Bank of Huntsville v. Witcher

• Decision Date: 01 September 1976
• Citation: 336 So.2d 1384
• Parties: The BANK OF HUNTSVILLE v. Claude L. WITCHER. Civ. 822.
• Court: Alabama Court of Civil Appeals

Page 1384

336 So.2d 1384

The BANK OF HUNTSVILLE v. Claude L. WITCHER.

Civ. 822.

Court of Civil Appeals of Alabama.

Sept. 1, 1976.

Watson, Moore & Mason, Huntsville, for appellant.

George C. Hawkins, Gadsden, and Hogan, Smith & Alspaugh, Birmingham, for appellee.

BRADLEY, Judge.

This appeal comes from the Circuit Court of Calhoun County. The defendant below appeals from a verdict and judgment in favor of the plaintiff in the amount of $2,250.

The complaint contained two counts: one for conversion and the other for fraud. Defendant denied the allegations of the complaint and filed a counterclaim for a deficiency judgment on a promissory note owed by the plaintiff. Plaintiff denied the contentions of the counterclaim, and after a pretrial hearing the case was tried to the court and a jury. The defendant's motions for directed verdict, judgment n.o.v., and new trial were denied by the trial court. The defendant appeals, contending that these rulings as well as the judgment on the merits were erroneous and a reversal is due to be entered. The underlying premise for the contention of error in the various rulings is that the record is devoid of any evidence that a conversion of the personalty was accomplished.

The evidence reveals that in March 1974 plaintiff (hereinafter 'Witcher') financed the purchase of a 1974 Ford pickup truck through the appellant, Bank of Huntsville (hereinafter 'Bank'). Witcher executed a promissory note and security agreement for a total amount of $3,308.55 to be paid in thirty-six installments of $110.34 per month, with each payment due on the sixth day of the month. Payments were to commence in May 1974.

A payment was made on May 10, 1974, and another on June 17th. In July 1974 Witcher obtained an extension of that month's payment. The next payment was made on August 24, 1974. In September 1974 Witcher again requested by telephone an extension of the September payment; he made no further payment until after being notified that the extension had been granted. Thereafter payments were made on October 21, December 5, December 17, 1974 and January 25 and February 21, 1975. No other payments were ever made.

Witcher testified that on March 1, 1975 he called the Bank to request an extension or a rearrangement of his payment schedule. The transcript of his testimony on this point is as follows:

'A. I told the gentleman that I was having financial trouble, the doctor bills, the hospital bills, drug bills, and then everything else, all the other expenses coming due, and I just couldn't make it. I asked the gentleman if there was any way he could set me up--my loan up on a six month basis, or six months, just making the note came (sic) due or if there was any way he could lower the payments at that time. And the gentleman I was talking to said he really didn't know, he would have to talk to someone else in the bank, and that he would get back with me. He said he would write a letter and tell me what the bank could and couldn't do. At that time he said, 'You're not in any real trouble. You're only 95 cents behind on your payment.' And he said, 'That 95 cents is nothing you could really worry about,' and that was it. He did tell me he would write a letter and tell me what the bank could and could not do.'

Witcher stated that he did not make the March or April payments because he was waiting to hear from the Bank.

On April 11, 1975 the Bank repossessed the Ford truck. Testimony for the Bank was that Witcher had been notified by letter prior to the repossession that the truck would be repossessed unless the amounts unpaid were paid within ten days. Witcher denied receiving such a letter.

There was also testimony that the Bank notified Witcher that his truck had been repossessed, and that it would be sold, and that the proceeds would be applied to reduce the outstanding indebtedness. After the sale of the truck there was a deficiency owing to the Bank of $188.09. The Bank's counterclaim sought the payment of this sum.

At the time the Bank informed Witcher that it had repossessed the truck, it sent him a package containing items of personal property taken from the truck, along with an itemized list of those articles of property. There was no wearing apparel in the package nor were such items listed on the inventory. Witcher alleged that there were certain articles of clothing in the truck at the time of repossession which were worth about $210.00. The Bank's agents testified there was no clothing in the truck at the time of repossession.

The evidence showed that Witcher's loan was two months in arrears at the time the truck was repossessed. The note and security agreement signed by Witcher were introduced into evidence. The security agreement contained provisions authorizing acceleration of the loan and repossession of the collateral in the event of default.

The Bank's first contention of error is that the first count of the complaint alleging conversion of the truck and clothing was not proven by the evidence. The Bank is correct in its position that a secured party may, on default, take possession of the collateral without judicial process if this can be done without a breach of the peace. Title 7A, Section 9--503, U.C.C.

In the case at bar the Bank held a security agreement which authorized it to take possession of the Ford pickup in the event Witcher failed to make the monthly payments as previously agreed. The evidence is without dispute that Witcher had failed to remit to the Bank the payments due on March 6 and April 6, 1975 and was therefore in default on April 11, 1975 when the Ford pickup truck was repossessed. There is no hint in the evidence of a breach of the peace committed during the repossession. Thus, repossession by the Bank of the 1974 Ford pickup truck was not a prima facie violation of law.

However, the issue before us is whether the Bank's conduct was such that Witcher had a right to believe that his requested extension would be granted, or that late payments would be accepted and the truck would not be repossessed without further contact from the Bank, so that the Bank is now estopped from asserting its statutory and contractual right to demand payment in full and repossess the collateral without notice to Witcher. We hold that under the facts of this case the jury could properly find that the Bank is estopped from making such election and repossessing the security without giving prior notice to the purchaser and that therefore seizure of the 1974 Ford pickup truck was a conversion of said collateral.

Estoppel has been defined by one court, in dealing with a case similar to the one before us, as: (1) knowledge of the facts by the party to be estopped; (2) intention by the party to be estopped that its conduct be acted upon, or such party acts so that the party asserting estoppel has a right to believe that the conduct is so intended; (3) ignorance by the party asserting estoppel of the true facts; and (4) injurious reliance by the party asserting estoppel on the conduct. Varela v. Wells Fargo Bank, 15 Cal.App.3d 741, 93 Cal.Rptr. 428 (1971). This definition is in accord with the Alabama cases. See, e.g., Mooradian v. Canal Ins. Co., 272 Ala. 373, 378, 130 So.2d 915 (1961); Ellison v. Butler, 271 Ala. 399, 124 So.2d 88 (1960).

We think there is sufficient evidence here to warrant the jury's finding that Witcher believed an extension had been granted. In a similar case, Varela v. Wells Fargo Bank, supra, the...