This is a reclamation action brought by the FCA Leasing Corporation (FCA) against the Trustee in Bankruptcy for the DeVita Fruit Company (DeVita) of Lima, Ohio, to recover certain citrus packing equipment. The Referee in bankruptcy found in favor of the Trustee. The District Court reversed. We affirm the conclusion reached by the District Court.

The facts were stipulated. On February 18, 1969, a conditional sales contract was entered into by DeVita with the Kipers Packaging Equipment Company (Kipers), the original seller, for the sale of the equipment. The agreement provided: "All prices F.O.B. Factories" and "Net 10 days." It further provided that the equipment would remain the property of Kipers until the purchase price was fully paid. Kipers was to have the right to repossess if not fully paid within 30 days.1 The goods were delivered in thirteen shipments in the spring of 1969 with the several invoices reciting that the various portions were sold to DeVita. DeVita has never made a payment to Kipers although it has retained possession at all times. Kipers has never filed a financing statement.

In early May 1969, DeVita entered into an agreement with FCA in which FCA agreed to attempt to purchase the equipment from Kipers and then lease it to DeVita. This agreement was culminated on May 15, 1969, by the signing of a document described as a "lease." This agreement called for FCA to purchase the equipment and then lease it to DeVita. DeVita was to pay $756.25 per month for five years as rent. Title was to remain in FCA at all times.2 The agreement further provided that in the event of default in the rent obligation or the filing of a petition in bankruptcy by DeVita, FCA was to have the right to repossess.3 There is no provision for DeVita to take title at the termination of the lease or to have the option to purchase.

On June 6, 1969, Kipers issued to FCA an invoice for the packing machinery, reciting, "Sold to FCA," and "Shipped to DeVita." On June 11, 1969, Kipers issued an invoice to DeVita crediting it with the entire amount due under the previous invoices. On June 19, 1969, FCA tendered its check to Kipers for the full amount of the purchase. The entire transaction occurred without the equipment ever being removed from DeVita's possession.4

On August 31, 1970, over fifteen months after the lease agreement was executed, DeVita filed a petition for bankruptcy, and on December 8, 1970, it consented to being adjudicated bankrupt. On January 4, 1971, FCA filed a reclamation petition, based upon its rights under the lease, which the Referee denied on September 27, 1971. On September 30, 1971, the Referee confirmed the sale of the property in question. The parties have agreed that the claim of FCA may be asserted against the proceeds of the sale rather than the packing equipment. On March 27, 1972, the District Court held that the reclamation petition should have been granted.

The Referee adopted the Trustee's theory that on the sale from Kipers to DeVita, title passed to DeVita, leaving Kipers with only a security interest. This theory contends that because Kipers failed to perfect that security interest, DeVita became the sole "owner." Kipers therefore had nothing to sell to FCA and accordingly the sale and subsequent lease agreement was a nullity. This contention regards FCA as a subrogee of Kipers for the underlying debt. To reach this conclusion the Referee relied upon a 1935 decision in which this court analyzed the Ohio version of the Uniform Sales Act. In re Henselman, 79 F.2d 738 (1935). In Henselman a dealer of the Goodyear Tire & Rubber Company was slow in making payment on his Goodyear account. He entered an agreement with Goodyear wherein tires in the dealer's possession which he had not paid for would be transferred back to Goodyear and then, without moving the tires, Goodyear would allow the dealer to keep the tires and sell them on consignment. The dealer proceeded to sell the goods without doing anything that would indicate to his other creditors that the tires were owned by Goodyear. The court found that under Ohio law the transaction was a fraud upon creditors since Goodyear had failed to take possession when the tires were transferred back to it. The court held that the Trustee's claim was superior to that of Goodyear.

We do not find Henselman controlling. We hold that the Ohio Legislature in enacting the Uniform Commercial Code specifically provided a remedy of repossession for an aggrieved seller in Kipers' situation.

The District Court correctly distinguished Henselman and held that under the Uniform Commercial Code Kipers had the right to resell the goods on DeVita's default, that the resale divested DeVita of all rights as a buyer, and that the resulting lease was a bona fide lease entitling FCA to the reclamation of its property.

Under the Uniform Commercial Code, Kipers' retention of title had the effect of the reservation of a security interest, Secs. 1302.42(A) Ohio Rev.Code, [2-401(1) U.C.C.], 1301.01(KK) [1-201 (37)]; Evans Products Co. v. Jorgensen, 245 Or. 362, 421 P.2d 978 (1966). A security interest arising solely under the Sales Article (Article 2) is subject to the provisions of the Secured Transactions Article (Article 9), Sec. 1309.11 [9-113]. Since this interest was created by a writing, signed by representatives of DeVita, and contained a description of the goods, it was enforceable against DeVita, Sec. 1309.14 [9-203], 1309.01 [9-105, 106]; Bender's UCC Service, Dusenberg and King, Sales and Bulk Transfers Sec. 11.02. The security interest in the present case attached as the parties agreed that it would attach, value was given and DeVita had rights in the collateral, Sec. 1309.15 [9-204]. The fact that this particular interest was never perfected does not preclude enforcement against the defaulting buyer, Sec. 1309.12 [9-201]; Anderson v. First Jacksonville Bank, 243 Ark. 977, 423 S.W.2d 273 (1968).5 At the time of default there were no third party rights involved. Sec. 1309.20 [9-301] lists those who take priority over an unperfected security interest. This does not include the debtor.

Since DeVita had not made any payments by May 1969, it was in default of the contract. Under Sec. 1309.46 [9-503] Kipers had the right to repossess the collateral or to dispose of it on DeVita's premises under the provisions of Sec. 1309.47 [9-504].6 Section 1309.47(C) permits the secured party to resell the collateral at a public or private sale so long as every aspect of the disposition is commercially reasonable. Here there is no question that the entire transaction was commercially reasonable. Sub-section (D) provides that the disposition transfers to the purchaser for value all of the debtor's rights therein. It is further provided that where the purchaser buys in good faith, he takes free of all the debtor's rights even though the secured party failed to comply with all the requirements of Secs. 1309.44-1309.50 [Part 5 of Article 9]. Good faith is defined as honesty in fact. Here there is no question but that FCA complied with this requirement. Sec. 1301.01 [1-201].

The only issue remaining is whether the lease agreement is sufficient to withstand the attack of DeVita's Trustee in Bankruptcy. We hold that it is.

It is well settled that where property is in the bankrupt's hands as a bailee, the trustee also holds the property in the same capacity, and the bailor is entitled to recover his property from the trustee. 4A Collier on Bankruptcy, 14th ed. Sec. 70.18 . Thus where a pure lease is involved, the goods belong to the lessor and the trustee has no right to retain them. In re Atlanta Times, Inc., 259 F. Supp. 820 (N.D.Ga.1966), aff'd Sanders v. National Acceptance Company of America, 383 F.2d 606 (5th Cir. 1967); Sanders v. Commercial Credit Corp., 398 F.2d 988 (5th Cir. 1968).

When the lease is intended as a security interest, Article 9 applies. Sec. 1309.02 [9-102]. However, a bona fide lease is not affected by Article 9. Sec. 1301.01(KK) [1-201(37)] gives some guidance concerning when a reservation of title in a lease agreement may be found to be in fact the reservation of a security interest. That section provides in part:

"Unless a lease or consignment is intended as security, reservation of title thereunder is not a 'security interest' but a consignment is in any event subject to the provisions on consignment sales, section 1302.39 of the Revised Code. Whether a lease is intended as security is to be determined by the facts of each case; however, (a) the inclusion of an option to purchase does not of itself make the lease one intended for security, and (b) an agreement that upon compliance with the terms of the lease the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration does make the lease one intended for security."

Here there is no evidence of an intent to reserve a security interest and in particular there are no provisions whereby DeVita was to be entitled to purchase the equipment at the expiration of the term. FCA is therefore entitled to the return of its property. In re Metropolitan Offset Printers, Inc., 391 F.2d 770 (3rd Cir. 1968); Burton, Rec'r v. Tatelbaum, Rec'r, 240 Md. 280, 213 A.2d 875 (1965); United States Leasing Corp. v. Hall, 264 N.C. 110, 141 S.E.2d 30 (1965).

Affirmed.