McCall v. Owens

• Decision Date: 09 May 1991
• Citation: 17 UCCRep.Serv.2d 301,820 S.W.2d 748
• Parties: 17 UCC Rep.Serv.2d 301 Boyce T. McCALL, Sr., Plaintiff-Appellee, v. Ted OWENS and Ted Douglas Owens d/b/a Ted's Chevron and Ron Beverly, and Ted Owens and Ted Douglas Owens d/b/a Ted's Chevron as co-partners associated and in business with East Tennessee Auto Recovery Corporation as a partnership, Defendants-Appellants. Boyce T. McCALL, Sr., Plaintiff-Appellee, v. FIRST TENNESSEE BANK and East Tennessee Auto Recovery Corporation, et al., Defendants-Appellants.
• Court: Tennessee Court of Appeals

Page 748

820 S.W.2d 748

17 UCC Rep.Serv.2d 301

Boyce T. McCALL, Sr., Plaintiff-Appellee, v. Ted OWENS and Ted Douglas Owens d/b/a Ted's Chevron and Ron

Beverly, and Ted Owens and Ted Douglas Owens d/b/a Ted's

Chevron as co-partners associated and in business with East

Tennessee Auto Recovery Corporation as a partnership,

Defendants-Appellants.

Boyce T. McCALL, Sr., Plaintiff-Appellee, v. FIRST TENNESSEE BANK and East Tennessee Auto Recovery

Corporation, et al., Defendants-Appellants.

Court of Appeals of Tennessee,

Eastern Section.

May 9, 1991.

Rehearing Denied June 5, 1991.

Permission to Appeal Denied by

Supreme Court Dec. 2, 1991.

William N. Groover, for Ron Beverly and East Tennessee Auto Recovery Corp., defendants-appellants; Janet Hogan, Knoxville, of counsel.

Boyd W. Venable, III and Alan L. Spear, Knoxville, for First Tennessee Bank, defendant-appellant.

John F. Weaver and C. Mark Troutman, McCord, Weaver & Troutman, P.C., Knoxville, for plaintiff-appellee.

OPINION

FRANKS, Judge.

In these cases consolidated for trial, defendants First Tennessee Bank, Ron Beverly and East Tennessee Auto Recovery Corporation have appealed jury verdicts for compensatory and punitive damages rendered in favor of the plaintiff. We reverse the trial court judgments on the basis of inconsistent verdicts as to liability and damages.

Plaintiff purchased a 1979 Ford Pinto from Garner Sams Ford on May 21, 1979 and financed the purchase through a loan from the United American Bank. The installment sales contract provided in part:

INSURANCE: Obligor shall purchase and maintain fire, theft, collision, and comprehensive insurance for the term of this contract, protecting the interests of Obligor and Holder in the property. Should Obligor fail to provide such coverage, Holder may, but is not obligated to, obtain such hazard insurance. Obligor shall then pay forthwith to Holder any premium necessary for such insurance, and, until full payment, the amount of said unpaid premium shall constitute an additional part of the obligation to be paid under and secured by this contract. Should Holder be unable to place such insurance or should initial insurance expire or be cancelled for any reason, Obligor shall immediately provide coverage by a carrier satisfactory to Holder.

The agreement also states the obligor's failure to keep the collateral insured would constitute a default on the note.

McCall decided to self-insure the vehicle and when the bank learned that the Pinto was not insured the bank purchased insurance from Southern Fire Insurance to protect its collateral. The premium was then charged to McCall, which he refused to pay. The note was eventually assigned to First Tennessee Bank which also attempted to collect from McCall.

The payments on the loan were paid in full by May of 1983 and, in June 1983, the bank demanded payment of the premium which totalled some $370.00. McCall again refused to pay. The bank then hired East Tennessee Auto Recovery and its employee, Ron Beverly, to repossess the Pinto. Ted Owens and his son, Ted Douglas Owens, operated Ted's Chevron Service Station and owned the wrecker utilized by Beverly in repossessing the vehicle. The bank's letter to Beverly authorizing the repossession, in part states:

We agree to indemnify and save you harmless from and all claims, damages, losses and action resulting from or arising out of the efforts to collect the above claim; except, however, such as may be caused by or arising out of the negligence or unauthorized acts of your agencies, its officers, employees or agents or the officers or employees of such agents.

McCall and his wife testified they heard someone "stealing their car" on the night of November 11, 1983. As the wife phoned the police, McCall dressed and ran out to confront Beverly and at least one other man. McCall testified that in defendants' haste to tow the car from his property the wrecker ran over his foot and knocked him to the ground. McCall was given first aid by his wife, a registered nurse, and obtained medical treatment for his injuries. Subsequently, McCall located the Pinto stored at Ted's Chevron and, when he tried to retrieve the vehicle, was dissuaded by a man who "flashed" a gun. On advice of counsel, McCall paid the disputed premium under protest and regained possession of his vehicle on November 18. He claimed that several small items of personal property had been taken from the vehicle and charged that the bank's report to a credit bureau about the repossession defamed him.

As a result, McCall filed two lawsuits. One against First Tennessee Bank and East Tennessee Auto Recovery jointly and severally for torts incident to wrongful repossession, trespass to realty, chattel conversion, assault and battery, outrageous conduct and defamation. The other incorporated the first complaint and claimed that Ted's Chevron, East Tennessee Auto Recovery and Ron Beverly aided in the commission of these torts as a partnership.

After trial before a jury, verdicts were rendered. In the first case, First Tennessee Bank was held liable for $49,000.00 in compensatory damages and $196,000.00 in punitive damages. East Tennessee Auto Recovery Corporation was found to be liable for $21,000.00 in compensatory and $84,000.00 in punitive damages. In the consolidated cause of action, Ted Owens was exonerated, Ted D. Owens was found liable for $9,000.00 in compensatory damages and $21,000.00 in punitive damages. Ted's Chevron was exonerated and Ron Beverly was held liable for $36,000.00 in compensatory damages and $84,000.00 in punitive damages. The alleged partnership was exonerated.

The trial judge overruled a motion for a new trial except Ted D. Owens was granted a new trial. He also ruled the bank must indemnify East Tennessee Auto Recovery for its torts but need not indemnify its president, Ron Beverly.

The bank under its agreement with McCall had the right to repossess the Pinto as a matter of law. Tenn.Code Ann. Sec. 47-9-503 gives a secured party the right to take possession of a collateral "on default". A failure to insure collateral is considered a default for which repossession is a proper remedy. See e.g., Ash v. Peoples Bank of Greensboro, 500 So.2d 5 (Ala.1986); Johnston v. Stinson, 418 So.2d 805 (Miss.1982); Eglin Federal Credit Union v. Curfman, 386 So.2d 860 (Fla.App.1980); Wagner v. Ford Motor Credit Co., 155 Ga.App. 729, 272 S.E.2d 500 (1980); However, there is material evidence to support McCall's assertion that the manner in which the repossession was carried out was a breach of the peace. Tenn.Code Ann. Sec. 47-9-503 gives a secured party the option of the self-help remedy of repossession "if this can be done without breach of the peace". Conversely, if the repossession may breach the peace, the creditor should resort to the judicial process or risk liability for tortious conduct. See generally 69 Am.Jur.2d Secured Transactions Sec. 593-597. Under the Uniform Commercial Code a "breach of peace" must involve some violence or threat of violence. Harris Truck & Trailer Sales v. Foote, 58 Tenn.App. 710, 436 S.W.2d 460 (1968). The testimony of McCall and his wife and his doctor provided adequate material evidence that the repossession entailed actual violence and the trier of fact could conclude the taking was unauthorized under the Code.

Whether First Tennessee Bank would be liable for East Tennessee Auto Recovery's actions was also for the trier of fact. First Tennessee hired East Tennessee Auto Recovery through its president, Ron Beverly, to repossess the vehicle. The bank asserts it was not liable for Beverly's torts because it disclaimed liability and Beverly was an independent contractor not engaged in ultra-hazardous activity. Neither argument is persuasive. A close reading of First Tennessee's alleged promise and disclaimer shows it to be ineffectual. First Tennessee...