in equal monthly installments of $500.00 commencing on January 1, 1985 with subsequent payments due the first day of each month thereafter until the total amount is paid. However, this award of damages, and plaintiffs’ acceptance of defendant’s offer to pay such amount of damages, is based upon defendant’s representations to the Court and to plaintiffs on August 23, 1984 concerning the quantities of certain of the phonorecords in question which defendant has imported and sold, reflected in the attached listing. If those representations later are determined to be substantially inaccurate, the Court, on application by plaintiffs setting forth such inaccuracies, will entertain a request for additional damages, including reasonable attorneys’ fees and costs, in accordance with the provisions of Title 17 of the United States Code.

5. Thereafter, on September 14, 1984 Plaintiffs filed their Motion for Civil Contempt, claiming, inter alia, that Defendants had blatantly and flagrantly violated the Consent Decree. Plaintiffs subsequently filed a Motion for a Writ of Seizure, seeking the seizure, impoundment and destruction of the alleged offending recordings.

6. A hearing on both motions was held September 19, 1984, and after Plaintiffs demonstrated post-decree sales, a Writ of Seizure was issued. This hearing was continued on September 20, 1984, and on September 25, 1984 the hearing on Plaintiffs’ Motion for Civil Contempt was continued.

7. By letter dated October 8, 1984, Defendants’ counsel advised Plaintiffs’ counsel that Defendants had discovered an additional 223 offending recordings (including 67 Culture Club recordings) and offered them for inspection. This list also included: 30 Carole King, 45 Jane Fonda and 81 miscellaneous recordings.

8. On October 19, 1984 Plaintiffs applied for an ex parte writ of seizure, contending that various infringing records were observed at Defendants’ warehouse. It was not the 223 recordings set forth in paragraph 7 above which was the subject of the motion, but rather some 800-900 Canadian recordings, 130 of which were estimated to be Quiet Riot recordings. The Court granted the motion, issued the Writ of Seizure and scheduled a hearing on the. seizure.

9. On October 29, 1984 a hearing on the October 19,1984 ex parte seizure was held. The facts demonstrated at the hearings before this Court pertinent to the contempt and seizure issues are set forth below.

10. On September 19 and 20, 1984 a hearing was held in connection with Plaintiffs’ Motion for Contempt and for a Writ of Seizure. The following demonstrates that various records were actually sold by Defendants’ various stores after the Consent Decree was in effect:

(a) On September 5,1984, Lauren Carlson, on behalf of Plaintiffs, purchased the Prince “Purple Rain” album from the downtown Record Outlet Store. When she approached the clerks in the store and asked for the Prince album, she was handed a Canadian album from behind the check-out counter.
(b) On September 7, 1984, Michael Kraski, an employee of Plaintiff CBS, purchased various Canadian recordings from the Oakland Record Outlet store. Specifically, he purchased the Jacksons’ “Victory” cassette and the Culture Club “Colour By Numbers” cassette.
(c) Further, on September 18, 1984 at the Miracle Mile Record Outlet Store, Mr. Kraski purchased Canadian copies of the Steve Perry “Street Talk” cassette and the Culture Club “Colour By Numbers” cassette.
(d) On September 6, 1984, Mark Wallace, an employee of Plaintiff Warner, bought three Canadian albums at the Record Outlet’s Allegheny Mall store. These records were: Rod Stewart’s “Camouflage”, Laura Brannigan’s “Self Control”, and Prince’s “Purple Rain”.
(e) Additionally, on September 18,1984 Mr. Wallace purchased three more Canadian albums from the Miracle Mile Record Outlet store. These were the Prince “Purple Rain”, the Dio “Last in Line” and the Twisted Sister “Stay Hungry” albums.

11. Therefore, the September 19 and 20, 1984 hearing demonstrated that Plaintiffs’ employees or representatives purchased 11 offending recordings (8 separate titles) after the effective date of the Consent Decree. These recordings are set forth in Appendix A.

12. After the September 19, 1984 testimony, this Court issued a Writ of Seizure and on September 19 and 20, 1984, the United States Marshals accompanied Plaintiffs’ representatives who searched various Record Outlet Stores as well as the warehouse.

13. This search yielded 298 Canadian recordings, each of which was covered by the August 31, 1984 Consent Decree. In all, there were 41 offending titles, 33 of which were newly offending (i.e., titles, although covered by the Decree, which had not been discovered as offending until that time), and which were seized by the U.S. Marshals. A specific listing of the recordings seized on September 19 and 20,1984 is contained in Appendix “B.”

14. In addition to the evidence presented at the September 19 and 20, 1984 hearing which demonstrated the sale of recordings covered by the Consent Decree after its effective date, the Plaintiffs also submitted evidence which demonstrated a willful disregard of the Consent Decree by the Defendants. More specifically:

“(a) On September 19, 1984, Mr. Norton Kalinsky testified that he was aware of all of the terms of the Consent Decree when it was originally discussed and negotiated in chambers on August 23, 1984. Although paragraph 3(b) of the Consent Decree provides that Defendants shall within ten days of the Decree furnish Plaintiff a statement under oath showing the title and number of units for all phonorecords covered by the Decree which have been sold by the Defendants and which such records remain in Defendants’ possession, together with copies of invoices, purchase orders, customs documents and other documentation, Defendants failed to do so by the time provided. Defendants failed to initially furnish a statement under oath, and the ‘purchase orders’ supplied contained redacted entries, including the source of the phonorecords. Nothing in the Consent Decree permitted Defendants to take it upon themselves to delete entries from the required documents. Moreover, Plaintiffs’ Exhibit 11, by Mr. Kalinsky’s own admission, does not show the number of records sold, nor does it show the records remaining in Record Outlet’s possession. Additionally, it shows returns on only 16 titles, although considerably more are infringing. This material has never been supplemented so as to be in compliance with the Consent Decree.

“(b) Paragraph 3(c) of the Consent Decree which provides, inter alia, that regarding any return of recordings to Canada Defendants were under an obligation to notify Plaintiffs so that they could supervise the returns. Mr. Norton Kalinsky admitted that he made returns to Canada without first notifying the Plaintiffs, and further that he understood the Court’s direction in this, regard. Mr. Kalinsky further testified that on August 28 and 29, 1984 he made shipments to Canada of record albums totalling 3,842 recordings and 1,663 recordings respectively. Thus, approximately 5,000 recordings were shipped back to Canada, without Plaintiffs’ supervision as required by the Consent Decree. This Court finds that the secretive manner in which Defendants returned recordings to Canada has deprived Plaintiffs of the accurate accounting negotiated in the Consent Decree, and is a willful violation.

“(c) On September 19, 1984 Mr. Norton Kalinsky also testified that he was aware that he was not to sell any offending records after the date provided in the Consent Decree (August 24, 1984). He also testified that instructions to this effect were given to his employees. However, testimony elicited during the hearings indicated that Record Outlet employees were not given explicit instructions not to sell Canadian recordings covered by the Consent Decree, and in some instances were instructed to sell infringing material.

“In this connection, on September 19, 1984, Stephanie Smith, a clerk in the downtown Record Outlet store, testified that she was not told to cheek every tape or album prior to sale to ascertain whether it was offending material. Additionally, Larry Krueger, the former manager of the Oakland Record Outlet, also indicated that he was not given instructions by anyone in charge not to sell the Canadian recordings. In fact, to the contrary, after the records were shipped to Canada, Mr. Krueger noted that two tapes were returned, a Culture Club ‘Colour By Numbers’ and a Jackson’s ‘Victory,’ and he was instructed by George Kalinsky to sell them. This Court notes that George Kalinsky never testified before this Court to refute this damaging testimony. Although his counsel admits his general behavior in this regard was improper, at no time was any acceptable justification offered.

“(d) Further, in direct defiance to the Consent Decree, certain employees were instructed to ‘switch’ American Prince albums brought to the checkout counter with the Canadian Prince albums placed behind the counter in both the Oakland and downtown stores. Moreover, as noted in ¶ 10(a) above, Lauren Carlson testified that when purchasing a Prince album from the downtown store, a clerk handed her a Canadian Prince album which was stored behind the check-out counter. Although the Defendants attempted to rebut this testimony by demonstrating that with respect to ‘hot’, i.e., top-selling albums, stock was kept behind the counter due to their popularity, because certain of Defendants’ employees testified that they were instructed to replace American Prince albums with Canadian albums, this Court finds this practice to constitute willful defiance of the Consent Decree.

“Moreover, Larry Krueger testified that after Canadian records were shipped back in late August that approximately 30 Prince albums of Canadian origin were placed behind the check-out counter. Mr. •Krueger further testified that American Prince records brought to the counter by customers were ‘switched’ for a Canadian Prince record on different occasions. He indicated that this practice was attributable to George Kalinsky, although he did not personally receive these instructions.

“Mr. Krueger also testified that he observed the practice of exchanging Prince albums from behind the counter when he worked in the downtown store in early September. Mr. Krueger further testified that he may have switched one or two Canadian Prince albums.

“In this connection, Jill Douglas, the former assistant manager and present manager of the Oakland Record Outlet store, testified that after the original transmission of the Canadian records back to Canada in late August, she was aware that Frank Talento, an employee of Record Outlet, discovered approximately 20 Canadian Prince albums, which were placed behind the check-out counter at George Kalinsky’s direction in order to ‘switch’ Prince albums brought to the counter by customers. Ms. Douglas testified that on approximately two occasions she followed this procedure. She further noted that these records were eventually taken ‘back to the warehouse or downtown.’

“Also, on September 25, 1984, Frank Ta-lento testified that upon discovering approximately 30 Canadian Prince albums in the Oakland store and being aware that they were Canadian and not ‘supposed to be there’, he called George Kalinsky to find out what to do with them. Mr. George Kalinsky told him to put the albums behind the counter and ‘try to get rid of them.’

“The existence of this practice was even further substantiated by the testimony of Margie Darnley, an employee of Record Outlet who testified that she was instructed by George Kalinsky to switch American Prince albums brought to the check-out counter for Canadian Prince albums. This transpired at the downtown store on a Saturday.

“Mr. Krueger further stated that on one occasion when he worked at the downtown store, George Kalinsky directed that the Canadian Prince albums be put out on display two or three at a time, and when sold, replaced.

“Again, this contumatious and deliberate behavior is attributable to George Kalinsky and similary no acceptable reason was proffered.”

Therefore, based upon the foregoing, this Court finds that Plaintiffs have proved that Defendants have willfully violated the Consent Decree on at least four occasions, as set forth in (a) through (d) above.

15. Additionally, during the October 24, 1984 hearing on the ex parte Writ of Seizure and the continuing contempt, the following was shown:

(a) On October 19, 1984, and as a result of ex parte search of Defendants’ warehouse and Bridgeville store by Plaintiffs, U.S. Marshals seized 217 infringing recordings, 24 separate titles, 8 of which were newly offending. These recordings are listed in Appendix “C.”
(b) Of the above, some were segregated from and others were integrated into the regular stock.
(c) Of the recordings noted in (a) above, six of these were the Quiet Riot “Condition Critical” albums, and these were mixed with the American stock.
(d) Of these 217 recordings, one Canadian (Dan Fogelberg) cassette tape was found on the selling floor.
(e) Additionally, 17 of Plaintiff Poly-gram’s Canadian recordings, 6 different titles, were identified during the seizure, 2 of which were newly offending. These were later produced at the hearing. A list of these is set forth in Appendix “D.”
(f) Therefore, the total number of offending recordings discovered on October 19, 1984 were 234 recordings.

16. Additionally, on October 29, 1984 Jerry Noftz, an employee of RCA Records, testified that on October 17, 1984, while inside the Record Outlet warehouse on a parallel matter (concerning his employer and other record company plaintiffs), he observed some offending recordings in connection with this case. Specifically, he testified that an “ultra conservative” estimate of the number of recordings was 300 CBS and Warner recordings, 150 of which were CBS Quiet Riot recordings (100 albums and 50 cassettes). He further stated that “out of curiosity” he randomly checked six or so of the Quiet Riot albums and all were Canadian product. The remainder of the 300 albums referenced above were Prince, Motley Crew and Twisted Sister. He randomly checked about a dozen of these, and all were Canadian product. Further, he stated that on October 17, 1984 the CBS product (Quiet Riot) was located four bins back from the wall, waist/chest high. The Warner product (Prince, Motley Crew and Twisted Sister) was located on the top shelf three bins back from the wall.

17. Comparing the figures referenced in 111115 and 16 with the 223 offending recordings admitted to by Defendants in the October 8, 1984 letter written by counsel, the Court concludes and notes the following:

(a) This Court concludes that Mr. Noftz is qualified to estimate quantities of albums and tapes.
(b) There were six Quiet Riot recordings seized on October 19, 1984 and Mr. Noftz saw six offending Quiet Riot albums on an earlier date. This Court finds the testimony of Mr. Noftz credible; it is incredulous that when faced with some 100 albums, his random checking uncovered the only six Canadian albums. The fact that these recordings were not in the same position as the CBS albums were two days later further substantiates this finding.
(e) Additionally, this Court finds that with respect to the Motley Crew albums seen by Mr. Noftz on October 17, 1984 that the absence of any such recordings seized by the marshals two days later indicates that these recordings were moved out of the warehouse prior to the time of the seizure.
(d) With respect to the Twisted Sister and Prince albums, the Court likewise concludes that those observed by Mr. Noftz were not the same recordings as those seized by the marshals two days later. (Supporting this conclusion is the fact that the Court finds it incredulous that Mr. Noftz’ random checking uncovered every Canadian album in the stack and all those not checked were nonoffending as well as the fact that the albums were moved within the two days.)
(e) This Court concludes that some of the 223 recordings reported by Defendants on October 8, 1984, as infringing were seized by the marshals on October 19, 1984. However, of the 234 recordings actually seized that day, the Court has no way of determining which ones were from the 223 recordings reported by the Defendants, particularly since the Court has found 300 recordings to have been in the warehouse on October 17 and absent two days later. The fact that the numbers reported do not coincide with the numbers confiscated as well as the absence of the 300 recordings referenced above indicate that Defendants were “moving” the recordings or using them in some way violative of the Consent Decree.
(f) Additionally, this Court concludes that sometime between the time Mr. Noftz was in the warehouse and the time the marshals seized the 234 recordings, 300 offending recordings were removed from the warehouse for sale or for some other use contrary to the provisions of the Consent Decree. Of these, the Court deems 150 to be Quiet Riot (CBS), and 150 to be Prince, Motley Crew and Twisted Sister recordings (Warner).

18. Therefore, based on the foregoing, this Court finds that the Consent Decree was willfully violated by Defendants and further, that in any event, the Defendants never took adequate steps to insure that their employees not sell offending Canadian recordings, or to otherwise comply with its terms.

19. Accordingly, based on the aforementioned, this Court finds Defendants in civil contempt for their multiple violations of the Consent Decree, and finds Defendants jointly and severally adjudged in civil contempt.

CONCLUSIONS OF LAW

20. Civil contempt liability attaches upon violation of a court order of which the recalcitrant individual had actual notice. Thompson v. Johnson, 410 F.Supp. 633 (E.D.Pa.1976), aff'd without opinion, 556 F.2d 568 (3d Cir.1977).

21. Further, behavior may be construed as contemptuous even in the absence of wilfulness. McComb v. Jacksonville Paper Company, 336 U.S. 187, 191, 69 S.Ct. 497, 499, 93 L.Ed. 599 (1949). Moreover, a single act of contempt may give rise to sanctions. Latrobe Steel Company v. United Steel Workers of America, 545 F.2d 1336, 1343 (3d Cir.1976).

22. Civil contempt, as opposed to criminal contempt, “is a sanction to enforce compliance with an order of the court or to compensate for losses or damages sustained by reason of noncompliance.” McComb v. Jacksonville Paper Company, 336 U.S. at 191, 69 S.Ct. at 499.

Thus, whereas the essential purpose of criminal contempt is to vindicate the court’s authority, “the objective of a civil contempt decree is to benefit the complainant.” Latrobe Steel Company v. United Steel Workers of America, 545 F.2d at 1343 (footnote omitted). See also, e.g., United States v. United Mine Workers, 330 U.S. 258, 295, 67 S.Ct. 677, 696, 91 L.Ed. 884 (1947).

23. There are two general categories of sanctions in civil contempt actions, remedial or compensatory as well as coercive, each having a distinctive purpose. Compensatory sanctions are retrospective and seek to compensate the victim for the damages caused by the contumacious party’s disobedience. However, coercive sanctions are prospective in nature and seek to assure future compliance. Latrobe Steel Company v. United States Steel Workers of America, 545 F.2d at 1344. In the situation of a coercive fine, the monies paid would not go to the plaintiff, but rather to the court, since its purpose is to “vindicate the integrity of the judicial process.” Id. at 1346.

24. The district court is given broad discretion in fashioning a remedy for civil contempt. See e.g., Delaware Valley Citizens Council for Clean Air v. Commonwealth of Pennsylvania, 678 F.2d 470, 478 (3d Cir.1982).

25. With respect to compensatory or remedial damages, in appropriate cases, the Court may award not only award damages and costs, but reasonable attorneys’ fees “necessary to secure the contemnor’s compliance with the court’s order.” Thompson v. Johnson, 410 F.Supp. at 643.

SANCTIONS

With the above standards in mind, this Court, having found the Defendants in civil contempt, both for willful disregard of the Consent Decree and due to their failure to comply (willful or not) with its terms, hereby sanctions as follows:

(1) With respect to the recordings actually sold after the Consent Decree {see Appendix A and ¶¶ 10 and 11), Defendants shall pay the appropriate Plaintiff in accordance with the following formula:
$1000 per title (initial infringement only) and $100 for each additional copy.

Thus, under this section, the total amount to be paid all Plaintiffs by Defendants is $8,000 (8 titles) plus $300 (3 additional copies) = $8,300.

In computing what amounts are due each Plaintiff, the parties shall consult Appendix A for the breakdown of the specific copyright holders, the initial offending titles and the number of offending copies.

(2) With respect to recordings seized after the Consent Decree (see Appendices B, C and D), Defendants shall pay the appropriate Plaintiffs in accordance with the following formula:
$250 per title (initial infringement only) and $25 for each additional copy.
Thus, under this section, the Defendants shall pay Plaintiffs the following:
(a) re: Appendix B
33 initial titles = $ 8,250
265 additional copies = 6,625
Total ' $14,875
(b) re: Appendix C
8 initial titles = $ 2,000
209 additional copies = 5,225
Total = $ 7,225
(c) re: Appendix D (only Polygram)
2 initial titles = $ 500
15 additional copies = 375
Total $ 875

In computing what specific amounts are due each Plaintiff, the parties shall consult Appendices B, C and D for the breakdown of the copyright holders, the initial offending titles and the number of offending copies.

(d) re: 300 albums deemed to be present in warehouse
(see If 17(f)).
300 copies (none determined to be initial violation) = $7,500

Given the testimony, since 150 of these are stated to be Quiet Riot, half of this amount shall go to CBS, and the other half to Warner (for the 150 of Prince, Motley Crew and Twisted Sister recordings).

(3) With respect to the 223 recordings admitted by Defendants to be in their possession after the effective date of the Consent Decree, this Court finds that some credit for these infringing items is appropriate. Thus, because Defendants took steps to purge their contempt, some credit will be given. However, because this possession was nonetheless contrary to the Consent Decree, full credit cannot attach. Accordingly, Defendants will be credited $12.50 per recording, mentioned by name by Defendants in the October 8, 1984 letter. Credit cannot be given for the “81 miscellaneous” recordings.
(4) Additionally, with respect to Defendants’ willful violation of the Consent Decree (see ¶ 14(a)-(d)) this Court sanctions Defendants $5,000 for each such violation. Thus this amount totals $20,-000.
(5) Accordingly, the total amount due Plaintiffs is $57,000.
(6) This Court further finds that Plaintiffs are entitled to be compensated by Defendants for the reasonable attorneys’ fees incurred in connection with Defendants’ post-decree contempt, which necessitated Plaintiffs’ return to Court to enforce the Consent Decree.
(7) Likewise, Defendants shall pay Plaintiffs the costs incurred in connection with Defendants’ post-decree contempt, which necessitated Plaintiffs’ return to court to enforce the Consent Decree.
(8) Further, in the event that Defendants subsequently violate the Consent Decree, Defendants will be sanctioned a coercive fine of $1000 per recording, irrespective of duplications in titles. This prospective sanction is to be paid to the Court rather than the Plaintiffs, unlike the other fines.
(9) Additionally, Defendants shall forfeit all recordings in the custody of the Court. These recordings shall be distributed to charities chosen by the Court after these recordings are marked by Plaintiffs to indicate that resale is prohibited. Although destruction of the infringing material is authorized under the copyright laws, it is to be noted that Plaintiffs have willingly consented to charitable distribution of this material.
An appropriate Order shall issue.

ORDER

And now, this 14th day of December, 1984, in conformity with the foregoing Opinion, Plaintiffs Motion for Civil Contempt is GRANTED, and it is hereby ORDERED, ADJUDGED and DECREED that the Defendants are in civil contempt of this Court. In further conformity with this Opinion, as sanctions, Defendants shall pay Plaintiffs a total amount of $57,000 ($58,-775 less $1775) for this contempt, plus reasonable attorneys’ fees and costs incurred by Plaintiffs attributable to the contempt aspect of this matter.

In calculating what amounts are due each Plaintiff, the parties shall consult the Appendices annexed hereto as well as the body of the Opinion, which sets forth the other recordings not listed in the Appendices and the credit allowable to the Defendants.

Judgment is entered accordingly.

APPENDIX “A”

ARTIST TITLE U.S. COPYRIGHT NO. OFFENDING RECORDINGS

Prince Purple Rain Warner Bros. 3

Jacksons Victory CBS 1

Steve Perry Street Talk CBS 1

Culture Club Colour by Numbers Polygram 2

Rod Stewart Camoflage WEA 1

Laura Branigan Self Control Atlantic 1

Dio Last in Line Warner Bros. 1

Twisted Sister Stay Hungry Atlantic 1

8 Total offending titles:

11 Total offending recordings:

APPENDIX “B”

ARTIST TITLE U.S. COPYRIGHT NO. OFFENDING RECORDINGS

Orig. Sound Track All the Right Moves Polygram 2

Footloose CBS 7

Flashdance Polygram 21

Cats WEA 1

Indiana Jones and the Temple of Doom * Lucasfilm Ltd (Polygram)

Beat Street ’ Orion Pictures Corp. (Atlantic)

Breakin Polygram

An Officer and a Gentleman ' Paramount Pictures (WEA)

Staying Alive 1 Paramount Pictures (Polygram) 1

* Culture Club Colour by Numbers Polygram 179

Def Leppard Pyromania Polygram 1

Luciano Pavarotti Luciano Polygram 3

Pavarotti’s Greatest Hits Vol. 1 3

ARTIST TITLE ILS. COPYRIGHT NO. OFFENDING RECORDINGS

Pavarotti’s Greatest Hits Vol. 2 1

0 Holy Night 1

0 Sole Mio 1

Steve Perry Street Talk CBS 12

Jane Fonda Workout The Workout, Inc. (CBS) 4

Cyndi Lauper She’s So Unusual CBS 3

Dan Fogelberg Windows and Walls CBS 1

John Cougar Mellen Camp/Uh-huh Polygram 3

Michael Jackson Off the Wall CBS 1

* Rod Stewart Camoflage WEA 3

Julio Inglesias Julio CBS 1

Elton John Breaking Hearts ** Happenstance Ltd. (WEA) 1

* Twisted Sister Stay Hungry Atlantic 4

Patti Austin Patti Austin Qwest 1

* Prince Purple Rain Warner Bros. 1

Cars Heartbeat City Elektra/Asylum 2

*Dio Last in Line Warner Bros. 4

Slade Keep Your Hands Off CBS 2

Inxs The Swing Atlantic 3

Rush Grace Under Pressure ** CAT Productions (Polygram) 1

Night Ranger Midnight Madness CBS 7

Linda Ronstadt What’s New Elektra 2

* Laura Branigan Self Control Atlantic 2

ZZ Top Eliminator Warner Bros. 3

Van Halen 1984 Warner Bros. 1

* Jacksons John Lennon/ Victory CBS 3

Yoko Ono Milk and Honey Polygram 2

David Sanborn Backstreet Warner Bros. 1

Total offending titles: 41

Total offending recordings: 298

Total titles not previously listed as offending: 33

APPENDIX “C”

ARTIST TITLE U.S. COPYRIGHT NO. OFFENDING RECORDINGS

* Culture Club Colour by Numbers Polygram 67

Quiet Riot Condition Critical CBS 6

Neil Diamond Primitive CBS 8

* Twisted Sister Stay Hungry Atlantic 9

* Slade Keep Your Hands Off CBS 6

ARTIST TITLE U.S. COPYRIGHT NO. OFFENDING RECORDINGS

Cars Heartbeat City Elektra/ Asylum

Bruce Springstein The River CBS 1

* Michael Jackson Off the Wall CBS 6

* Jacksons Victory CBS

Berlin Love Life David Geffen Co. (WEA) 2

* Inxs The Swing Atlantic 2

* Billy Joel Innocent Man CBS 1

* Jane Fonda Workout ** The Workout, Inc. (CBS) * * * 41

Midnight Star No Parking on the Dancefloor ** Solar Records, (WEA) 2

Teddy Pendergrass Love Language Elektra/ Asylum 1

* Elton John Breaking Hearts *" Happenstance, Ltd. (WEA) 1

Carole King Tapestry CBS 37

* Prince Purple Rain Warner Bros. 4

* Rod Stewart Camoflage WEA 1

* Dan Fogelberg Windows and Walls CBS

* Orig. Sound Track Beat Street ** Orion Pictures Corp. (Atlantic)

" Against All Odds Columbia Pictures Ind., Inc., (WEA)

* " Cats WEA

* " Footloose CBS

Total offending titles: 24

Total offending recordings: 217

Total titles not previously listed as offending:

APPENDIX “D”: POLYGRAM

NO. OFFENDING RECORDINGS ARTIST TITLE

1 Def Leppard Pyromania

1 * Luciano Pavarotti Greatest Hits Vol. 1

1 The Great Pavarotti

2 Cameo She’s Strange

2 * John Lennon/Yoko Ono Milk and Honey

1 * John Cougar Mellen Camp Uh-huh

9 * Oris:. Sound Track Flashdance

Total offending titles: 7

Total offending recordings: 17

Total titles not previously listed as offending: 2

      . Norton Kalinsky and George Kalinsky were added as Defendants on Plaintiffs’ September 25, 1984 oral motion, and the current caption reflects this. The Defendants are generally referred to in plural form, although technically the Kalinskys were not initial parties.

      . Plaintiffs later changed their position with respect to the destruction of the offending recordings and agreed that these recordings couid be distributed to charities, so long as no resale would take place.

      . See n. 4, infra.

        . Regarding the Culture Club “Colour By Numbers” recording, Defendants claim that any violation of the Consent Decree with respect to this recording should not be viewed harshly nor even sanctioned. Defendants argue that it was not obvious to them that Culture Club was infringing material covered by the Decree. In support of this argument Defendants assert that Virgin records is listed on some of the recordings as the manufacturer or copyright holder, although they concede that the Plaintiff Poly-gram is listed on other copies.
      This Court rejects Defendants’ arguments and finds that the Culture Club records are covered by the Consent Decree and that Defendants had sufficient knowledge to ascertain this, based on the following: Notwithstanding Norton Kalinsky's testimony that he was unaware that the Culture Club U.S. copyright holder was one of the Plaintiffs, this Court notes that Defendant submitted documents (contained in Plaintiffs’ Exhibit 11) which contradict this assertion. The documents are purchase orders, supplied by Defendants, pertaining to records. Norton Kalinsky took it upon himself to blacken out the Canadian source of the recordings as well as what he described as records not of Plaintiffs. Curiously, Culture Club entries are not redacted. Further, and more important, on Defendants’ Oakland store inventory records, the record company for the "Colour by Numbers” recording was listed as "Col.” which Defendants’ employee testified means "Columbia” or “CBS." Moreover, this Court notes that Billboard, a trade publication, lists "Colour by Numbers” as a CBS recording. Defendants admit reading Billboard and in fact consulting it to determine the Record Outlet “Hot List” to isolate the biggest-selling albums.
      Based on the above, this Court finds no merit in Defendants’ argument that they were unaware that the Canadian Culture Club recording was Polygram-related and therefore offending. Accordingly, this Court finds “Colour by Numbers” of Canadian origin to be offending.

      . In contrast, Wayne Dobson, an employee of Record Outlet, testified that two days later, on October 19, 1984 the Warner product was located underneath the CBS product which was on the "top shelf left.”

      . Costs, as well, are limited to those incurred in connection with the contempt, not the original suit. Thompson v. Johnson, 410 F.Supp. at 643.

      . The Court finds the actual sale of the infringing material to be more egregious than possession, although both violate the Consent Decree. Accordingly, Defendants are fined four times the minimum penalty for infringement under 17 U.S.C. § 504(c).

      . With respect to violations after the first infringement of a particular title, Defendants are fined one-tenth the fine for the initial infringement. A distinction is made here because while the initial infringement is the most offensive, the Court finds that Defendants should also be sanctioned in proportion to volume, but not to the same degree.

      . With respect to the possession of infringing material in defiance of the Consent Decree, the Court finds the minimum fine set forth in 17 U.S.C. § 504(c) to be appropriate.

      . See n. 8, supra.

      . Thus, the total credit for the 30 Carole King, the 45 Jane Fonda and the 67 Culture Club is $1775.

      . This Court finds $5000 for each willful violation to be an appropriate fine, given that this amount was negotiated in the Consent Decree. Accordingly, it is certainly more than reasonable that Defendants pay this amount on each willful violation subsequent to the Consent Decree.

       Previously listed as an offending title.

       With respect to these recordings, the copyright holder is an entity other than one of the Plaintiffs, but one of the Plaintiffs in each instance has the distribution rights, and is indicated in the parentheses. This information was gleaned from Plaintiff’s Exhibit 24 as well as the jackets of actual recordings. It is to be noted, in any event, Defendants do not dispute that these particular recordings are infringing.

       Previously listed as offending title

       With respect to these recordings, the copyright holder is an entity other than one of the Plaintiffs, but one of the Plaintiffs in each instance has the distribution rights, and is indicated in the parentheses. This information was gleaned from Plaintiff’s Exhibit 24 as well as the jackets of actual recordings. It is to be noted, in any event, Defendants do not dispute that these particular recordings are infringing.

       Court count differs slightly from U.S. Marshal count.

       Previously listed as an offending title.


author: CARRIGAN, District Judge.

text:
    MOFFAT COUNTY STATE BANK, Plaintiff, v. PRODUCERS LIVESTOCK MARKETING ASSOCIATION, Defendant.
    No. 82-C-1763.
    United States District Court, D. Colorado.
    Dec. 17, 1984.
    Gregory L. Williams, Rothgerber, Appel & Powers, Denver, Colo., for plaintiff.

      William D. Meyer, Boulder, Colo., for defendant.
   ORDER

CARRIGAN, District Judge.

The plaintiff, Moffat County State Bank (the “Bank”), a Colorado corporation, sued Producers Livestock Marketing Association (“Producers”), a livestock sale barn, claiming that Producers converted the Bank’s property by selling at auction sixty-eight head of cattle for the account of Thomas E. Seewald which were subject to the Bank’s perfected security interest. Producers is a Utah corporation doing business in Colorado. The Bank is claiming $20,313.00, the proceeds from the cattle sale, plus interest from the date of the sale. The Bank and Producers have filed cross motions for summary judgment. Producers has filed a third party complaint against Thomas E. Seewald but that complaint is not in issue here. Jurisdiction is founded on diversity. 28 U.S.C. § 1332(a).

The parties submitted Stipulated Facts and Exhibits setting forth all facts necessary to decide the summary judgment motions. Because there are no genuine issues of material fact, summary judgment is appropriate. Fed.R.Civ.P. 56. The essential facts are as follows:

On July 27, 1981, the Bank loaned $75,-232.33 to Thomas E. Seewald of Maybell, Colorado. This loan combined a new advance and a rewriting of existing mature loans previously made to Seewald. Seewald was a cattle rancher in Moffat County, Colorado. To secure its loan, the Bank entered into a security agreement with Seewald designating as collateral certain farm equipment, seventy-nine head of cattle and four horses. The cattle were identified by number, sex, age and brand.

Section 2 of the security agreement provides that the Bank holds a security interest in the listed property “together with all additions, accessions, replacements, substitutions, proceeds and products therefrom including natural increase of livestock and any and all property of similar type or kind now owned or hereafter acquired by the debtor and used for either personal, family or household purposes; farming or ranching operations; or any business in which the debtor is or might be engaged.”

Two other provisions of the agreement are relevant. Section 5(4) provides that the “Debtor shall at all times keep the collateral at [Maybell in Moffat County, Colorado] unless notice is given to the Secured Party in advance and the Secured Party consents in writing to the removal to another location.” Section 6 provides that the “Debtor shall be in default under this Agreement upon the ... sale of any of the collateral....”

Because the Bank had entered into similar arrangements with Mr. Seewald in the past, a financing statement, listing the bank as secured party and Seewald as debt- or, and covering “Machinery and Livestock,” had been filed with the Clerk and Recorder of Moffat County in 1976. Neither the “proceeds” nor the “products” box of the financing statement was checked. Pursuant to the Uniform Commercial Code (“U.C.C.”), as codified at Colo.Rev.Stat. § 4-9-403(2) (1984 Cum.Supp.), a financing statement is effective for five years from the date of filing. In anticipation of the execution of the July 27, 1981 security agreement, and pursuant to Colo.Rev.Stat. 4-9-403(3) (1984 Cum.Supp.), the Bank filed a Continuation Financing Statement with the Moffat County Clerk and Recorder on July 10, 1981.

On October 20 and 21, 1981, without the Bank’s knowledge, Seewald sold sixty-eight head of cattle through Producers, a livestock sale barn in Greeley, Colorado. Prior to sale, the cattle were inspected by a Colorado state brand inspector who certified compliance with the livestock bill of sale laws to Producers. According to Producers’ sales records, it sold sixty-three head of cattle for Seewald on October 20, 1981 for a gross sales price of $19,730.56, and five head of cattle on October 21, 1981 for a gross sales price of $1,837.33. The total net proceeds paid by Producers to Seewald for both sales, after deducting commissions and other sale expenses, was $20,313.00. Seewald warranted to Producers that all cattle were free from any liens and encumbrances. Producers made no inquiry and had no actual knowledge of the Bank’s asserted security interest in the cattle. Seewald neither remitted any part of the proceeds to the Bank nor informed the Bank of the sale.

In January 1982, the Bank first learned, through an anonymous letter, that Seewald may have sold some of his cattle without informing the Bank or remitting the proceeds to the Bank. By letter of February 19, 1982, the Bank informed Seewald that he was in breach of the security agreement by diverting proceeds from the October 1981 cattle sales and by failing to apply that money to the note principal and interest at the Moffat County State Bank. After contacting public livestock markets across the state, the Bank discovered, in March 1982, that Producers had sold the cattle for Seewald in October 1981. Despite the Bank’s repeated demands for payment, neither Seewald nor Producers has remitted to it any part of the proceeds.

In August 1982, the Bank foreclosed on the farm equipment listed in the security agreement. After applying the proceeds of that sale to Seewald’s indebtedness, Seewald still owed the Bank approximately $35,000 plus accrued interest. On August 20, 1982, Seewald filed, in the United States Bankruptcy Court for the District of Colorado, a voluntary petition under chapter 7 of the Bankruptcy Code.

The course of dealing and course of performance between the Bank and Seewald with respect to sales of cattle other than the one in dispute are also relevant. Seewald was an agricultural loan customer at the Bank from 1974 through 1982. During that period, Seewald negotiated a number of agricultural loans to finance his cattle breeding operation. The Bank expected Seewald to repay his loans from the proceeds derived from the sale of cattle.

Although the Bank’s security agreements with Seewald, including the July 1981 agreement, state that Seewald was required to obtain written consent from the Bank before selling any cattle collateral, the Bank did not transact business with its customers, including Seewald, in that manner. The relevant stipulated facts are as follows:

“14. On more than one occasion, [J. Ted Haddan, the Bank Vice-President] advised Seewald that he was permitted to sell his cattle collateral as he saw fit provided that he brought the proceeds from each sale promptly to the Bank, where Seewald and the Bank would discuss the disposition of such proceeds. This arrangement was applied by the Bank to most of its agricultural loan customers and is typical in the cattle industry.
15. The Bank did not require agricultural borrowers, including Seewald, to have proceeds’ checks drawn payable to both the borrower and the Bank, unless the borrower was in default or had otherwise given the Bank cause for concern. Such restriction was not placed on Seewald.
16. In practice, the Bank did not require Seewald or other agricultural borrowers to obtain written consent from the Bank to transport or sell cattle collateral before such transportation or sale. There were two reasons this was not required: (1) requiring written consent would have created an administrative burden for the Bank; and (2) the Bank trusted Seewald and its other agricultural borrowers to bring in the proceeds after any sale.
26. Prior to October 1981, the Bank’s policy generally required the loan officer to field inspect collateral for loans once per year, time permitting. The Seewald collateral was inspected on April 28, 1979 and January 30, 1982 by Haddan. More frequent inspections were not performed due to Haddan’s lack of time to perform same.
32. In addition to the October 1981 sales by Seewald at Producers’ market, the Bank is aware of cattle sales by Seewald on or about March 9, 1977, June 30, 1977, October 14, 1977, January 10, 1978, October 20,1980, and December 10, 1981. On none of these occasions did Seewald request specific pre-sale permission from the Bank to sell some of his cattle.
38. If Seewald had brought the proceeds from the October 1981 sales at Producers in to the Bank within a few days after those sales, the Bank would not have considered Seewald in breach of his promissory note or security agreement with respect to those sales.”

This is a diversity case. Because all events relevant to the dispute occurred in Colorado, Colorado law governs.

Two issues must be resolved:

A. Did the Bank perfect a security interest in the cattle sold by Producers?
B. Did the Bank authorize sale of the cattle and thus lose its security interest in the collateral under Colo.Rev.Stat. § 4-9-306(2) (1984 Cum.Supp.)?

If the Bank perfected its security interest in the cattle sold by Producers and did not authorize the sale of the cattle, Producers is liable to the Bank for converting the cattle. On the other hand, if the Bank failed to perfect its security interest in the cattle or authorized the sale by Producers, the Bank must bear the loss for Seewald’s breach of the security agreement.

The applicable Colorado law is clear and undisputed:

“An auction company that sells property in behalf of another who holds the property subject to a perfected security interest, and the purchaser thereof, are each liable to the holder of the security interest for the fair value of the property sold, regardless of whether the auction company purchaser had actual knowledge of the existence of the security interest or the other’s want of authority to sell, in the absence of facts showing acquiescence or consent on the part of the holder of the security interest.” Colorado Bank and Trust Company v. Western Slope Investments, Inc., 36 Colo.App. 149, 539 P.2d 501, 504 (1975).

This dispute arises because of the farm products exception to the protection of good faith purchasers rule of the Uniform Commercial Code. Section 9-307(1) of the Code, Colo.Rev.Stat. § 4-9-307(1) (1973), provides:

“A buyer in ordinary course of business (subsection (9) of section 4-1-201) other than a person buying farm products from a person engaged in farming operations takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence.”

It is undisputed that the cattle sold by Producers were farm products and that Seewald was a person engaged in farming operations. It is similarly undisputed that Producers was a buyer in the ordinary course of business.

A. Did the Bank Perfect a Security Interest in the Cattle?

The perfection of a security interest is governed by Article 9 of the Uniform Commercial Code, as adopted in Colorado at Colo.Rev.Stat. §§ 4-9-101 et seq. (1973). The Bank argues that it took every step required by the U.C.C. to perfect its security interest in the cattle.

Producers rests on three grounds in asserting that the Bank failed to perfect a security interest in the cattle it sold for Seewald. First, the Bank inadequately described the livestock in the security agreement. Second, the Bank inadequately described the livestock in the financing statement. Third, the Bank acquired no interest in the cattle because it did not execute a bill of sale for the cattle nor did it take and record an assignment of the cattle brand in compliance with the livestock bill of sale laws, Colo.Rev.Stat. §§ 35-54-101 et seq. (1984).

1. Adequacy of description in the security agreement.

The security agreement identifies the livestock collateral as follows:

“71 cows and calves
1 2yrs heifer
3 yearling (2 steers & 1 heifer)
4 bulls
4 horses
Branded thus (5)
\K”

In addition to the itemized livestock, the security agreement also extended to “all additions, accessions, replacements, substitutions, proceeds and products therefrom including natural increase in livestock and any and all property of similar type or kind now owned or hereafter acquired by the Debtor and used for either personal, family or household purposes; farming or ranching operation; or any business in which the Debtor is or might be engaged.”

Colo.Rev.Stat. § 4-9-110 (1973) sets forth the statutory standard for description of collateral in a security agreement:

“For the purposes of [Article 9 of the U.C.C.], any description of personal property is sufficient if it specifically identifies and itemizes in the security agreement what is described as to consumer goods, and whether or not it is specific if it reasonably identifies what is described as to all other personal property.” (emphasis added)

Producers asserts that, in Colorado, a description “reasonably identifies” livestock only if it meets the requirements of the livestock bill of sale laws, Colo.Rev. Stat. §§ 35-54-101 et seq. (1984). Colo. Rev.Stat., § 35-54-101 provides, in pertinent part, that a duly executed bill of sale must describe the animal by sex, age, breed, brands or earmarks, wattle or dewlap, and horned or dehorned. The description of livestock in the security agreement is admittedly not this specific.

Producers’ assertion is incorrect. The collateral description requirements of Article 9 of the U.C.C. are not supplemented by the livestock bill of sale laws: The statutory schemes serve different purposes. The livestock bill of sale laws provide a method to transfer title to livestock, while Article 9 provides for the creation and perfection of security interests in personal property, including cattle.

The livestock bill of sale laws were clearly designed to prevent rustling. Cugnini v. Reynolds Cattle Co., 648 P.2d 159 (Colo.App.1981), aff'd, 687 P.2d 962 (1984). The bill of sale accompanying transfer must be sufficiently specific to identify a particular animal. This law is addressed to one specific problem — rustling—and does not address the distinct problem of notifying prospective buyers of security interests in the livestock. There is no provision in the livestock bill of sale laws for creating and recording a security interest; the only mechanism for this purpose is that set forth in Article 9 of the U.C.C.

The description of the collateral in the security agreement was adequate to give the bank a valid security interest in all cattle owned by Séewald. The description “reasonably identifies” what is described. Colo.Rev.Stat. § 4-9-110 (1973). That is all that is required.

2. Adequacy of description in the financing statement.

On November 26, 1976, the Bank filed a financing statement with the Moffat County Clerk and Recorder which identified the collateral as “machinery and livestock.” Colo.Rev.Stat. §§ 4-9-401 and 402 (1984 Cum.Supp.). Neither the “products” nor the “proceeds” box was checked. On July 10, 1981, the Bank filed a continuation statement in accordance with Colo.Rev. Stat. § 4-9-403(3) (1984 Cum.Supp.). Producers argues that the Bank only perfected a security interest in the cattle specifically enumerated in the security agreement because it failed to check the “products” of collateral box. This argument is without merit.

A financing statement “is sufficient if it ... contains a statement indicating the types ... of collateral.” Colo.Rev.Stat. § 4-9-402(1) (1984 Cum.Supp.). Subsection 4-9-402(8) (1984 Cum.Supp.) further provides that “[a] financing statement substantially, complying with the requirements of this section is effective even though it contains minor errors which are not seriously misleading.” The Fifth Circuit has held, on facts nearly identical to those at issue here, that the simple description “livestock” is sufficient under U.C.C. § 9-402 (Colo.Rev.Stat. § 4-9-402) to cover natural increases and other additions even in the absence of a specific indication on the financing statement. United States v. Southeast Mississippi Livestock Farmers Association, 619 F.2d 435 (5th Cir.1980). In that case, the court explained:

“Official Comment (2) to § 9-402 of the UCC states that a financing statement is intended to be a system of ‘notice filing’ and nothing more:
What is required to be filed is not, as under chattel mortgage and conditional sales acts, the security agreement itself, but only a simple notice which may be filed before the security interest attaches or thereafter. The notice itself indicates merely that the secured party who has filed may have a security interest in the collateral described. Further inquiry from the parties concerned will be necessary to disclose .the complete state of affairs.”
619 F.2d at 439.

The court’s conclusion in Southeast Mississippi is equally true in this case: “Certainly, any reasonable party examining the financing statements describing [Seewald’s] collateral would have been sufficiently alerted to direct an inquiry to the [Bank] to determine what, if any, security interest in the livestock was held by the [Bank].”

It is arguable whether, to be technically correct, the Bank should have checked the “products” box; the security agreement explicitly covered the enumerated livestock “together with all additions, accessions, etc.” Regardless, had Producers consulted the financing statement, the Bank’s failure to check the box would not have been “seriously misleading.” Colo.Rev.Stat. § 4-9-.402(8) (1984 Cum.Supp.).

3. Failure to comply with the livestock bill of sale laws, Colo.Rev.Stat. §§ 35-54-101 et seq. (1984).

The Bank was not required to execute a bill of sale under Colo.Rev.Stat. § 35-54-101 nor to take an assignment of Seewald’s brand, as Producers asserts, when it took a security interest in Seewald’s cattle. As explained above, the livestock bill of sale laws govern passage of title in livestock. The livestock bill of sale laws supplement Article 2 of the U.C.C. as codified in Colorado, Colo.Rev.Stat. §§ 4-2-101 et seq., and, to the extent they are inconsistent with Article 2, supercede it. See Cugnini v. Reynolds Cattle Co., supra. They do not, however, supplement or supercede Article 9 as Producers asserts.

In sum, therefore, I find and conclude that the Bank did perfect a security interest in the cattle Producers sold for Seewald.

B. Did the Bank authorize sale of the cattle and thus lose its security interest?

The second issue is whether the Bank authorized the sale of cattle and thus lost its security interest in the collateral. Colo.Rev.Stat. §§ 4-9-306(2) (1984 Cum. Supp.) provides:

“Except where this article otherwise provides, a security interest continues in collateral notwithstanding sale, exchange, or other disposition thereof unless the disposition was authorized by the secured party in the security agreement or otherwise, and also continues in any identifiable proceeds including collections received by the debtor.” (emphasis added)

The Bank argues that the security agreement did not authorize sale of the cattle and that that agreement governs. It relies on Colorado Bank & Trust Co. v. Western Slope Investments, Inc., supra, 539 P.2d 501, where the court rejected an auction company’s waiver defense and held that the company was liable for conversion for selling cattle subject to a security interest held by the plaintiff bank. There the security agreement had prohibited sale of the collateral without prior written consent from the bank, but the bank’s loan officer testified at trial that “he had never required a customer to get written approval before the sale of collateral, and that he generally relied upon the honesty of the customer to deliver the proceeds to the bank from such sales.” 539 P.2d at 503. On appeal, the court held that this testimony could not support the auction company’s waiver defense because when a “usage of trade” is inconsistent with the express terms of the security agreement, the express terms control. Colo.Rev.Stat. §§ 4-1-205(2) and (4) (1973).

In the instant case, however, there is evidence of waiver not only from a “course of dealing” or “usage of trade,” but also from the “course of performance” between the parties. Pursuant to Colo.Rev.Stat. § 4-2-208(3) (1973), a “course of performance shall be relevant to show a waiver or modification of any term inconsistent with such course of performance.”

The Bank argues that its authorization, if any, was conditioned on Seewald’s remitting the proceeds to it, and that Seewald’s failure to perform this condition subsequent rendered its consent inoperative. This argument is without merit. The Bank’s authorization, if any, was unaffected by Seewald’s failure to remit the proceeds of the sale. The Tenth Circuit addressed this issue in First National Bank and Trust Company of Oklahoma City v. Iowa Beef Processors, Inc., 626 F.2d 764, 769 (10th Cir.1980), where it stated:

“Consent to sell in the debtor’s own name ‘provided’ the seller remits by its own check to the bank is not a true conditional sales authorization. In essence, such a condition makes the buyer an insurer of acts beyond its control. The bank has made performance of the debtor’s duty to remit proceeds to the bank a condition of releasing from liability a third party acting in good faith. IBP could not ascertain in advance whether this condition would be met, as it could if a condition precedent was involved; nor did IBP have any control over the performance of the condition, as long as it paid [the debtor]. A secured party has an interest in protecting its security by conditioning its consent, but it can place conditions that would afford it protection without great unfairness to the good faith purchaser.”

The Bank’s reliance on Southwest Washington Production Credit Association v. Seattle-First National Bank, 92 Wash.2d 30, 593 P.2d 167 (1979), is misplaced. In that case, the court held that a security interest continued in collateral sold by debtors with consent of the secured party (on condition the debtors remitted the proceeds to the credit association) when the buyer failed to pay the debtors who were then unable to remit the proceeds to the credit association. In that situation there was no unfairness in continuing the security interest because the party liable, the buyer, controlled fulfillment of the condition. In contrast, here Producers, the buyer, paid Seewald, the debtor, for the cattle. It was the debtor who failed to pay the Bank, as in the Iowa Beef Processors case.

Finally, the Bank argues that it did not authorize or waive its security interest in the cattle because it did not voluntarily and intentionally relinquish a known right. Security National Bank v. Belleville Livestock Commission Co., Inc., 619 F.2d 840, 846 (10th Cir.1979). Although one of the purposes of the Uniform Commercial Code is “to make uniform the law among the various jurisdictions,” Colo.Rev.Stat. § 4-1-102(2)(c) (1973), courts have split widely on the question whether the secured party authorized sale of the collateral or waived its security interest in the collateral given very similar fact situations. The fact that so many cases have addressed this issue indicates that the same problem has arisen again and again in farming and ranching communities across the country.

While the security agreement normally prohibits disposition of the collateral without prior written consent from the secured party, the secured party usually does not, in practice, insist upon that written consent. The reason for the practice expressed by the Moffat County State Bank is typical. It would be administratively burdensome to provide a written consent for each sale of collateral. Rather, the Bank relies on the honesty of its agricultural borrowers to bring in the proceeds after a sale of collateral.

Banks and credit associations normally comply with the notice-filing provisions of Article 9 of the U.C.C. as the Bank did here. However, it appears from the numerous reported cases that livestock auction companies and other livestock purchasers often (and perhaps ordinarily) do not make inquiry to determine whether the livestock are subject to a security interest. Producers argued here that to require such an inquiry would be too burdensome; typically, a livestock sale barn auctions hundreds, if not thousands, of animals every day and cannot easily telephone each county clerk to check for financing statements, then place a follow-up call to each secured party to determine whether the animals are collateral and whether consent has been given for the sale.

The leading cases on the issue of authorization and waiver are Clovis National Bank v. Thomas, 77 N.M. 554, 425 P.2d 726 (1967) (holding that the secured party waived its security interest in the collateral cattle), and Garden City Production Credit Association v. Lannan, 186 Neb. 668, 186 N.W.2d 99 (1971) (holding that the secured party did not waive its security interest in the collateral cattle).

In the Clovis line of cases, the courts have characterized the secured party’s conduct as express waiver or express consent and have held that the secured party’s authorization of the sale releases the auction company or other purchaser from liability to the secured party. First National Bank and Trust Company of Oklahoma City v. Iowa Beef Processors, Inc., supra, 626 F.2d 764; Security National Bank v. Belleville Livestock Commission Co., Inc., supra, 619 F.2d at 846-48 (finding no implied waiver but finding express consent); Ottumwa Production Credit Association v. Keoco Auction Co., 347 N.W.2d 393 (Iowa 1984); Lisbon Bank and Trust Co. v. Murray, 206 N.W.2d 96, 99 (Iowa 1973); North Central Kansas Production Credit Association v. Washington Sales Co., 223 Kan. 689, 577 P.2d 35 (1978) (finding no implied waiver but finding express consent); Anon, Inc. v. Farmers Production Credit Association of Scottsburg, 446 N.E.2d 656 (Ind.App.1983). A persuasive rationale for this result is that “the secured party is in a much better position to protect itself than the buyer because he knows of the debtor and the origin of the product. The buyer, sometimes at remote distances, does not have this knowledge. Therefore, the loss is cast upon the secured party.” Anon, Inc., supra, 446 N.E.2d at 660.

Lannan and its progeny, on the other hand, have characterized the secured party’s conduct as a mere failure to object or rebuke the debtor for selling without written consent and have held that such mere inaction does not constitute a waiver. Security National Bank v. Belleville Livestock Commission Co., Inc., supra (finding no implied waiver from bank’s failure to object but finding express consent to sale); Wabasso State Bank v. Caldwell Packing Co., 308 Minn. 349, 251 N.W.2d 321, 323 (1976) (see cases there cited from both the Clovis and Lannan lines of cases); First Tennessee Production Credit Association v. Gold Kist, Inc., 653 S.W.2d 418 (Tenn.Ct.App.1983). An important policy rationale underlying these holdings is to facilitate the granting of credit to the capital-intensive agricultural industry. North Central Kansas Production Credit Association v. Washington Sales Co., supra, 577 P.2d at 41.

While I find little distinction in the operative facts between cases where courts have found express consent and others where courts have found only failure to object not amounting to waiver, I must attempt to apply these precedents to the facts here presented. I find that the Moffat County State Bank expressly consented to Seewald’s sale of cattle. The Bank expected Seewald to sell his cattle in order to repay his loans. Its vice-president had advised Seewald on more than one occasion that he could sell his cattle collateral as he saw fit provided Seewald promptly brought the proceeds from each sale to the Bank. Stipulation 14. If Seewald had brought the sale proceeds check to the Bank within a few days following the October 1981 sales by Producers, the Bank would not have considered Seewald in default under the promissory note and security agreement. Stipulation 38. It is apparent that the event of default was Seewald’s failure to remit the proceeds from the sale, not the sale itself.

As the Tenth Circuit stated in First National Bank and Trust Co. of Oklahoma City v. Iowa Beef Processors, supra, 626 F.2d at 767-68:

“The reality of cattle financing arrangements is that the secured party expects and wants the collateral to be sold continually in order for it to receive payment on the line of credit it has extended. At the same time, however, the secured party is reluctant to give blanket consent to the sales because it would lose its right to go against the purchaser should the debtor default. Consequently, secured parties in this area have tried to protect themselves by placing conditions on sales authorizations.”

The court found, however, that consent conditioned on the debtor remitting the proceeds to the bank was not a true conditional sales authorization, as discussed above. The court went on to conclude as follows:

“[T]he policy of the Uniform Commercial Code to promote ready exchange in the marketplace, see Riverside Nat’l Bank v. Law, 564 P.2d 240, 243 (Okl.1977), outweighs the secured party’s interest in the collateral under these circumstances. Therefore, we hold that even though the secured party conditions consent on receipt of the proceeds, failure of this condition will not prevent that consent from cutting off the security interest under section 9-306(2).” 626 F.2d at 769.

Producers admittedly did not check the Moffat County records to determine whether the cattle were subject to a security interest but this failure is irrelevant because the Bank gave Seewald actual authority to sell. Even if Producers had checked the Moffat County records and, finding a financing statement, telephoned the Bank, it presumably would have been told that Seewald was authorized to sell his cattle and accept proceeds in his own name as long as he brought the proceeds to the Bank. See First National Bank and Trust Company of Oklahoma City v. Iowa Beef Processors, supra, 626 F.2d at 768.

The tension in the law on the issue of the buyer’s liability when the debtor pockets the proceeds from the sale of livestock collateral, as evidenced by divergent case law results on facts apparently indistinguishable in all material respects, arises because the Uniform Commercial Code’s treatment of security interests in livestock does not reflect the actual practice in the trade.

Section 9-307 of the U.C.C., Colo.Rev. Stat. § 4-9-307 (1973), provides that “[a] buyer in the ordinary course of business ... other than a person buying farm products from a person engaged in farming operations takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence.” (emphasis added) A number of states have amended this provision to distribute more equitably the rights and responsibilities of lenders holding security interests in livestock, and livestock buyers, including auction companies. See 3 Uniform Laws Annotated Master Ed., Uniform Commercial Code § 9-307 (1984 Cum.Annual Pocket Part), reporting Illinois, Nebraska, North Dakota, Ohio, Indiana and Tennessee amendments.

In Ohio, for example, a buyer of farm products in the ordinary course of business takes free of a perfected security interest unless the secured party sends written notice to the buyer before the sale that it claims a security interest in certain described farm products. The secured party may request the debtor to provide a written list of its potential buyers. If the secured party does request such a list, the debtor may not sell farm products to a buyer who does not appear on the list without the prior written consent of the secured party. This system protects both the secured party and the buyer of farm products without unduly burdening either party. The debtor can readily furnish the secured party a list of the sale barns and major purchasers with whom he or she normally transacts business. The secured party can then send a simple notice to each listed purchaser. Each auction company or other purchaser would then maintain its own filing system and could quickly check its own records, when a load of livestock comes in, to determine whether it should make the proceeds check payable only to the seller or jointly to the seller and the secured party.

While other schemes could, of course, be devised, the Ohio legislation illustrates that the Colorado legislature holds the solution to the problem brought to this court by the Bank and Producers. Until the legislature acts, courts will continually be placed in the position of choosing between two innocent parties on the basis of such ill-defined and difficult to apply distinctions as failure to rebuke versus express consent. The resultant uncertainty will continue to spawn litigation in contravention of the policies of the Uniform Commercial Code.

Accordingly,

IT IS ORDERED that summary judgment is granted in favor of defendant Producers Livestock Marketing Association and against plaintiff Moffat County State Bank.

      . In 1977, the U.C.C. was amended to provide that a security interest in collateral automatically continues in identifiable cash proceeds provided that the financing statement covers the original collateral. Colo.Rev.Stat. § 4-9-306(3)(b) (1984 Cum.Supp.). It thus became unnecessary to check a box on each financing statement in order to perfect a security interest in identifiable cash proceeds. The Bank’s failure to check the proceeds box in 1976 was thus without significance when the cattle were sold in 1981.

      . In 1968, New Mexico, by statute, set aside the Clovis rule. N.Mex.Stat.Ann. §§ 55-1-205(3) and (4) (1978).