Cabool State Bank v. Radio Shack, Inc.

• Decision Date: 30 January 2002
• Docket Number: No. 24381.,24381.
• Citation: Cabool State Bank v. Radio Shack, Inc., 65 S.W.3d 613 (Mo. App. 2002)
• Parties: CABOOL STATE BANK, Plaintiff-Respondent, v. RADIO SHACK, INC., d/b/a Tandy Corporation, Defendant-Appellant.
• Court: Missouri Court of Appeals

65 S.W.3d 613

CABOOL STATE BANK, Plaintiff-Respondent, v. RADIO SHACK, INC., d/b/a Tandy Corporation, Defendant-Appellant.

No. 24381.

Missouri Court of Appeals, Southern District, Division One.

January 30, 2002.

Mark A Fletcher, Lathrop & Gage, L.C., Springfield, for appellant.

Lee J. Viorel, Husch & Eppenberger, LLC, Springfield, for respondent.

KENNETH W. SHRUM, Presiding Judge.

In this court-tried case, Radio Shack, a division of Tandy Corporation ("Radio Shack"), appeals from a money judgment adverse to it and in favor of Cabool State Bank ("Bank"). The judgment amount ($15,529.43) represents the value of merchandise Radio Shack took from one of its franchised stores after the store closed. Bank alleged it had a lien on the merchandise superior to Radio Shack's claim, and the trial court agreed. Radio Shack's appeal charges three instances of trial court misapplication or misinterpretation of the law. This court affirms the judgment.

STANDARD OF REVIEW

The decision in a court-tried case will not be disturbed on appeal unless the judgment is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976).

We presume the trial court's decision is correct, and Radio Shack (as the appellant) has the burden of showing error. Walker v. Hanke, 992 S.W.2d 925, 930[2] (Mo.App.1999). "The appellate court is primarily concerned with the correctness of the trial court's result, not the route taken by the trial court to reach that result." Business Men's Assur. Co. v. Graham, 984 S.W.2d 501, 506 (Mo.banc 1999). Therefore, the judgment will be affirmed under any tenable theory, no matter if the reasons advanced by the trial court are wrong or insufficient. Id. at 506[2].

STATEMENT OF FACTS

On June 8, 1995, Michael Boudreaux ("Michael") and his wife, Debra Boudreaux ("Debra") contracted with Van Pamperien to buy a business from him.¹ The business was a retail electronics store operated under a franchise from Radio Shack. The contract involved the store inventory, fixtures, retail equipment, and a franchise agreement with Radio Shack. The sale closing was contingent upon Radio Shack approving transfer of the franchise to Boudreauxes. Ultimately, Radio Shack gave its approval, and the sale was consummated per the contract.

Michael and Debra borrowed money from Bank to buy this business. The loan documents included (1) a note that Michael and Debra signed individually and purportedly on behalf of "D & J Enterprises, Inc.," (2) a security agreement signed solely by Michael and Debra and which identified them, both in the body of the document and on signature lines, as borrowers and owners of the collateral, and (3) UCC-1 financing statements signed by Michael and Debra. On the UCC-1's signature lines, the only capacity identified for Michael's and Debra's signature was that of "Debtors." Contrarily, Bank listed "D & J Enterprises Inc., Radio Shack, Dealer, Debra K. Boudreaux, Michael C. Boudreaux" as "Debtors" at the top left-hand side of the UCC-1 documents. The UCC-1 filings covered, inter alia, "all inventory ... whether now owned or hereafter acquired, substitutes and replacements thereof." In a similar vein, the collateral listed in Bank's security agreement included "[a]ll inventory ... purchase[d] ... from Van Pamperien and all inventory purchased or replaced."

The stipulation and attached documents (from which the stipulation is largely drawn) are confusing and often contradictory in describing what role two corporate entities (D & J Enterprises, Inc. and Tri-B Enterprises, Inc.) played in this business. Even so, according to the stipulation, in January 1998 "[t]he Boudreauxes and Tri-B ... ceased business operations." On February 25, 1998, Radio Shack gave "[Michael] Boudreaux and Tri-B... [official notice] that the [franchise] Agreement # C068 was terminated." The inventory on hand when the store closed "had been acquired by the Boudreauxes and Tri-B ... from Radio Shack after January 1997." Although Radio Shack had no security interest in the inventory, it took possession of it from "the Boudreauxes and Tri-B Enterprises, Inc." At the time, Radio Shack claimed the Boudreauxes and Tri-B owed Radio Shack $6,394.73. Bank then sued Radio Shack, and claimed Boudreauxes still owed Bank money and that Bank had a perfected security interest in the inventory superior to any claim Radio Shack might have.

The trial court entered judgment for Bank, and this appeal by Radio Shack followed.

DISCUSSION AND DECISION

Radio Shack's first attempt at showing reversible error is rooted in certain assertions made by Radio Shack in the argument portion of its brief, i.e., (1) "the name of the store and the entity with which Radio Shack was doing business was changed from Michael Boudreaux d/b/a D & J Enterprises, Inc. to Tri-B Enterprises Inc. in late 1995[;]" (2) Tri-B was the only entity with which Radio Shack did business from November 1995 until January 1998; (3) the inventory Radio Shack took from the store after it closed had been sold to Tri-B, and no one else; and (4) because of the so-called change of name, § 400.9-402(7) was implicated.²

Based on these claims, Radio Shack argues that the so-called change of name was seriously misleading within the meaning of § 400.9-402(7); the inventory that Radio Shack took from the store was acquired exclusively by Tri-B more than four months after the so-called name change; Bank never filed a new financing statement within four months of the so-called name change, and therefore, Bank's original UCC-1 filings were ineffective to perfect a security interest in the inventory against Radio Shack.³

Radio Shack's first point maintains the trial court committed reversible error when it found otherwise, that is, the court erred as a matter of law when it found that "actual notice ... of the initial secured claim of ... Bank prevents it [Radio Shack] from invoking the provisions of § 400.9-402 because the change in name could not have been seriously misleading with respect to Radio Shack." We disagree.

First and foremost, the argument thus advanced is based on flagrant mischaracterizations about what the record shows. Contrary to Radio Shack's post-trial assertions that after November 1995 it only did business with Tri-B and the inventory taken from the closed store had been sold exclusively to the corporate entity, Radio Shack stipulated it had sold the subject inventory to Tri-B Enterprises and Boudreauxes, and it took the inventory from both parties—not just Tri-B Enterprises—after the store closed. Radio Shack confirmed that it recognized and treated Michael, in his individual capacity, as having an ownership interest in the franchise and dealership after November 1995 when it stipulated that Tri-B and Boudreauxes "ceased business operations in January 1998[,]" and "[o]n February 25, 1998, Mr. Boudreaux and Tri-B ... were given official notice ... that the [franchise] agreement # C068 was terminated." Similar confirmation is found in documents that Michael submitted to Radio Shack after November 1995 (which it accepted) in which he described himself, individually, as Radio Shack's "Dealer" or "Franchisee."

We cannot discern exactly what role D & J Enterprises, Inc., played in this business, if any, nor do we know if an ownership interest in the inventory was ever transferred to that entity. The record also lacks evidence about the extent or nature of Tri-B's ownership interest in the inventory. However, the record does show, without contradiction or conflict, that (1) Boudreauxes bought the original inventory in their individual names, (2) Boudreauxes gave Bank a security interest in the original inventory and "all inventory purchased or replaced," (3) Bank perfected its security interest in existing and future inventory owned by Boudreauxes by filing UCC-1 financing statements that listed Boudreauxes and D & J. Enterprises, Inc., as "Debtors," (4) Radio Shack had actual knowledge of the loan transaction between Bank and Boudreauxes, and (5) the subject inventory was sold to both the Boudreauxes and Tri-B. Throughout the relevant period, Boudreauxes were "Debtors" of Bank within the meaning of § 400.9-402(7), they never changed their name during the period, and (according to the stipulation) the subject inventory was sold to Boudreauxes and Tri-B. Under the circumstances, the potential defense under § 400.9-402(7) was not available to Radio Shack, and the trial court's holding regarding that section is surplusage.

Section 400.9-402(1) provides as follows:

"A financing statement is sufficient if it gives the names of the...