Brockbank v. Best Capital Corp.

Decision Date29 June 2000
Docket NumberNo. 25162.,25162.
PartiesEdward P. BROCKBANK, Respondent, v. BEST CAPITAL CORP., Petitioner.
CourtSouth Carolina Supreme Court

James R. Allen and Andrea C. Pope of Barnes, Alford, Stork & Johnson, LLP, of Columbia, for petitioner.

Thomas W. Bunch, II of Robinson, McFadden & Moore, of Columbia, for respondent.

WALLER, Justice:

Edward P. Brockbank (Debtor) sued Best Capital Corp. (Creditor) after the repossession and sale of his mobile home, alleging, among other things, violation of the notice provision contained in Article 9 of the Uniform Commercial Code (UCC).1 The trial judge granted Creditor's motion for summary judgment. The Court of Appeals reversed and remanded. Brockbank v. Best Capital Corp., Op. No. 99-UP-098 (S.C.Ct.App. filed February 18, 1999). We granted Creditor's petition for a writ of certiorari following the denial by the Court of Appeals of Creditor's petition for rehearing. We affirm the Court of Appeals' opinion as modified.


Brockbank and his wife, Sharon K. Brockbank, purchased a double-wide mobile home from Kahn Development Company in February 1995. Kahn assigned the contract to Creditor.2 The Agreement for Sale of Manufactured Home (Agreement) states that Debtor "may take possession of the property, live in it, and continue in possession while this Agreement remains in effect." Debtor agreed to pay taxes and maintain fire insurance coverage, with Creditor named as the loss payee on the insurance policy. Debtor agreed not to transfer or assign his rights under the Agreement without Creditor's prior written permission. Debtor agreed not to move the mobile home from the location specified in the Agreement until the loan was paid in full. Debtor agreed to maintain the home in good repair, and Creditor retained the right to inspect it at any reasonable time upon reasonable notice to Debtor.

The Agreement further provides that

[i]f you fail to make payment when due, if you break any promise under this Agreement, or if the prospect of payment is impaired, the seller ("we") may declare this Agreement in default and demand that the entire balance be paid in full. If we institute suit against you to enforce our rights and obtain a valid judgment against you, you shall pay all of our expenses of suit and reasonable attorney's fees, not to exceed 15% of the balance owing under this Agreement.

Under a section titled "Seller's remedies," the Agreement states:

Except as provided by law, if you default in making any payment or in performing any other obligation hereunder, we may either bring an action against you for specific performance, or enforce a forfeiture of your interest in the manufactured home. If a forfeiture is enforced, you will forfeit all rights and interests in and to the property and appurtenances, and shall immediately surrender to us peaceable possession of the property and forfeit to us, as liquidated damages, all payments made hereunder together with all improvements placed on or in the property. In no event shall the provisions of this paragraph affect our other lawful rights or remedies against you.

Finally, the Agreement states that "[u]pon your performance of all requirements under this Agreement, including payment of all sums due, we will convey to you good and marketable title free of all liens to this manufactured home."

Debtor left the marital home in August 1995, but continued to make the payments until January 1996. The next month, Debtor sued his wife for divorce and stopped making payments on the marital home. Mrs. Brockbank could not afford to make the payments on the home and moved out in March 1996. Debtor stated in an affidavit that

[s]ometime in January 1996, I received [Creditor's] demand letter dated January 18, 1996, wherein [Creditor] demanded payment of the entire outstanding balance under the sales agreement. I telephoned [Creditor] about the payments on the mobile home. I told [Creditor] that I would not make monthly payments if I did not have use of the home. I was told that [Creditor] and my wife were discussing payment arrangements.
I did not receive any other information or have any other contact with [Creditor] until after April 28, 1996. On April 28, 1996, I returned to the mobile home to visit my family and a stranger appeared at the door. The stranger told me that she had purchased this mobile home approximately two weeks earlier.

Creditor had resold the home for $19,500.

Debtor alleged that Creditor was required, pursuant to Article 9 of the UCC, to provide him with notice of the sale of the mobile home. See S.C.Code Ann. § 36-9-504(3) (Supp. 1999). Debtor moved for partial summary judgment on the issue of liability, asserting a hearing was necessary only to determine damages under the formula established in S.C.Code Ann. § 36-9-507(1) (Supp.1999).

Creditor counterclaimed, requesting a deficiency judgment and sanctions under the South Carolina Frivolous Civil Proceedings Sanctions Act. Creditor admitted it had not sent Debtor or his estranged wife notice of the sale, but argued that Article 9 applies only to secured transactions and there was no security interest created by the Agreement. Creditor also contended that Debtor was not entitled to notice because he had abandoned the home and his estranged wife voluntarily had surrendered it to Creditor.

The trial judge granted summary judgment to Creditor. The judge ruled the Agreement constituted an unsecured loan and so the default and penalty provisions of Article 9 did not apply to the transaction. The Court of Appeals reversed, finding that the transaction between Debtor and Creditor falls squarely within the statutory definition of a secured transaction. Based on that determination, the Court of Appeals remanded the case for the trial judge to determine whether Brockbank's alleged abandonment of the home divested him of his rights under Article 9, including the right to notice of the sale.

1. Did the Court of Appeals err in finding that the Agreement created a security interest in the mobile home?
2. Did the Court of Appeals err in remanding to the lower court the issue of whether Debtor's departure from the home divested him of his rights under Article 9?
3. Did the trial judge err in finding that Debtor's departure from the home divested him of his rights under Article 9?

A trial court may properly grant a motion for summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), SCRCP. Summary judgment is not appropriate when further inquiry into the facts of the case is desirable to clarify the application of the law. Tupper v. Dorchester County, 326 S.C. 318, 487 S.E.2d 187 (1997). Summary judgment should not be granted even when there is no dispute as to evidentiary facts if there is dispute as to the conclusion to be drawn from those facts. Id. In determining whether any triable issues of fact exist, the court must view the evidence and all reasonable inferences that may be drawn from the evidence in the light most favorable to the non-moving party. Manning v. Quinn, 294 S.C. 383, 365 S.E.2d 24 (1988). An appellate court reviews the granting of summary judgment under the same standard applied by the trial court pursuant to Rule 56, SCRCP. Williams v. Chesterfield Lumber Co., 267 S.C. 607, 230 S.E.2d 447 (1976); Wells v. City of Lynchburg, 331 S.C. 296, 501 S.E.2d 746 (Ct.App.1998).


A mobile home usually is classified as personal property. See City of North Charleston v. Claxton, 315 S.C. 56, 431 S.E.2d 610 (Ct.App.1993)

(finding that mobile homes were personal property because they had no significant attachments to the property such as permanent foundations or additions). A security interest in a mobile home is perfected by listing the interest on the certificate of title. See S.C.Code Ann. § 36-9-302(3)(b) (Supp.1999) and Note 1 of South Carolina Reporter's Notes; S.C.Code Ann. §§ 56-19-210, 56-19-290(3), and 56-19-340 (1991 & Supp.1999). However, the "certificate of title statutes only govern the issue of whether or not the security interest in the collateral in question has been duly perfected. All other aspects of such transactions are governed by the Article 9 rules." Note 1 of South Carolina Reporter's Notes to S.C.Code Ann. § 36-9-302 (Supp.1999).

Article 9 of the UCC applies to "any transaction (regardless of its form) which is intended to create a security interest in personal property or fixtures including goods, documents, instruments, general intangibles, chattel paper, or accounts." S.C.Code Ann. § 36-9-102(1)(a) (Supp.1999). The "fundamental objective of Article 9 of the Uniform Code [is to] provid[e] uniform and simplified rules governing chattel security which meet modern commercial needs.... Article 9 rejects any distinction based on form or designation of the device employed." In re Berry, 189 B.R. 82, 86 (Bankr.D.S.C. 1995) (quoting S.C.Code Ann. Title 36, Commercial Code, Background and Introduction, p. 14) (internal quotes omitted).

No magic words or precise form are necessary to create a security interest so long as the minimum formal requirements regarding perfection, attachment and enforceability are met. In re CFLC, Inc., 166 F.3d 1012, 1016 (9th Cir.1999) (citing In re Amex-Protein Dev. Corp., 504 F.2d 1056, 1058-59 (9th Cir.1974)); accord United Virginia Bank/Seaboard Natl. v. B.F. Saul Real Estate Inv. Trust, 641 F.2d 185, 189 (4th Cir.1981)

; Mitchell v. Shepherd Mall State Bank, 458 F.2d 700, 703 (10th Cir.1972). "The court must find both language in a written agreement that objectively indicates the parties' intent to create a security interest...

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