Johanson Transportation Service v. Rich Pik'd Rite Inc.

• Decision Date: 07 February 1985
• Citation: 210 Cal.Rptr. 433,164 Cal.App.3d 583
• Court: California Court of Appeals Court of Appeals
• Parties: , 40 UCC Rep.Serv. 695 JOHANSON TRANSPORTATION SERVICE et al., Plaintiff and Appellant, v. JIMMY GRIZZARD SALES, INC., et al., Defendants and Respondents. * Civ.F/3064.

Page 433

210 Cal.Rptr. 433

164 Cal.App.3d 583, 40 UCC Rep.Serv. 695

JOHANSON TRANSPORTATION SERVICE et al., Plaintiff and Appellant, v. JIMMY GRIZZARD SALES, INC., et al., Defendants and Respondents. ^*

Civ.F/3064.

Court of Appeal, Fifth District, California.

Feb. 7, 1985.

Certified for Partial Publication ^**

(Cal.Rules of Court, rule 976.1) Andrews, Andrews, Thaxter & Jones and Franklin P. Jones, Fresno, for plaintiff and appellant.

Brobeck, Phleger & Harrison, Frederick D. Holden, Jr. and Rebecca J. Foust, Skjerven, Morrill, MacPherson & Drucker and Vincent O'Gara, San Francisco, for defendants and respondents.

OPINION

MARTIN, Associate Justice.

Plaintiff Johanson Transportation Service, a truck transportation broker, filed a complaint against Jimmy Grizzard Sales, Inc., Wells Fargo Bank, N.A., and Rich Pik'd Rite, Inc., to recover $36,194.20 in freight charges. Plaintiff had advanced the charges to truckers who hauled strawberries shipped by defendant Grizzard to the east coast. Following the fruit shipments, the fruit buyers issued single checks to Grizzard that included payment for both the fruit and freight. Grizzard deposited the checks in a deposit account at Wells Fargo's Ventura branch. Wells Fargo and Rich Pik'd Rite both claimed a security interest in the deposit account. At plaintiff's request, default was entered against defendant Jimmy Grizzard Sales, Inc. on April 20, 1983. Defendants Wells Fargo and Rich Pik'd Rite both moved for summary judgment. On June 21, 1983, the superior court granted both motions for summary judgment and on July 26, 1983, judgment was entered in favor of both defendants. Plaintiff filed a timely notice of appeal.

STATEMENT OF FACTS

Plaintiff is a truck transportation broker with its principal place of business in Fresno, California. Defendant Jimmy Grizzard Sales, Inc. (Grizzard) is a former grower and shipper of strawberries with its principal place of business at Oxnard, California. Defendant Rich Pik'd Rite, a Delaware Corporation, is a processor of fresh fruits. Defendant Wells Fargo is a national bank.

On September 4, 1981, Grizzard entered into a credit and security agreement with defendants Wells Fargo and Rich Pik'd Rite. The agreement provided for establishment of a deposit account at Wells Fargo's Ventura branch. The agreement required Grizzard to deposit all of the proceeds from the sale of its 1981-82 strawberry crop in the account and precluded Grizzard from drawing on the account. All deposits to that account were to be used to reduce Grizzard's indebtedness to the defendants. ¹

The credit and security agreement granted to Wells Fargo and Rich Pik'd Rite security interests in the following collateral:

"A. All strawberries and strawberry plants, growing on, to be grown on, or harvested from the real property described in Exhibit 4 hereto; and all strawberry packing boxes, strawberry trademarks and trade names; and all accounts receivable, rights to payment, contract rights, and chattel paper constituting proceeds of the foregoing;

"B. All licenses, guaranties, warranties, management agreements, marketing or sales agreements, escrow contracts, indemnity agreements, service agreements, maintenance agreements, insurance policies, joint venture and partnership interests, and other contracts of every kind, warehouse and other receipts, bills of sale, bills of lading, and other documents of every kind (whether or not negotiable), to the extent they relate to the Collateral described in subsection A of this Section 2.1; "C. All money and property heretofore, now, or hereafter deposited in or to the Strawberry Account or the Deposit Account;

"D. All of Borrower's interest in and right to any proceeds from Borrower's litigation against Western Kraft, a division of Willamette Industries, Inc., now pending in the United States Bankruptcy Court for the Central District of California as adversary proceeding number LA-80-1561 CA ("Western Kraft Litigation");

"E. All cash, non-cash receipts, accounts, chattel paper, instruments, general intangibles, and rights to payment of every kind now or at any time hereafter arising out of Borrower's handling, cooling, packing or shipping of berries grown by others; and

"F. All proceeds and products of or from the aforementioned Collateral (and any proceeds of any proceeds and any products of any products) now existing or hereafter arising."

The description of the collateral on Grizzard's financing statement (form UCC-1) was the same as that set forth in the agreement, except that paragraph C was omitted from the financing statement.

Between May 5 and May 19, 1982, Grizzard contacted plaintiff to arrange trucking services for the transportation of 12 different loads of strawberries from Grizzard's business in Oxnard to points on the east coast. Plaintiff advanced the total amount of freight charges to the truckers carrying the 12 loads. The freight charges amounted to $36,194.20, which included $2,660.44 in brokerage fees payable to plaintiff. The strawberries were sold on a "sold delivered" or "delivered price" basis. This meant the freight charges were included in the total cost to the fruit buyer and not charged separately. With respect to each sale, Grizzard received from the buyers one check representing the purchase price and freight charges for the strawberries. Grizzard deposited all checks received for the strawberries in the deposit account at Wells Fargo.

Grizzard failed to repay the funds plaintiff advanced for freight charges. Following written demand on Wells Fargo and Rich Pik'd Rite, plaintiff filed a complaint stating three causes of action against Grizzard, Wells Fargo, and Rich Pik'd Rite. In its first cause of action, plaintiff alleged breach of contract by Grizzard only. In its second and third causes of action, plaintiff alleged unjust enrichment of and conversion by both Wells Fargo and Rich Pik'd Rite as defendants.

On June 21, 1983, the lower court heard the arguments of counsel and granted defendants' motions for summary judgment, finding no triable issue of fact.

DISCUSSION

I. WERE THE PAYMENTS FOR FREIGHT CHARGES SUBJECT TO THE SECURITY INTERESTS CLAIMED BY RESPONDENTS?

Plaintiff contends defendants may not retain the $36,194.20 in freight charges because those charges were not "proceeds" subject to the defendants' security interests. Thus, by inference, plaintiff claims there were triable issues of fact and summary judgment was improper.

The purpose of a summary judgment motion is to determine if there are any triable issues of material fact, or whether the moving party is entitled to judgment as a matter of law.

A summary judgment entered under Code of Civil Procedure section 437c is an appealable judgment as in other cases. (Code Civ.Proc., § 437c, subd. (l ).) General rules relating to the scope of appellate review apply to appellate review of summary judgment, with two major exceptions. First, an argument or theory will generally not be considered if raised for the first time on appeal, unless the question is one of law to be applied to undisputed fact. Thus, possible theories not fully developed or factually presented to the trial court cannot create a "triable issue" on appeal. Second, issues raised and then abandoned in the trial court also cannot be considered on appeal. (2 California Civil Procedure Before Trial (Cont.Ed.Bar 1978) § 29.86, p. 319.) An appellate court will uphold a summary judgment when the record establishes there is no cause of action. In considering the grant of summary judgment, the reviewing court is not confined to the sufficiency of the stated reasons. The validity of the ruling is reviewable and not the reasons therefor. A motion for summary judgment necessarily includes a test of the sufficiency of the complaint and as such is in legal effect a motion for judgment on the pleadings. (Barnett v. Delta Lines, Inc. (1982) 137 Cal.App.3d 674, 682, 187 Cal.Rptr. 219.)

In the instant case, plaintiff contends the trial court improperly granted summary judgment by erroneously finding the freight charges subject to the security interests claimed by defendants. Plaintiff asserts three reasons for the trial court's error: (1) The description of collateral in defendants' UCC-1 financing statements did not include the freight charges; (2) defendants had no security interests in the Wells Fargo deposit account itself; and (3) the freight payments are not "proceeds" within the meaning of the California Uniform Commercial Code. ² We address each contention in turn.

With respect to the description of collateral, plaintiff contends Grizzard's obligations to defendants must be determined by examining the September 4, 1981, credit and security agreement and the UCC-1 financing statements filed to perfect the claimed security interest. Pursuant to section 2.1, paragraph C of the credit and security agreement, Grizzard granted defendants a security interest in "all money and property heretofore, now, or hereafter deposited in or to the Strawberry Account or the Deposit Account." Plaintiff notes the description of collateral in the financing statement omits this paragraph. Plaintiff contends a more restrictive description of collateral in a financing statement controls over a broader description contained in a security agreement when the claims or rights of third parties are at issue. (Matter of Katz (5th Cir.1977) 563 F.2d 766, 768-769.) Plaintiff concludes defendants may not rely on paragraph C of the credit and security agreement to subject the freight charges to their security interests "merely because the payments for the freight charges found their way into the deposit account."

Section 2.1, paragraph E of the agreement (which is almost identical to item number six, paragraph D on exhibit 1 to the UCC-1 financing statement) describes the following claimed collateral:

"E. All cash, non-cash receipts, accounts, chattel paper, instruments, general...