Philko Aviation, Inc. v. Shacket

462 U.S. 406 (1983)

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Nature of the Case

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Facts

A corporation operated by Roger Smith sold a new airplane to D. D paid the sale price in full and took possession of the aircraft, and they have been in possession ever since. Smith did not give D the original bills of sale reflecting the chain of title to the plane. Smith gave them photocopies and his assurance that he would 'take care of the paperwork,' which the Shackets understood to include the recordation of the original bills of sale with the FAA. D never attempted to record their title with the FAA. Smith then proceeded to sell the same airplane to P. According to P, Smith said that the plane was in Michigan having electronic equipment installed. Nevertheless, P and its financing bank were satisfied that all was in order, for they had examined the original bills of sale and had checked the aircraft's title against FAA records. Smith gave P all the title documents but not possession of the aircraft. P's bank subsequently recorded the title documents with the FAA. D filed the present declaratory judgment action to determine title to the plane. P argued that it had title because D had never recorded their interest in the airplane with the FAA. The District Court awarded summary judgment in favor of D, and the Court of Appeals affirmed, reasoning that § 503(c) did not pre-empt substantive state law regarding title transfers, and that, under the Illinois Uniform Commercial Code D had title but P did not. The Supreme Court granted certiorari.