Chrysler Credit Corp. v. Malone
| Decision Date | 30 November 1973 |
| Docket Number | No. 17448,17448 |
| Citation | 502 S.W.2d 910,13 UCCRep.Serv. 964 |
| Parties | 13 UCC Rep.Serv. 964 CHRYSLER CREDIT CORPORATION, Appellant, v. Bobby MALONE, Individually and d/b/a Bobby Malone Insurance Agency, Appellee. |
| Court | Texas Court of Appeals |
Irion, Cain, Magee & Davis, and Tedford E . Kimbell, Dallas, for appellant.
Miteff & Webb, and Meto Miteff, Fort Worth, for appellee.
The plaintiff, Chrysler Credit Corporation, sued defendant, Bobby Malone, individually and d/b/a Bobby Malone Insurance Agency, seeking to recover damages for the conversion of a 1970 Chrysler automobile on which the plaintiff owned a security interest.
A trial before a jury ended with defendant being awarded a judgment to the effect that plaintiff take nothing from him and from that judgment the plaintiff has appealed. The parties will be referred to herein as they appeared in the trial court.
Undisputed facts in the case were: Worthey Forest Park Chrysler-Plymouth Company was an automobile dealer in Fort Worth; on May 20, 1970, it was engaged in the business of selling new and used automobiles and it had on that date, as a part of its inventory, the 1970 Chrysler automobile that is the subject matter of this lawsuit; on that date the plaintiff held a valid, existing and unsatisfied security interest in that 1970 Chrysler in the amount of $4,763.93 as a result of furnishing the dealer the money with which to buy the car from the manufacturer; as of that date the Worthey Company dealership owed the defendant, Malone, and his insurance agency almost $10,000.00 for insurance premiums on insurance policies that defendant had obtained and sold to the dealership prior to that date; on May 20, 1970, Malone tried to get a payment on these past due premiums from the Worthey Company dealership and on the morning of May 20, 1970, the Worthey Company dealership did issue and deliver to Malone a check for $5,000.00, payable to Bobby Malone Insurance Agency, which was given in part payment of these past due insurance premiums; Bobby Malone Insurance Agency was defendant's trade name; Malone never did deposit this check for collection; on the afternoon of May 20, 1970, Malone returned to the Worthey Company dealership and purchased from that dealership the 1970 Chrysler automobile in question for a price of $4,763.93; on this occasion Malone endorsed the dealer's $5,000.00 check that the dealer had given him that morning and gave it back to the dealer as payment in full for the car; after the tax and cost of license plates were added to the purchase price the bill lacked about $68.00 totaling $5,000.00; when Malone gave back to the Worthey Company the $5,000.00 Worthey Company check as payment for the car, the Worthey Company gave him the car and $68.00 in change plus a bill of sale to the car; Malone did not part with any cash or with anything else in buying the car except the return to the dealer of the dealer's check.
The plaintiff's contention below was, and in this Court is, that as a matter of law because of the undisputed facts in the case the defendant, Malone, was not a 'buyer in ordinary course of business' as defined in V.T.C.A., Bus. & C., Sec. 1.201(9) because the car was sold and transferred to him by the Worthey Company in exchange for the cancellation of a money debt that the seller owed the buyer. Plaintiff contends that since this is true the transaction did not result in its security interest in the car being extinguished and that the court therefore erred in rendering judgment for defendant.
We sustain plaintiff's contentions and reverse the judgment.
Defendant seeks to uphold the judgment in his favor because, he says that he was a 'buyer in ordinary course of business' in that he did not receive the automobile in total or partial satisfaction of a money debt due and owing to him. The defendant would have been entitled to win this case only if he was right in this contention.
So the real controversy in the case existed over the question of whether the Chrysler automobile was sold and transferred to Malone by the dealer in total or partial satisfaction of a money debt that the dealer then owed to Malone.
The following provisions are contained in the Texas Business and Commerce Code which was enacted in 1967:
'A buyer in ordinary course of business (Subdivision (9) of Section 1.201) other than a person buying farm products from a person engaged in farming operations takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence.' Sec. 9 .307(a).
Sec. 1.201(9). (Emphasis supplied.)
The briefs of the parties make it apparent that they are in agreement that the decision in this case is controlled by a construction of those two statutes and by making a proper application of them to the facts of this case.
Associates Discount Corp. v. Rattan Chevrolet, Inc., 462 S.W.2d 546 (Tex.Sup., 1970) holds that Sec. 9.307(a), Bus. & C., V.T.C.A., applies to the sale of motor vehicles.
It is undisputed that on the morning of May 20, 1970, the Worthey dealership owed Malone nearly $10,000.00 for past due insurance premiums. This was a debt on an open account. On that same morning the Worthey dealership executed and delivered to Malone the $5,000.00 check in which his agency was named as the payee, and it was given to Malone to replace a part of the $10,000.00 debt that the dealership owed to Malone. This transaction did not alter the fact that the Worthey dealership was still indebted to Malone for the $10,000.00. It simply changed the form of a part of the debt. The check was evidence that the maker of the check (the dealership) was indebted to the payee, Malone, in the amount of $5,000.00. V.T.C.A., Bus. & C. Code, Sec. 3.413(a). The check was merely an order to Worthey Company's banker to pay to the payee, Malone, out of the maker's bank account, the amount of the check. The balance of the $10,000.00 debt was still in the same form that it had always been in.
We hold that when the payee therein, Malone, endorsed the dealer's $5,000.00 check back to its maker and redelivered it to its maker in satisfaction of and in extinguishment of the debt that was evidenced by the check in exchange for the sale and transfer to the payee of the 1970 Chrysler car, that such transaction constituted a transfer of the car for or in partial satisfaction of a money debt that the transferor then owed to the transferee of the car.
This being true, Malone was not a 'buyer in ordinary course of business' in the transaction in question within the meaning of the Business and Commerce Code of Texas, Sec. 1.201(9), as set out above, and the transaction whereby Malone bought the car therefore did not extinguish the plaintiff's security interest in the car. See Sec. 9.306(b) and Sec. 9.307(a) of the same statute.
The trial court submitted two special issues to the jury which he intended to cover the issue of whether defendant was a buyer in ordinary course of business. Number 1 asked if Malone acted in good faith in receiving the auto from the Worthey Company, and No. 2 asked 'Do you find . . . that at the time the $5,000.00 check in question was delivered to Mr. Malone that he did not intend to exchange said check in payment of the automobile in question?'
The jury's findings were that Malone acted in good faith and that he did not intend at the time he received the check to exchange it in payment for the car.
We hold that the court erred in rendering judgment based on the jury's answers to those issues, because those issues alone did not determine the question.
The controlling issue in this case was the question of whether or not in the May 20, 1970 transaction in which Malone purchased the car he was a 'buyer in ordinary course of business' as that term is...
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