Central Realty, Inc. v. Hillman's Equipment, Inc.

• Decision Date: 11 April 1969
• Docket Number: No. 469S75,469S75
• Citation: 253 Ind. 48,246 N.E.2d 383
• Parties: CENTRAL REALTY, INC., the First National Bank in Wabash, Terry E. Cooper, Kay Cooper, Terry E. Cooper, d/b/a Terry's Restaurant, Appellants, v. HILLMAN'S EQUIPMENT, INC., Appellee.
• Court: Indiana Supreme Court

Page 383

246 N.E.2d 383

253 Ind. 48

CENTRAL REALTY, INC., the First National Bank in Wabash, Terry E. Cooper, Kay Cooper, Terry E. Cooper, d/b/a Terry's Restaurant, Appellants, v. HILLMAN'S EQUIPMENT, INC., Appellee.

No. 469S75.

Supreme Court of Indiana.

April 11, 1969.

Charles R. Tiede, Plummer, Tiede, Magley & Metz, Wabash, for appellant Central Realty, Inc.

Robert S. McCain, Fay Leas, Fort Wayne, for appellee.

JACKSON, Judge.

This case comes to us on petition to transfer. See Hillman's Equipment, Inc. v Central Realty, Inc. (1968), Ind.App., 242 N.E.2d 522.

Appellee, Hillman's Equipment, Inc., is the vendor of certain restaurant equipment sold to Terry Cooper for the purpose of equipping Terry's Restaurant, of which he was the proprietor. On June 22, 1965, Cooper purchased $20,448.00 worth of restaurant equipment from appellee, which equipment was paid for out of the proceeds of a promissory note made by Cooper to First National and signed by Central Realty, Inc. as guarantor. Cooper also executed a security agreement with First National, the terms of which gave the bank a security interest in 'All Restaurant Equipment and Fixtures now owned or hereafter acquired located at Terry's Restaurant.' A financing statement covering the above mentioned equipment was duly and timely filed by the bank in the office of the Indiana Secretary of State on June 29, 1965.

From June 9, 1965 up to October 16, 1965, appellee delivered various other pieces of equipment to Cooper which were to be paid for in installments. To secure this equipment, Cooper executed a security agreement to appellee which was dated 'December _ _, 1965' and which provided that the first installment payment due thereunder would be on January 10, 1966. Although bearing the date 'December _ _, 1965,' appellee contends that the security agreement was not signed by Cooper until January 18, 1966, on which date appellee filed a financing statement in the office of the Recorder of Wabash County, Indiana, claiming a security interest in the restaurant equipment delivered from June 9 up to October 16, 1965. The financing statement provided that it was filed without the debtor's signature, and thus did not perfect a security interest in collateral.

Subsequently, Cooper being in default of rent payments and payments on the note, Central Realty, pursuant to provisions of its lease with Cooper, took possession of Terry's Restaurant on February 24, 1966, including all equipment and fixtures delivered by appellee to Cooper between June 9 and October 16, 1965. On April 13, 1966 First National formally assigned its security interest and rights in Terry's Restaurant to Central Realty. On April 18, 1966 Central Realty gave notice that it was selling at public sale on May 2, 1966 all of Cooper's equipment. On April 29, 1966 Cooper signed a document purporting to give to appellee 'right, title and interest,' and the 'immediate possession' of the equipment delivered to Cooper between June 9, 1965 and October 16, 1965. Also on this date appellee filed a financing statement with the Secretary of State claiming a security interest in the property in question.

At trial, petitioners Central Realty, Inc. and First National Bank filed a motion for summary judgment, together with supporting affidavits. Appellee then filed its motion, including supporting affidavits, to deny summary judgment. On July 1, 1966 the trial court granted appellants' motion for summary judgment. After the trial court denied its motion for a new trial, appellee appealed to the Appellate Court. The Appellate Court in Hillman Equipment, Inc. v. Central Realty, Inc. (1968) Ind.App., 242 N.E.2d 522, reversed the trial court with instructions to enter summary judgment for appellee, and to determine the fair market value of the equipment at the time of the sale.

The Appellate Court framed its view of the issues presented by the case as follows:

'May a secured party with a prior perfected security interest in equipment or other collateral, who has repossessed it, by agreement subordinate his security interest therein to a junior secured party who has not perfected his security interest by proper filing or other means as prescribed by the Uniform Commercial Code?' 242 N.E.2d 522, 525.

The Court then held that there may be such subordination, and concluded from the affidavits in support of the motions made at trial that appellants were estopped from denying a subordination agreement with appellee. Quoting again from the opinion of the Appellate Court:

'The evidence is clear that a controversy existed as to the presence of the subordination agreement or estoppel. It is the opinion of this court that all of the evidence offered for the purpose of granting a summary judgment clearly established that the security interest of the appellant should take priority.' 242 N.E.2d 522, 526.

To arrive at its conclusion that a subordination agreement arose by operation of estoppel, it was necessary for the Appellate Court to review the evidence contained in the record, weigh that evidence, and arrive at a conclusion of fact; namely, that appellants, by their conduct, are estopped from denying the existence of a subordination agreement with appellee. We point out that this case was before the Appellate Court as an appeal from a ruling of the trial court granting appellants' motion for summary judgment.

Our statute on summary judgment, Ind.Ann.Stat. § 2--2524(c), (1968 Repl.) provides:

'(c) Motion and Proceedings Thereon. The motion shall be served at least ten (10) days before the time fixed for the hearing. The adverse party prior to the day of hearing may serve opposing affidavits. The judgment sought shall be rendered forthwith if 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. A summary, judgment, interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages.'

In Kapusta v. DePuy Manufacturing Co. (1968), Ind., 234 N.E.2d 487, this Court considered the question of whether failure of the adverse party to file counter affidavits would automatically result in the granting of summary judgment for the moving party. This Court, in construing the words 'if appropriate' in Ind.Ann.Stat. § 2--2524(e) stated:

'We construe the words 'if appropriate' in subsection (e), in light of subsection (c) to still require a finding that there is no genuine issue as to any material fact, whether or not counter-affidavits are filed.' (Emphasis added.) 234 N.E.2d 487, 488.

Ind.Ann.Stat. § 2--2524(c) was patterned after, and is identical to Rule 56(c) of the Federal Rules of Civil Procedure. In Fountain v. Filson (1949), 336 U.S. 681, 69 S.Ct. 754, 93 L.Ed. 971, the Supreme Court of the United States was confronted with issues strikingly similar to those at bar. In that case the District Court for the District of Columbia granted the appellant's motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. The Court of Appeals for the District of Columbia reversed and remanded the case to the District Court with instructions to enter a personal judgment for the appellees, the non-moving party. The ruling of the Court of Appeals was based in part upon factual conclusions drawn from the depositions and affidavits offered in support and in opposition to the motion for summary judgment. In reversing the Court of Appeals the Supreme Court said:

'We need not pass on the propriety of an order for summary judgment by a district court in favor of one party after the opposite party has moved for summary judgment in its favor, where it appears that there is no dispute as to any fact material to the issue being litigated. For here the order was made on appeal on a new issue as to which the opposite party had no opportunity to present a defense before the trial court.' 336 U.S. 682, 69 S.Ct. 755.

The Supreme Court went on to say:

'Summary judgment may be given, under Rule 56, only if there is no dispute as to any material fact. There was no occasion in the trial court for Mrs. Fountain to dispute the facts material to a claim that a personal obligation existed, since the only claim considered by that court on her motion for summary judgment was the claim that there was a resulting trust. When the Court of Appeals concluded that the trial court should have considered a claim for personal judgment it was error for it to deprive Mrs. Fountain of an opportunity to dispute the facts material to that claim by ordering summary judgment against her.' 336 U.S. 683, 69 S.Ct. 756.

Although we are not bound by the determination of the Supreme Court in Fountain v. Filson, supra, it nonetheless offers authoritative guidance in the case at bar.

Thus, it is clear from both Indiana and Federal authorities that summary judgment under § 2--2524, supra, and its identical counterpart Rule 56, cannot be granted where there exists a genuine issue as to a material fact.

That there were present in the case at bar genuine issues as to material facts is clear from a review of the record. The Appellate Court...