Dallas/Fort Worth Airport Bank v. Dallas Bank & Trust Co., 05-82-01276-CV
| Decision Date | 13 January 1984 |
| Docket Number | No. 05-82-01276-CV,05-82-01276-CV |
| Citation | 667 S.W.2d 572 |
| Court | Texas Court of Appeals |
| Parties | 38 UCC Rep.Serv. 902 DALLAS/FORT WORTH AIRPORT BANK, Appellant, v. DALLAS BANK & TRUST COMPANY, Appellee. |
Jim K. Choate, Brice & Barron, Dallas, Robert M. Tharp, Robert H. Power & Assoc., Irving, for appellant.
William W. Wilson, Steven L. Page, Witts & Wilson, Dallas, for appellee.
Before AKIN, VANCE and ROWE, JJ.
This is a summary judgment case wherein Dallas Bank & Trust Company, as endorsee and holder in due course, sought payment of a certificate of deposit purchased from Dallas/Fort Worth Airport Bank by William R. Wortley. Airport Bank claimed a right of set-off against the certificate of deposit to the extent of the purchase money debt owed to it by Wortley. Both banks moved for summary judgment based on affidavits with documentary exhibits attached, both movants conceding that no controlling fact issues were in dispute. The trial court denied Airport Bank's motion and granted summary judgment for Dallas Bank. We affirm.
The relevant undisputed facts are these: On September 19, 1980, Airport Bank made a loan to Wortley and issued a $250,000 certificate of deposit to him in exchange for his promissory note for a like amount. Contemporaneous with this transaction, Wortley, as debtor, executed a security agreement in favor of Airport Bank, as secured party. This security agreement expressly covered as collateral "the balance of every deposit account of debtor under control of secured party...." The certificate of deposit issued by Airport Bank recited that "William R. Wortley has deposited in this bank $250,000 payable to William R. Wortley or order 365 days after date on return of this certificate properly endorsed."
On November 13, 1980, Dallas Bank made a $250,000 loan to Wortley in exchange for his promissory note for a like amount. Contemporaneously with this transaction, Wortley, as debtor, executed a security agreement in favor of Dallas Bank, as secured party. This security agreement expressly granted to Dallas Bank a security interest in that $250,000 certificate of deposit issued to Wortley two months earlier by Airport Bank. The original certificate of deposit was endorsed in blank by Wortley and left in the possession of Dallas Bank. In response to a letter from Dallas Bank dated November 19, 1980, Airport Bank acknowledged on November 26, 1980, that Wortley had pledged the certificate of deposit to Dallas Bank as collateral for his debt to that bank.
Wortley defaulted on his loan to Dallas Bank and that bank on May 28, 1981, foreclosed on the certificate of deposit. After the certificate of deposit had matured on September 19, 1981, Dallas Bank presented it to Airport Bank for payment. Airport Bank declined payment, asserting that under its security agreement and under its legal right of offset it had set-off on September 4, 1981, all deposits held in the name of Wortley against his debts to that bank.
Airport Bank contends on appeal that the trial court erred in denying its summary judgment motion because as a matter of law: (1) from the inception of its loan it held a perfected security interest in all funds allocable to the certificate of deposit; and (2) its right of offset was superior to any claim by Dallas Bank to these funds. Airport Bank contends also that the trial court erred in granting summary judgment in favor of Dallas Bank because Airport Bank's security interest was prior in time to Dallas Bank's security interest. We overrule all these contentions because under the undisputed facts, prior to Airport Bank's offset, Dallas Bank had become the owner and holder in due course of the certificate of deposit, and thereby, to the extent of its loan, its rights to the funds allocable to the certificate of deposit became superior to those of Airport Bank.
Airport Bank argues in its first point of error that the evidence conclusively established that it acquired a perfected security interest in the funds allocable to the certificate of deposit rather than in the certificate of deposit itself. For this position, the bank relies upon the security agreement it took in accordance with TEX.BUS. & COM.CODE ANN. Chapter 9 (Vernon 1968 and Supp.1982-1983), which covered as collateral for its loan to Wortley: "The balance of every deposit account of debtor (Wortley) under control of secured party (Airport Bank)." We cannot agree, however, with Airport Bank's argument because, by definition, a "deposit account" under TEX.BUS. & COM.CODE ANN. section 9.105 (Vernon Supp.1982-1983), does not include an account evidenced by a certificate of deposit:
9.105(a) In this chapter unless the context otherwise requires ... (5) "deposit account" means a demand, time, savings, passbook, or like account maintained with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a certificate of deposit.... (Emphasis supplied).
Because of the exclusion appearing in this definition,...
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