INGRAHAM, Circuit Judge:
Since 1921 packers and stockyard men in interstate commerce have been subjected to remedial federal legislation and regulation. This appeal stems from the bankruptcy of one such regulated packer, Samuels & Co., Inc., of Dallas, Texas. The issues raised, however, all question the priority of liens between a class of cattle raisers who sold their cattle to Samuels & Co. and C.I.T. Corporation, which financed their purchase.
Prior to its filing a voluntary petition for an arrangement under Chapter XI of the Bankruptcy Act, 11 U.S.C. § 701 et seq., Samuels & Co. had purchased cattle under a “grade and weight basis,” and C.I.T. had financed those purchases secured by a floating lien on Samuels’s inventory and other property. The cattle thus sold were delivered to the bankrupt, who slaughtered the animals. The carcasses were permitted to cool and were then inspected, graded and weighed. Samuels would then issue its check for the purchase price and further process the meat into finished products. This system is common to the meat packing industry and its conditions are spelled out by regulation published in 9 Code of Federal Regulations. C.I.T. became insecure in this plan upon learning that Samuels intended to file a plan of arrangement under Chapter XI. Thus on May 23, 1969, it refused to advance additional funds for cattle purchased. On the same day Samuels filed its plan of arrangement which ultimately led to an adjudication of straight bankruptcy in April of 1970. Appellants, representing a class of cattle sellers whose cattle were delivered to Samuels before May 23, 1969, and who had received checks in payment therefor but whose checks were returned unsatisfied, filed claims for the amount of the purchase price with the bankruptcy court. That class of cattle sellers asserted a first priority lien and their position was opposed by C.I.T., asserting the superiority of its lien on Samuels inventory.
The bankruptcy court ordered a receiver to dispose of the easily spoiled meat and meat by-products but to hold the proceeds of sale pending resolution of the conflicting claims of the cattle sellers and C.I.T. The referee ultimately held the cattle sellers’ interests to be paramount and subordinated C.I.T.’s lien. C.I.T. sought review in the district court, which reversed the referee, holding:
(a) That C.I.T. had a perfected lien in Samuels’ inventory and other property;
(b) That the cattle delivered by May 23, 1969, and represented by the dishonored checks, were properly includable in Samuels’ inventory, i. e., that C.I.T.’s lien had attached.
(c) That the class of cattle sellers had delivered goods subject to a reservation of title which, under the Uniform Commercial Code as en- ' acted in Texas, was the mere reservation of a security interest which had not been perfected before C.I.T.’s lien attached. See Texas Business and Commercial Code § 9.312(c), V.T.C.A.
The class of cattle sellers appeal. We reverse.
The facts are undisputed. The question is one of law concerning priority of liens in bankruptcy established under the Uniform Commercial Code: Is the [560]*560reserved purchase money security interest provision, Texas Business and Commercial Code (U.C.C.),
It is clear that between a party whose security interest has attached and been perfected and one whose security interest has merely attached, that the former lien takes priority. U.C.C. § 9 — 301(1)(a). The latter interest is also subordinate to the rights of a person who becomes a lien creditor before the interest is perfected, and who is without knowledge of the prior security interest. § 9 — 301(1)(b). A trustee in bankruptcy meets these requirements. 11 U.S.C. § 107(c)(1)(B); 11 U.S.C. § 110(c). Our concern is, however, for the proper rule to be afforded the remedial legislation of the Packers and Stockyards Act and the valid regulations issued thereunder. 7 U.S.C.A. § 181 et seq., 9 C.F.R. 201.43, 201.99.
Central to the district court’s decision was the belief that the appellants’ delivery of the animals while making a reservation of title acted solely as the taking of a purchase money security interest under § 9 — 107. This would create voidable title in Samuels. § 2— 403. Thus title to the property would be in Samuels’s hands at the time of bankruptcy leaving the unperfected security interest cut off by both C.I.T.’s lien on inventory and a trustee in bankruptcy’s power under §§67 and 70 of the Bankruptcy Act.3 Where this reasoning [561]*561breaks down, however, is its failure to properly account for Regulations 201.43 and 201.99 promulgated under the Packers and Stockyards Act (9 CFR, §§ 201.-43 and 201.99). Regulation 201.43 requires a packer to make its payment to his cattle suppliers promptly:
Ҥ 201.43 ACCOUNTS AND RECORDS, PACKERS AND STOCKYARDS ACT 1921, AS AMENDED
(b) PURCHASERS TO PAY PROMPTLY FOR LIVESTOCK. Each packer, market agency, or dealer purchasing livestock shall, before the close of the next business day following the purchase of livestock and the determination of the amount of the purchase price, transmit or deliver to the seller or his duly authorized agent the full amount of the purchase price, unless otherwise expressly agreed between the parties before the purchase of livestock. Any such agreement shall be disclosed in the purchaser’s records and on the accountings or other documents issued by the purchaser relating to the transaction.”
Regulation 201.99 requires that until the packer pays for the carcasses the carcasses be identifiably held:
Ҥ 201.99 PURCHASE OF LIVESTOCK BY PACKERS ON A CARCASS GRADE, CARCASS WEIGHT, OR CARCASS GRADE AND WEIGHT BASIS.
(a) Each packer purchasing livestock on a carcass grade, carcass weight, or [562]*562carcass grade and weight basis shall, prior to such purchase, make known to the seller, or to his duly authorized agent, the details of the purchase contract. Such details shall include, when applicable, expected date and place of slaughter, carcass price, condemnation terms, description of the carcass trim, grading to be used, accounting, and any special conditions.
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INGRAHAM, Circuit Judge:
Since 1921 packers and stockyard men in interstate commerce have been subjected to remedial federal legislation and regulation. This appeal stems from the bankruptcy of one such regulated packer, Samuels & Co., Inc., of Dallas, Texas. The issues raised, however, all question the priority of liens between a class of cattle raisers who sold their cattle to Samuels & Co. and C.I.T. Corporation, which financed their purchase.
Prior to its filing a voluntary petition for an arrangement under Chapter XI of the Bankruptcy Act, 11 U.S.C. § 701 et seq., Samuels & Co. had purchased cattle under a “grade and weight basis,” and C.I.T. had financed those purchases secured by a floating lien on Samuels’s inventory and other property. The cattle thus sold were delivered to the bankrupt, who slaughtered the animals. The carcasses were permitted to cool and were then inspected, graded and weighed. Samuels would then issue its check for the purchase price and further process the meat into finished products. This system is common to the meat packing industry and its conditions are spelled out by regulation published in 9 Code of Federal Regulations. C.I.T. became insecure in this plan upon learning that Samuels intended to file a plan of arrangement under Chapter XI. Thus on May 23, 1969, it refused to advance additional funds for cattle purchased. On the same day Samuels filed its plan of arrangement which ultimately led to an adjudication of straight bankruptcy in April of 1970. Appellants, representing a class of cattle sellers whose cattle were delivered to Samuels before May 23, 1969, and who had received checks in payment therefor but whose checks were returned unsatisfied, filed claims for the amount of the purchase price with the bankruptcy court. That class of cattle sellers asserted a first priority lien and their position was opposed by C.I.T., asserting the superiority of its lien on Samuels inventory.
The bankruptcy court ordered a receiver to dispose of the easily spoiled meat and meat by-products but to hold the proceeds of sale pending resolution of the conflicting claims of the cattle sellers and C.I.T. The referee ultimately held the cattle sellers’ interests to be paramount and subordinated C.I.T.’s lien. C.I.T. sought review in the district court, which reversed the referee, holding:
(a) That C.I.T. had a perfected lien in Samuels’ inventory and other property;
(b) That the cattle delivered by May 23, 1969, and represented by the dishonored checks, were properly includable in Samuels’ inventory, i. e., that C.I.T.’s lien had attached.
(c) That the class of cattle sellers had delivered goods subject to a reservation of title which, under the Uniform Commercial Code as en- ' acted in Texas, was the mere reservation of a security interest which had not been perfected before C.I.T.’s lien attached. See Texas Business and Commercial Code § 9.312(c), V.T.C.A.
The class of cattle sellers appeal. We reverse.
The facts are undisputed. The question is one of law concerning priority of liens in bankruptcy established under the Uniform Commercial Code: Is the [560]*560reserved purchase money security interest provision, Texas Business and Commercial Code (U.C.C.),
It is clear that between a party whose security interest has attached and been perfected and one whose security interest has merely attached, that the former lien takes priority. U.C.C. § 9 — 301(1)(a). The latter interest is also subordinate to the rights of a person who becomes a lien creditor before the interest is perfected, and who is without knowledge of the prior security interest. § 9 — 301(1)(b). A trustee in bankruptcy meets these requirements. 11 U.S.C. § 107(c)(1)(B); 11 U.S.C. § 110(c). Our concern is, however, for the proper rule to be afforded the remedial legislation of the Packers and Stockyards Act and the valid regulations issued thereunder. 7 U.S.C.A. § 181 et seq., 9 C.F.R. 201.43, 201.99.
Central to the district court’s decision was the belief that the appellants’ delivery of the animals while making a reservation of title acted solely as the taking of a purchase money security interest under § 9 — 107. This would create voidable title in Samuels. § 2— 403. Thus title to the property would be in Samuels’s hands at the time of bankruptcy leaving the unperfected security interest cut off by both C.I.T.’s lien on inventory and a trustee in bankruptcy’s power under §§67 and 70 of the Bankruptcy Act.3 Where this reasoning [561]*561breaks down, however, is its failure to properly account for Regulations 201.43 and 201.99 promulgated under the Packers and Stockyards Act (9 CFR, §§ 201.-43 and 201.99). Regulation 201.43 requires a packer to make its payment to his cattle suppliers promptly:
Ҥ 201.43 ACCOUNTS AND RECORDS, PACKERS AND STOCKYARDS ACT 1921, AS AMENDED
(b) PURCHASERS TO PAY PROMPTLY FOR LIVESTOCK. Each packer, market agency, or dealer purchasing livestock shall, before the close of the next business day following the purchase of livestock and the determination of the amount of the purchase price, transmit or deliver to the seller or his duly authorized agent the full amount of the purchase price, unless otherwise expressly agreed between the parties before the purchase of livestock. Any such agreement shall be disclosed in the purchaser’s records and on the accountings or other documents issued by the purchaser relating to the transaction.”
Regulation 201.99 requires that until the packer pays for the carcasses the carcasses be identifiably held:
Ҥ 201.99 PURCHASE OF LIVESTOCK BY PACKERS ON A CARCASS GRADE, CARCASS WEIGHT, OR CARCASS GRADE AND WEIGHT BASIS.
(a) Each packer purchasing livestock on a carcass grade, carcass weight, or [562]*562carcass grade and weight basis shall, prior to such purchase, make known to the seller, or to his duly authorized agent, the details of the purchase contract. Such details shall include, when applicable, expected date and place of slaughter, carcass price, condemnation terms, description of the carcass trim, grading to be used, accounting, and any special conditions.
(b) Each packer purchasing livestock on a carcass grade, carcass weight, or carcass grade and weight basis, shall maintain the identity of each seller’s livestock and the carcasses therefrom and shall, after determination of the amount of the purchase price, transmit or deliver to the seller or his duly authorized agent a true written account of such purchase showing the number, weight, and price of the carcasses of each grade (identifying the grade) and of the ungraded carcasses, an explanation of any condemnations, and any other information affecting final accounting. Packers purchasing livestock on such a basis shall maintain sufficient records to substantiate the settlement of each transaction.
(c) When livestock are purchased by a packer on a carcass weight or carcass grade and weight basis, purchase and settlement therefor shall be on the basis of carcass price. This paragraph does not apply to purchases of livestock by a packer on a guaranteed yield basis.
(d) Settlement and final payment for livestock purchased by a packer on a carcass weight or carcass grade and weight basis shall be on actual (hot) carcass weights determined before shrouding. The hooks, rollers, and gambrels or other similar equipment used at a .packing establishment in connection with the weighing of carcasses of the same species of livestock shall be uniform in weight. The tare weight shall include only the weight of such equipment.
(e) Settlement and final payment for livestock purchased by a packer on a USDA carcass grade shall be on an official (final, not preliminary) grade. If settlement and final payment are based upon any grades other than official USDA grades, such other grades shall be set forth in detailed written specifications which shall be made available to the seller or his duly authorized agent. For purposes of settlement and final payment for livestock purchased on a grade or grade and weight basis, carcasses shall be final graded before the close of the second business day following the day the livestock are slaughtered.”
These regulations had binding effect on Samuels, whose compliance therewith permitted it to continue its operations.
C.I.T. responds to appellants’ arguments under the Code, § 1 — 205,4 by ob[563]*563serving that the regulations are not inconsistently applied and are but a means to implement a seller’s right of reclamation provided by U.C.C. § 2 — 702(b).
Like the district court’s conclusion on the application of § 9 — 107(b), C.I.T.’s argument misses the unique pattern of the Packers and Stockyards Act and Regulations. Meat and meat by-products of like grade and weight are, as the referee found, fungible goods:
“When the livestock has been graded and the yield determined the meat is processed, packaged and sold. After the livestock has been processed and packaged, it is impossible to trace or. identify any seller’s particular livestock.”
The Packers and Stockyards Act regulations are a recognition that once a check has issued from a packer, the carcass will be processed and its identity lost. Consequently, the “hot check” provision of U.C.C. § 2 — 403(a) (2) is an unavailable remedy. The Packers and Stockyards regulations and cases, therefore, consider the packer’s obligation to pay to be that of a fiduciary, Bowman v. U.S.D.A., 363 F.2d 81 (5th Cir., 1966), and the purpose of the act to be the protection of the producer’s and consumer’s purse. Bowman, supra; Glover Livestock Co. v. Hardin, 454 F.2d 109 (8th Cir., 1972); Bruhn’s Freezer Meats of Chicago, Inc. v. U.S.D.A., 438 F.2d 1332 (8th Cir., 1971); Swift & Co. v. United States, 393 F.2d 247 (7th Cir., 1968). The reasoning of these cases and the impact of the Packers and Stockyards Act convinces this court that more than an unperfected security interest subject to reclamation is reserved for the cattle seller. Not by contract but by statute and regulation a packer lacks full dominion over the carcasses until the seller has been paid. Where the packer defaults by the issu-anee of a bad check (and destroys the identity of the security by processing the carcasses into fungible meat products), the seller is the beneficiary of a trust imposed by remedial statute. This we must note was the very statute which permitted the bankrupt to engage as a meat packer in interstate commerce and it is clear that the Packers and Stockyards Act and Regulations 201.42 and 201.99 thereunder comprise a course of dealing and usage of trade known to both the bankrupt packer and C.I.T., which had financed it for an extended period.
The judgment of the district court is reversed and remanded with directions to reinstate the judgment of the referee.
Numerical citation conforms to Texas Business and- Commercial Code. Quotations are taken from 1962 official draft of U.C.C. and with some numerical changes have been adopted in Texas.