Nicholson's Mobile Home Sales, Inc. v. Schramm

• Decision Date: 20 June 1975
• Docket Number: No. 1--1273A222,1--1273A222
• Citation: 330 N.E.2d 785,164 Ind.App. 598
• Parties: , 77 A.L.R.3d 1257, 17 UCC Rep.Serv. 574 NICHOLSON'S MOBILE HOME SALES, INC., Defendant-Appellant, v. Karl SCHRAMM and Diana Schramm, Plaintiffs-Appellees.
• Court: Indiana Appellate Court

Page 785

330 N.E.2d 785

164 Ind.App. 598, 77 A.L.R.3d 1257,

17 UCC Rep.Serv. 574

NICHOLSON'S MOBILE HOME SALES, INC., Defendant-Appellant, v. Karl SCHRAMM and Diana Schramm, Plaintiffs-Appellees.

No. 1--1273A222.

Court of Appeals of Indiana, First District.

June 20, 1975.

William T. Hornaday, Hornaday, Winter & Todd, Bloomington, for defendant-appellant.

Kenneth L. Nunn, Bloomington, for plaintiffs-appellees.

ROBERTSON, Chief Judge.

The defendant-appellant, Nicholsons, is appealing from a $7400 judgment rendered by a jury in favor of the plaintiffs-appellees, Karl and Diana Schramm. The judgment was for damages to the Schramms for removal of a mobile home from their mobile home park, however, the jury found against Diana Schramm on her claim for personal injuries.

The several issues raised by Nicholson may be summarized as:

1. Whether the determination that the Schramm's lien upon a mobile home was valid and superior to a security interest claimed by a bank was contrary to the evidence and the law, and;

2. Whether punitive damages were properly awarded.

For the reasons set forth hereafter we affirm the judgment of the trial court.

The facts show that the Schramms operated a mobile home park in Bloomington Indiana. In November of 1968, Karl was approached by a John Applewhite who stated he was in the business of purchasing mobile homes and renting them to students and other persons. Applewhite wanted to locate a number of mobile homes in Schramm's park and agreed to pay the lot rentals. Applewhite brought as many as nine mobile homes to the park and, at various times, rented those homes to other persons. The Schramms did not attempt to find renters for Applewhite's mobile homes, nor in any other way participated in his enterprise.

By December, 1969, four of Applewhite's mobile homes remained in the park, none of which were occupied. At that time the Schramms filed with the Monroe County Recorder a 'Notice of Intent to Hold Hotel Keepers Lien' on the four mobile homes for the amount of accrued unpaid lot rentals. This notice was sent to holders of the security interest in the mobile homes, to whom Applewhite had also failed to make payment. The holder of the security interest in two of the mobile homes settled with the Schramms and removed them from the park.

The Bloomington National Bank (Bank) held a security interest in the two remaining mobile homes, having acquired them as the assignee of the interest claimed by Nicholson's Mobile Home Sales, the vendor of those two mobile homes.

In mid-September, 1970, one of the two remaining mobile homes was removed from the park by Nicholson without any notice. Karl did observe the truck as it left the park with the mobile home and pursued it in his automobile. Karl pulled abreast of the truck at a stop light and informed the two men in the truck to not 'ever come on my property again'.

Towards the end of September 1970, the two employees of Nicholsons returned to Schramm's park and were in the process of removing the remaining mobile home when Diana approached them. When she became aware of their purpose she told them they were trespassing and requested them to leave. She asked for their identification and if they had any court papers, however, the men gave no answers. Diana testified that the gray haired man finally shouted at her and subsequently shoved her backwards. She also said that she was struck in the stomach several times by a jack handle while the men were connecting the tow truck to the mobile home. The two men completed hitching the mobile home to the truck and proceeded to take the mobile from the park. Diana was still standing between the front of the mobile home and the rear of the tow truck when it began to move, and after allegedly being struck several times by the moving trailer she jumped onto the tongue or hitch between the truck and the mobile home. The two men in the truck were aware of Diana being upon the hitch but they proceeded to tow the mobile home out of the park. The truck was stopped a couple of hundred feet down the highway by four police officers who ordered Diana to remove herself from the hitch. The two men were subsequently permitted to continue with the mobile home which was thereafter reconditioned and resold. Diana testified she was sick and upset for a period of time thereafter and that during the incident she was frightened, sickened, was humiliated.

The Bank had a standing agreement on sales of mobile homes by Nicholson under which the Bank would finance the sale to the buyer, and take an assignment of Nicholson's to repossess the mobile home, if necessary, and hold it for a period prior to resale.

The Schramms subsequently brought suit for Diana's injuries and the amount of their lien upon the mobile home. The resulting judgment is the subject of this appeal. ¹

Nicholsons first series of arguments urge that they possessed the superior lien. The several allegations of error urge that Schramm's knowledge of their 'sellers lien' makes the Schramm's lien inferior and that Applewhite was not a guest upon which a Mobile Home Park Owners Lien could be imposed. Nicholson also complains of several instructions given by the trial court regarding liens.

Schramm's argument is that their lien is superior because of their possession of the property and that, in any event, Nicholsons' breach of the peace in repossessing the mobile home was unlawful.

We are of the opinion that the evidence demonstrated that the Bank, by way of Nicholson's assignment, possessed an unperfected purchase money security interest, as defined by IC 1971, 26--1--9--107, which says:

'A security interest is a 'purchase money security interest' to the extent that it is

(a) taken and retained by the seller of the collateral to secure all or part of its price;'

Mr. Nicholson testified that most of Applewhite's mobile homes were financed by the bank and that Nicholson retained that interest and subsequently assigned it to the Bank after the sale.

Additionally, Mr. Nicholson testified that Applewhite had purchased four or five mobile homes for him. Nicholson was also aware of the location and intended leasing of these mobile homes. The significance of this testimony is to establish what type of 'goods' the mobile homes were for the purpose of determining the necessity of perfecting the purchase money security interest. IC 1971, 26--1--9--109 says:

'Goods are . . . (4) 'inventory' if they are held by a person who holds them for sale or lease . . . Inventory of a person is not to be classified as his equipment.'

We are of the opinion, because of the foregoing definition, that the mobile homes constituted inventory.

IC 1971, 26--1--9--302(1), States 'A financing statement must be filed to perfect all security interests . . ..' (The several exceptions thereafter enumerated have no bearing on this case, nor do we find the property to be the 'subject of a statute.') We must, therefore, conclude that the purchase money security interest in this appeal was not perfected by Nicholson for the reason that the record does not show that the required financing statement was, in fact, filed.

The question remains, however, of whether the Bank perfected the purchase money security interest.

Nicholson's transfer of the security agreement and debt instrument to the Bank was an assignment of chattel paper. IC 1971, 26--1--9--105(1)(b). Possession by the Bank perfected its security interest in the chattel paper (IC 1971, 26--1--9--305) but not the mobile home. An examination of the record does not reveal that any of the exclusions for a financing statement are applicable. See IC 1971, 26--1--9--302(3). That, coupled with the fact that there was no evidence tending to show the Bank filed a financing statement on the mobile home or received the assignment of a perfected security interest leaves Nicholson as well as the Bank with an unperfected security interest.

On the other hand, we are of the opinion that the Schramm's lien, based upon the applicable statutes, was perfected because they were in possession of the property.

Nicholson's...