Crocker Nat. Bank v. IDECO DIV. OF DRESSER IND., Civ. A. No. H-83-2988.

• Decision Date: 29 December 1988
• Docket Number: Civ. A. No. H-83-2988.
• Citation: 702 F. Supp. 615
• Parties: CROCKER NATIONAL BANK, Plaintiff, v. IDECO DIVISION OF DRESSER INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

702 F. Supp. 615

CROCKER NATIONAL BANK, Plaintiff, v. IDECO DIVISION OF DRESSER INDUSTRIES, INC., Defendant.

Civ. A. No. H-83-2988.

United States District Court, S.D. Texas, Houston Division.

December 29, 1988.

Tim Leonard, Houston, Tex., for plaintiff.

James R. O'Donnell, Houston, Tex., for defendant.

MEMORANDUM ON SUMMARY JUDGMENT

HUGHES, District Judge.

This court previously granted summary judgment in favor of Ideco Division of Dresser Industries, holding that its possessory security interest prevailed over the security interest of Crocker National Bank in drilling rigs and in several Caterpillar diesel engines. On appeal, this court's judgment was affirmed on the drilling rigs, and it was remanded on the engines. Crocker Nat'l Bank v. Ideco Div., 839 F.2d 1104 (5th Cir.1988). The court of appeals ruled that it was necessary to determine the relationship of Continental Drilling Company to the parties in this litigation specifically about the engines because the crucial issue was whether Ideco retained possession.

Crocker's security interest in T.O.S. inventory does not attach to the engines. First, the engines were never in the possession of T.O.S. Second, if Crocker had a security interest in the engines, the interest terminated when the engines were returned for full credit to the original vendor. Last, if Continental acted as a bailee at the time the contract was repudiated, Ideco had never relinquished possession of the engines to T.O.S. Accordingly, Ideco's motion for summary judgment will be granted.

Facts.

Crocker National Bank was the holder of a security interest in all of T.O.S.'s inventory wherever located, accounts receivable, general intangibles, and returned goods. Ideco is the unpaid seller of the engines sold to T.O.S. Ideco invoiced T.O.S. on 30-day terms, noting a tax exempt sale for resale. Simultaneously, T.O.S. invoiced its customer Continental for the engines. In December 1981, Ideco shipped the engines directly to Continental at a storage facility used jointly by T.O.S. and Continental.

The engines remained at the storage facility until July 1982, when Ideco issued credit memoranda, executed a mutual release of contract with T.O.S., and retook possession of the engines.

Possession and Placement.

According to Ideco's invoice, which also was incorporated into T.O.S.'s invoice to Continental, the engines were shipped to Continental Drilling Company at Highway 155 North, Tyler, Texas. The actual delivery of the engines was to Continental, not to T.O.S. T.O.S. did not have possession of the engines to allow Crocker's security interest to...