Bradley v. Straus-Frank Co., STRAUS-FRANK

• Decision Date: 14 April 1967
• Docket Number: No. 16904,STRAUS-FRANK,16904
• Citation: 414 S.W.2d 504
• Parties: Chellie BRADLEY et al., Appellants, v.COMPANY, Appellee. . Dallas
• Court: Texas Court of Appeals

Page 504

414 S.W.2d 504

Chellie BRADLEY et al., Appellants, v. STRAUS-FRANK COMPANY, Appellee.

No. 16904.

Court of Civil Appeals of Texas.

Dallas.

April 14, 1967.

Neil Brans, of Brans, Higginbotham & Berry, Dallas, for appellants.

Kenneth R. Guest, of Matthews & Matthews, Dallas, for appellee.

CLAUDE WILLIAMS, Justice.

Action to foreclose a contractual lien on personal property. Straus-Frank Company brought this action against Chellie Bradley and her husband, Arthur M. Bradley, alleging that the defendants had executed and delivered to plaintiff an instrument designated a 'Collateral Agreement' by the terms of which defendants had created a lien on an automobile and the cash value of two life insurance policies to secure the payment of an indebtedness evidenced by promissory note executed by Gene Bradley and Wilburn Wiley in favor of plaintiff. Plaintiff alleged that the indebtedness had not been discharged and that the defendants had failed and refused to deliver the automobile and the life insurance policies to plaintiff so that the car might be sold and the cash value of the policies be realized, and the proceeds applied to the payment of the indebtedness. It was also alleged that Gene Bradley and Wilburn Wiley had been adjudicated bankrupts and discharged in bankruptcy and for that reason they were not made parties to the action.

Defendants denied that a valid lien had been created by the collateral agreement executed by them and further contended that the indebtedness owed to the plaintiff was extinguished by virtue of discharges in bankruptcy of the makers of the note.

Following a nonjury trial judgment was rendered decreeing the existence of a lien upon the automobile and proceeds of the insurance policies and declaring said lien foreclosed. The court directed the sale of the automobile in question with the proceeds thereof being applied to the balance of the indebtedness and also directed that the insurance policies be delivered to plaintiff's attorneys. At the request of defendants the trial court filed findings of fact and conclusions of law.

The facts are virtually without dispute. On June 30, 1965 Gene M. Bradley, son of Mr. and Mrs. Bradley, appellants herein, and Wilburn Wiley, made, executed and delivered to Straus-Frank Company their promissory note in the principal sum of $4,500. On the same date appellants Arthur M. Bradley and wife Chellie Bradley made, executed and delivered to Straus-Frank Company an instrument designated 'Collateral Agreement' which contained, inter alia, the following material provisions:

'COLLATERAL AGREEMENT

'The undersigned, for a good and valuable and sufficient consideration, agree with STRAUS FRANK CO. (hereinafter called 'Company') as follows: As collateral security for the payment of all debts, obligations or liabilities now or hereafter existing, absolute or contingent, of GENE M. BRADLEY, to Company (hereinafter called 'indebtedness'), the undersigned hereby assign, transfer to and pledge with Company the following described property this day.

(1) 1962 Plymouth automobile, motor #2127--101356, owned by Mrs. Chellie Bradley as her separate property.

(2) $1,000.00 life insurance policy on life of Mrs. Chellie Bradley, beneficiary being Arthur M. Bradley. Franklin Life Insurance Company #247552.

(3) $2,000.00 life insurance policy on life of Arthur M. Bradley, beneficiary being Mrs. Chellie Bradley. Southwestern Life Insurance Company, policy #121738.'

'In the event of the nonpayment of any indebtedness when due, or upon the happening of any of the events specified in the last preceding paragraph, Company may then, or at any time thereafter, at its election, apply, set off, collect or sell in one or more sales, with or without any previous demands or demand of performance or notice or advertisement, the whole or any part of the collateral in such order as Company may elect, and any such sale may be made either at public or private sale at its place of business or elsewhere, or at any broker's board or securities exchange, either for cash or upon credit or for future delivery, at such price as Company may deem fair, and Company may be the purchaser of any or all collateral so sold and hold the same thereafter in its own right free from any claim of the undersigned or right of redemption. Demands of performance, notices of sale, advertisements, and the presence of property at sale are hereby waived, and Company is hereby authorized to sell hereunder any evidence of debt pledged to it. Any sale hereunder may be conducted by an auctioneer or any officer or agent of Company.

'The proceeds of the sale of any of the collateral and all sums received or collected by Company from or on account of such collateral shall be applied by Company to the payment of expenses incurred or paid by Company in connection with any sale, transfer, or delivery of the collateral, including the expense of compliance with any state or federal securities act affecting the disposition of any collateral, to the payment of any other costs, charges, attorney's fees, or expenses mentioned herein, and to the payment of the indebtedness or any part thereof, all in such order and manner as Company in its discretion may determine. Company shall pay any balance to the undersigned or to the person or persons entitled thereto upon proper demand being made therefor.'

'Each of the undersigned waives any right to require Company to (a) proceed against any person, (b) proceed against or exhaust any collateral, or (c) pursue any other remedy in Company's power, and waives any defense arising by reason of any disability or other defense of any other of the undersigned or any other person, or by reason of the cessation from any cause whatsoever of the liability of any other of the undersigned or against any other person. Until all indebtedness shall have been paid in full, none of the undersigned shall have any right of subrogation, and each of the undersigned waives any right to enforce any remedy which Company now has or may hereafter have against any other of the undersigned or against any other person and waives any benefit of and any right to participate in any collateral or security whatsoever now or hereafter held by Company.'

'Venue of any action arising out of this agreement is fixed in Dallas County, Texas. Upon Demand, the aforesaid automobile will be delivered to Company in Dallas, Texas. All other covenants herein are performable in Dallas, Dallas County, Texas.'

Contemporaneous with the execution of the collateral agreement appellants executed a written assignment to Straus-Frank Company of the two life insurance policies referred to in the collateral agreement. The credit manager of Straus-Frank Company testified that the note had been credited with a certain cash payment and had also been credited with the sum of $1,400 which had been borrowed on one of the insurance policies. It was stipulated that appellants were in possession of the Plymouth automobile and the policies of life insurance described in the collateral agreement and that prior to the institution of the suit demand had been made upon appellants to deliver the three items of personal property to either Straus-Frank Company or to the attorneys for the plaintiff. It was also stipulated that Gene M. Bradley and Wilburn Wiley, the makers of the note in question, had been discharged in bankruptcy by the United States District Court for the Northern District of Texas and that during the pendency of such bankruptcy proceeding Straus-Frank Company had been listed as one of their creditors and such company had filed a claim in the bankruptcy proceedings.

The trial court found as a fact that appellants had made, executed and delivered to appellee the collateral security agreement as partial security for payment of the promissory note executed by Gene Bradley and Wilburn Wiley; that demand had been made upon appellants to deliver the automobile and the two life insurance policies described in the collateral agreement to appellee but they had refused to comply with such demand; that the indebtedness remaining due on the note in question is $2,854.28, together with accrued interest thereon. The court concluded as a matter of law that the collateral security agreement executed by appellants to appellee is supported by a valid and sufficient...