American Nat. Bank of Denver v. Christensen, s. 70--173

Citation28 Colo.App. 501,476 P.2d 281
Decision Date09 September 1970
Docket Number23927,Nos. 70--173,s. 70--173
Parties, 8 UCC Rep.Serv. 294 The AMERICAN NATIONAL BANK OF DENVER, a National Banking Association, Plaintiff in Error, v. Wilbur CHRISTENSEN, d/b/a Wilbur Christensen Construction Co., Defendant in Error. . II
CourtCourt of Appeals of Colorado

Dawson, Nagel, Sherman & Howard, John W. Low, David R. Johnson, Denver, for plaintiff in error.

Calkins, Kramer, Grimshaw & Carpenter, Richard L. Harring, Denver, for defendant in error.

ENOCH, Judge.

This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.

This case involves the competing claims by Wilbur Christensen, d/b/a Wilbur Christensen Construction Co., (Christensen) and The American National Bank of Denver (Bank) over two pieces of construction equipment.

In July, 1966, Christensen delivered two Model TS--14 Euclid Scrapers (Scrapers) to Fincham Equipment Co. (Fincham), a dealer in both new and used heavy construction equipment. The original purpose of the delivery was for Fincham to sell the scrapers for Christensen. The scrapers were left in Fincham's yard with the other equipment that it had for sale until they were replevied by the Bank.

The Bank had been providing floor plan financing for Fincham for several years. On July 1, 1966, the effective date of the Uniform Commercial Code, the Bank filed a financing statement covering equipment on Fincham's lot. On December 5, 1966, Fincham gave the Bank a security interest in its current and after-acquired inventory of machines by executing and delivering to the Bank a security agreement. Fincham advised the Bank that it had purchased the scrapers as part of its inventory and requested that these machines be included under its floor plan security agreement. The Bank verified that Fincham had possession of the scrapers.

John M. Fincham, the owner and operator of Fincham Equipment Co., died on March 16, 1967. At that time, his company was in default on its indebtedness to the Bank. Consequently, on March 21, 1967, the Bank initiated a replevin action to recover the scrapers and other pieces of construction equipment which the Bank claimed as collateral for its loan to Fincham. Christensen filed a motion to intervene on April 5, 1967. On May 29, 1967, the trial court entered judgment for the Bank against Fincham. Thereafter, the trial court permitted Christensen to intervene over objection of the Bank and subsequently held the interest of the Bank in the scrapers to be junior to that of Christensen. Judgment was entered against the Bank in favor of Christensen for $44,000, the determined value of the scrapers, plus interest and costs.

I

The Bank contends that the trial court erred by permitting Christensen's claims to be heard in Adams County, rather than Denver County. It relies on 12 U.S.C. § 94 which has been interpreted to mean that a national banking institution is entitled to have a litigation against it heard in the county of its location. We find no merit in this argument.

The authorities cited by the Bank are distinguishable and do not apply in this case in that they all deal with situations in which a national banking institution had some action initiated against it. In this case, the Bank was the moving party. The Bank chose the venue (i.e., the District Court of Adams County) and it cannot complain about the determination of all issues properly before that court. See, Annot., 1 A.L.R.3d 904.

II

The record indicates that after delivery of the scrapers to Fincham, Christensen was in need of a compactor. Fincham claimed that he knew where to locate such a machine. The parties then discussed a trade whereby Christensen was to give up his scrapers which the parties valued at $52,000. In return, Fincham was to give Christensen a compactor worth $38,500, plus $13,500 cash. This proposal was not carried out because Fincham did not have enough cash to purchase the compactor from his supplier. To overcome this obstacle, Christensen, upon Fincham's request, executed a promissory note and a security agreement whereby Christensen purportedly purchased the compactor from Fincham. With Christensen's knowledge, Fincham sold the chattel paper to the Bank. The proceeds enabled Fincham to acquire the compactor and, in turn, give it to Christensen.

The Bank alleges the trial court erred in not accepting its contention that the trade-in proposal represented an absolute sale of the scrapers by Christensen to Fincham. Had the trial court done so, Christensen would not have had any interest in the scrapers when they were replevied by the Bank. We do not agree. The evidence merely indicated that the parties had entered into an agreement which was not consummated. Where there is sufficient evidence in the record to sustain the trial court's findings, the reviewing court, on writ of error, is bound by the trial court's determination even though it is possible for reasonable men to arrive at a different conclusion based on the same facts. Whatley v. Wood, 157 Colo. 552, 404 P.2d 537.

III

The Bank's third assignment of error is that the trial court should have granted the Bank's motion for new trial based upon newly discovered evidence. The evidence upon which the Bank relies was Christensen's post-trial deposition in which he stated that Fincham had sent him a check in the amount of $13,500. Christensen attempted to cash this check but it was never paid.

To sustain a motion for new trial on the ground of newly discovered evidence, it must be established that the evidence could not have been discovered in exercise of reasonable diligence and produced at trial, that the evidence is material to some issue before the court under the pleadings, and that if received, it would probably change the result. Kennedy v. Bailey, Colo., 453 P.2d 808. Whether to grant a new trial because of newly discovered evidence is a matter that lies within the sound discretion of the trial court. Gomez v. Miller, Colo., 459 P.2d 126. We hold that it was not error for the court to have dismissed the motion for new trial based on the ground of newly discovered evidence.

IV

The Bank claims that the trial court erred in not applying C.R.S.1963, 155--2--326 1 (hereinafter referred to as '2--326') to this case. In its findings of fact, the trial court found that when the original trade-in agreement was rescinded, Christensen left the scrapers with Fincham and gave him the authority to sell them.

The trial court held that the transaction between Fincham and Christensen was not a 'sale or return'. We agree that the facts of this case do not qualify this transaction as a 'sale or return' under 2--326(1). 'Sale or return' under subsection (1) is not defined in the Code. However, a 'sale or return' transaction is not a new concept in Colorado law. A 'sale or return' is a contract for the sale of goods whereby title passes immediately to the buyer subject to his option to rescind or return the goods if he did not resell them. See, Uniform Sales Act, C.R.S.1963, 121--1--19, rule 3 and Ferry-Morse Seed Co. v. Board of County Commissioners, 126 Colo. 426, 250 P.2d 1003. Section 2--326(2) provides that goods held on sale or return are subject to the claims of the buyer's creditors while such goods are in the buyer's possession. The exceptions set forth in subsection (3)(a), (b), (c) apply only to transactions covered by subsection (3) and do not apply to a sale or return under subsection (1).

Consignment transactions (i.e., where title does not pass to the consignee) are covered by subsection (3), which deems such a transaction to be a sale or return; therefore, subject to the claims of the consignee's creditors, unless one of the three exceptions under 2--326(3) is established. Since the transaction in this case was a consignment, we hold that 2--326(3) is applicable and that it was error for the trial court not to have applied it. General Electric Co. v. Pettingell Supply Co., 347 Mass. 631, 199 N.E.2d 326; Guardian Discount Co. v. Settles, 114 Ga.App. 418, 151 S.E.2d 530; Sussen Rubber Co. v. Hertz, 19 Ohio App.2d 1, 249 N.E.2d 65.

V

The trial court further found, assuming that the provisions of 2--326 did apply that 'Fincham was substantially engaged in selling goods of others * * *' On the basis of this finding, the trial court concluded that exception 2--326(3)(b) was applicable. This finding of fact does not support the trial court's conclusion because of the absence of a finding that Fincham was Generally known by his creditors to be substantially engaged in selling the goods of others, nor is there sufficient evidence in the record to support such a...

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