Farmers State Bank, Aurora v. Edison Non-Stock Co-op. Ass'n, N-STOCK

• Decision Date: 30 November 1973
• Docket Number: No. 39013,NON-STOCK,N-STOCK,39013
• Citation: 212 N.W.2d 625,190 Neb. 789,13 UCC Rep. 728
• Parties: , 13 UCC Rep.Serv. 728 FARMERS STATE BANK, AURORA, Nebraska, a corporation, Appellee, v. EDISONCOOPERATIVE ASSN., a corporation, Appellant, Impleaded with Dick J. Nelson, Appellee.
• Court: Nebraska Supreme Court

Page 625

212 N.W.2d 625

190 Neb. 789, 13 UCC Rep.Serv. 728

FARMERS STATE BANK, AURORA, Nebraska, a corporation, Appellee, v. EDISON NON-STOCK COOPERATIVE ASSN., a corporation, Appellant Impleaded with Dick J. Nelson, Appellee.

No. 39013.

Supreme Court of Nebraska.

Nov. 30, 1973.

Syllabus by the Court

1. Under the Uniform Commercial Code, a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof by the debtor unless his action was authorized by the secured party in the security agreement or otherwise, and also continues in any identifiable proceeds including collections received by the debtor.

2. Where a sale of farm products by a debtor engaged in farming operations is claimed to be authorized under the terms of a security agreement, the sale must ordinarily be made in compliance with the conditions and limitations of the authorization.

3. Ordinarily to establish a waiver of legal right there must be a clear, unequivocal, and decisive act of a party showing such a purpose or acts amounting to an estoppel on his part.

4. Ordinarily a waiver is a voluntary abandonment or surrender by a capable person of a right known by him to exist, with the intention that such right shall be surrendered.

Sherwood & Poff, William H. Sherwood, Oxford, for appellant.

Adams & Carstenson, Aurora, Knudsen, Berkheimer, Endacott & Beam, Lincoln, for appellee.

Heard before WHITE, C.J., BOSLAUGH, McCOWN, and NEWTON, JJ., and RONIN, District Judge.

McCOWN, Justice.

This is an action for conversion brought by the plaintiff creditor, Farmers State Bank, the holder of a security interest in farm crops, against the defendant elevator which purchased grain from the farmer debtor. At the conclusion of all the evidence, the District Court granted plaintiff's motion for judgment; entered judgment for the plaintiff in the sum of $11,728.65; and discharged the jury. The defendant elevator has appealed.

On June 16, 1969, Dick J. Nelson, as debtor, executed a financing statement and security agreement in favor of the plaintiff, Farmers State Bank. The agreement granted plaintiff bank a security interest in all the debtor's crops and livestock located on described real estate situated in both Gosper and Hamilton counties in Nebraska. The agreement provided: 'If marked here the security interest shall attach to all product and proceeds of Collateral, but Secured Party does not hereby consent to the sale of the Collateral' and 'If marked here Debtor shall, so long as no event of default has occurred, have the right in the regular course of business, to process and sell inventory and farm products only, but the security interest shall attach to all product and proceeds of all Collateral.'

In large type above the signatures of the parties appeared the language: 'DEBTOR AGREES THAT HE HAS READ THIS AGREEMENT AND THAT THIS AGREEMENT INCLUDES AND IS SUBJECT TO THE ADDITIONAL PROVISIONS SET FORTH BELOW AND ON THE REVERSE SIDE HEREOF, THE SAME BEING INCORPORATED HEREIN BY REFERENCE.'

In the first paragraph on the reverse side of the agreement, the debtor warrants and covenants: '(1) That except for the security interest granted hereby Debtor is, * * * the owner of the Collateral free from any adverse lien, security interest or encumbrance; * * *. (2) That no financing statement covering the Collateral or any proceeds thereof is on file in any public office * * *. (3) Not to sell, transfer or dispose of the Collateral, nor take the same or attempt to take the same from the county where kept as above stated, without the prior written consent of the Secured Party. * * * (5) Not to permit or allow any adverse lien, security interest or encumbrance whatsoever upon the Collateral, * * *.'

The third paragraph on the reverse side of the agreement provides: 'DEBTOR SHALL BE IN DEFAULT under this agreement upon the happening of any of the following events or conditions: (1) default in the payment of (sic) performance of any obligation, covenant or liability contained or referred to herein or in any note evidencing the same; (2) any warranty, representation or statement made or furnished to Secured Party by or on behalf of Debtor proves to have been false in any material respect when made or furnished; (3) any event which results in the acceleration of the maturity of the indebtedness of Debtor to others under any indenture, agreement or undertaking; (4) loss, theft, damage, destruction sale or encumbrance to or of any of the Collateral * * * (5), death, dissolution, termination of existence, insolvency, business failure, appointment of a receiver * * *.'

On June 18, 1969, a separate financing statement signed by the parties was filed in Gosper County. It contained the name and address of the debtor and the secured party, described the collateral and the real estate on which the crops were to be grown, which included the land in Gosper County on which this grain was grown. The financing statement as filed showed also that it covered proceeds.

On April 16, 1969, Dick J. Nelson had executed a security agreement and financing statement covering the same collateral to the Farmers and Merchants Bank at Edison, Furnas County, Nebraska. That financing statement was filed for record in Gosper County on April 17, 1969. On the date that Nelson executed the security agreement and financing statement to the plaintiff bank on June 16, 1969, he owed the Farmers and Merchants Bank at...