Also known as:products of commingled goods · mass of commingled goods · commingled goods product · commingled goods · commingling
Written by attorneys · grounded in primary & secondary sources — see below
A resulting item formed when goods are physically united with other goods so that their individual identities are lost. A security interest does not attach to commingled goods as such but may attach to the product or mass that results.
Sources & Authorities
How it applies
Common Examples
2
Commingled Hotel Revenues Support Veil Piercing
Lena and her siblings ran Harborview Inn through Harborview Inc. They never issued stock, kept no minutes, and maintained no separate bank account. Hotel revenues paid the siblings' personal mortgage and car loans. After a guest was injured, Lena transferred the operating assets to a new LLC, leaving the corporation insolvent. The court found the unity of interest and ownership required for veil piercing because the commingling of corporate and personal funds showed the corporation was treated as the owners' alter ego.
Security Interest Attaches to Commingled Inventory
Pacific Bank held a perfected security interest in Peak Performance's raw fabric. Peak Performance mixed the fabric with other materials to produce finished garments. The bank asserted its interest in the finished garments. The security interest attached to the product or mass even though the original fabric could no longer be identified separately.
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Test Yourself
9
Practice Questions5
· 9 primary sources
Select any source to read its text and confirm it supports the definition.
Cases
Uniform Acts
Course Outlines
Common questions
Frequently Asked
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Does a security interest attach directly to commingled goods themselves?+
No. A security interest does not exist in commingled goods as such. It may attach only to the product or mass that results after the goods are physically united with other goods so that their identity is lost.
Supporting sources
What happens to perfection when collateral becomes commingled goods?+
If a security interest in collateral is perfected before the collateral becomes commingled goods, the security interest that attaches to the product or mass is perfected. Multiple perfected interests rank equally in proportion to the value of the collateral at the time it became commingled goods.
Supporting sources
How does commingling of funds factor into veil-piercing analysis?+
Commingling of funds is one factor courts consider when determining whether there is unity of interest and ownership such that the separate personalities of the corporation and the individual no longer exist. When combined with failure to maintain formalities and use of corporate assets for personal purposes, it supports disregarding the corporate form.
Supporting sources
Business Associations Corporations and LlcsFormation of organizations · Articles of organization; certificates of formationUBEFoundational