Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

Exercise 13

Liens. Autolign Manufacturing Group, Inc., was a plastic injection molder that made parts for the auto industry. Because of a fire at its plant, Autolign subcontracted its work to several other companies to produce parts for its customers. Autolign provided the subcontractors with molds it owned so that they could produce the exact parts needed. After the subcontractors produced the parts, Autolign sold them to automakers. Shortly afterward, Autolign ceased operations. The subcontractors sued Autolign for breach of contract, claiming that they were never paid for the parts that they had produced for Autolign. The subcontractors asserted a statutory "molder's lien" on the molds in their possession. A molder's lien is similar to an artisan's lien in that it is possessory, but it was established by a Michigan statute rather than common law. One of Autolign's creditors, Wamco 34, Ltd., argued that the molds were its property because the molds were used to secure repayment of a debt that Autolign owed to Wamco. The trial court held that Wamco was a secured creditor and that its interest had priority over the plaintiffs' lien in the molds. The subcontractors appealed. Which party had the superior claim? Explain your answer. [ Delta Engineered Plastics, LLC v. Autolign Manufacturing Group, Inc., 286 Mich.App. 115, 777 N.W.2d 502 (2010)]