Cockrell v. Citizens Nat. Bank of Denton
| Decision Date | 27 November 1990 |
| Docket Number | No. 2-89-258-CV,2-89-258-CV |
| Citation | 802 S.W.2d 319 |
| Parties | 15 UCC Rep.Serv.2d 301 John H. COCKRELL, Jr., Appellant, v. CITIZENS NATIONAL BANK OF DENTON and the Federal Deposit Insurance Corporation, as Receiver for Citizens National Bank of Denton, Texas, Appellees. |
| Court | Texas Court of Appeals |
S. Stewart Frazer and Johnette Oden, Dallas, for appellant.
Coleman & Smith, William L. Smith, Jr., Denton, for appellees.
Before WEAVER, C.J., and JOE SPURLOCK, II and HILL, JJ.
Appellant, John H. Cockrell, Jr., brought this suit against the appellee, Citizens National Bank of Denton, the "bank," alleging conversion of personal property and seeking actual and exemplary damages. 1 Both parties claimed a security interest in the property which consisted of certain equipment. The alleged wrongful conversion involves the bank's foreclosure of its security interest and subsequent sale of the equipment. Cockrell had sold his business to certain purchasers, the "Sydnors," who are not parties to this suit, and he claimed a priority purchase money security interest in the equipment.
The security agreement under which the bank held its interest was prior in time, and its security interest affixed to this equipment only under the after-acquired title provisions of such security agreement. Both parties filed financing statements, the bank's having been filed by its predecessor in interest on May 9, 1985, and Cockrell's having been filed on October 7, 1985. Cockrell's claim that his purchase money security interest had priority over the security interest held by the bank depends upon whether his security interest was perfected at the time the Sydnors received possession of the property or within twenty days thereafter. TEX.BUS. & COM.CODE ANN. § 9.312(d) (Tex.UCC) (Vernon Supp.1991).
The case was submitted to a jury which answered all questions in favor of appellant, including Jury Question No. 1 which read as follows:
Do you find that John H. Cockrell, Jr., filed notice of his security interest with the Secretary of State of the State of Texas at the time that the Sydnors received possession of the collateral or within 20 days thereafter?
ANSWER: "Yes" or "No."
Answer: yes
The trial court granted the bank's motion for judgment non obstante veredicto, found that there was no evidence of probative force to sustain the jury's answer to Jury Question No. 1 and that all other jury questions were rendered immaterial thereby, and entered judgment that Cockrell take nothing. We reverse and render judgment for appellant.
Appellant brings four points of error. Under the first three points he claims the trial court erred in granting the judgment n.o.v. because: 1) appellee's motion for judgment n.o.v. advocated a legal definition of the word "possession"; 2) appellant did not have the burden to prove the meaning of "possession" in legal terms rather than its ordinary meaning; and 3) there was sufficient evidence to support the jury's verdict. Under point four, appellant alleges the trial court erred in failing to render judgment for appellant on the jury verdict because there was sufficient evidence to support such verdict.
Under point of error one, appellant asserts that the bank, in its motion for judgment n.o.v., advocated a legal definition of the term "possession" contrary to the position taken by appellee at trial. The purpose of this point of error is not made clear, but in any event the representations as to the position advocated by appellee in its motion for judgment are not supported by the record. Nowhere in the bank's motion for judgment n.o.v. does it refer to or advocate a special definition of the term "possession." The appellant points out that such a position was taken by the appellee in the brief which it submitted to the trial court in support of such motion, but there is nothing in the record to indicate that the granting of the motion by the trial court was founded on any such definition of the term "possession," and appellant has failed to direct us to the portion of the record whereby he may have been harmed by this assertion. Point of error number one is overruled.
Likewise, the purpose of point two is not made clear. Appellant appears to assert that the charge placed on him the burden of proving "possession," according to its legal meaning, rather than by its common, ordinary meaning. The appellant does not direct us to any portion of the record which required him to meet any legal meaning of the term "possession," nor do we find the same in the record. Point of error number two is overruled.
The gist of appellant's appeal is contained in his points three and four which points are addressed together in his brief. Appellant's argument under both of these points is to the effect that the trial court erred in granting judgment n.o.v., and in failing to render judgment in favor of appellant, because there was sufficient evidence before the jury to support the jury's answer to Jury Question No. 1, that is that Cockrell filed notice of his security interest with the secretary of state at the time the Sydnors received possession of the collateral or within twenty days thereafter. The jury's answer to that question, if sustained, is sufficient to establish that Cockrell's purchase money security interest in the equipment was timely perfected and had priority over the security interest claimed by the bank. In this respect, we note that at the trial the parties stipulated that if Jury Question No. 1 was answered in the affirmative then a conversion had been found by the jury. The bank also states in its brief that only one issue is presented on this appeal, and that is whether there is some evidence of probative value to support the jury's answer to Jury Question No. 1. We agree that this is the issue before us.
The jury was not asked to determine a specific date on which the Sydnors received possession of the equipment and it made no such finding. It was asked only if Cockrell filed notice of his security interest with the secretary of state at the time or within twenty days after the Sydnors received possession.
It is undisputed that Cockrell perfected his lien by filing a financing statement with the secretary of state on October 7, 1985. To fall within the twenty-day provision of section 9.312(d), so as to protect the priority of Cockrell's claim, possession of the equipment must have passed to the Sydnors at some time on or after September 17, 1985. Accordingly, we must sustain the judgment n.o.v. in favor of the bank if we determine that there was no evidence, or no more than a mere scintilla of evidence, to support the jury's finding that the Sydnors received possession of the equipment on or after that date.
The evidence shows that Cockrell, as seller, and the Sydnors, as buyer, 2 entered into an agreement dated August 1, 1985, which provided that Cockrell shall sell, assign and transfer to the Sydnors, on the closing date, Cockrell's mini-blind business located in Dallas, together with the assets of such business. The assets included certain equipment which is the subject of this lawsuit. On the same date the Sydnors paid $5,000 to Cockrell, as part of the purchase price, and executed a promissory note for the balance, the note being secured by a security interest in the equipment under a security agreement of the same date. Subsequently, the parties executed an amended agreement dated September 18, 1985, which "amends, restates, and replaces" the agreement of August 1, 1985.
Both the agreement and the amendment provided for the closing of the transaction to take place on August 1, 1985, or at such other time as they may agree to in writing. No written agreement changing the closing date is contained in the evidence. Cockrell contends that the closing occurred on October 3, 1985, and the bank claims that the closing occurred on August 1, 1985. We do not consider that a determination of the date on which the transaction was closed is determinative of the issue before us.
None of these documents pertaining to the transaction make any reference to possession or provide for the delivery of possession of the equipment to the buyer, either at the closing or at any other time.
The Sydnors began operating the business on August 1, 1985, and at that time they obviously had some access to the equipment. The equipment remained in the same building where it was located at the time the agreement was signed on August 1, 1985. The bank contends that the Sydnors' access to the equipment and their commencement of operations of the business show conclusively that they received possession of the equipment on August 1, 1985. However, the Sydnors' access to the equipment, and their possession thereof for operating purposes at that time, were not exclusive. Cockrell continued to have access to the equipment until October 3, 1985. The equipment was located in a warehouse or warehouses three doors from where Cockrell continued to operate his office. Cockrell had keys to the office and to the warehouses where the equipment was located. He and two of his employees remained involved in the day-to-day operations of the business, including operating the equipment, and were in and out of the warehouse on a day-to-day basis until October 3, 1985.
Cockrell testified that the Sydnors took possession of the equipment on October 3, 1985. He further testified that after August 1, the parties spent "sixty some odd days in the process of implementing the conditions of the Agreement and the Amended Agreement," that he needed to determine the value of the inventory and particularly the value of the receivables, and that the orders received before August 1 needed to be completed and the payments collected. He stated that he had concerns about delivering possession of the equipment to the Sydnors and testified that ...
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