Pruske v. National Bank of Com. of San Antonio

• Citation: 18 UCCRep.Serv. 1325,533 S.W.2d 931
• Decision Date: 11 February 1976
• Docket Number: No. 15440,15440
• Court: Texas Court of Appeals
• Parties: 18 UCC Rep.Serv. 1325 Alfred D. PRUSKE, and Alfred D. Pruske, R.V., Inc., Appellants, v. NATIONAL BANK OF COMMERCE OF SAN ANTONIO, Appellee.

Page 931

533 S.W.2d 931

18 UCC Rep.Serv. 1325

Alfred D. PRUSKE, and Alfred D. Pruske, R.V., Inc., Appellants, v. NATIONAL BANK OF COMMERCE OF SAN ANTONIO, Appellee.

No. 15440.

Court of Civil Appeals of Texas,

San Antonio.

Feb. 11, 1976.

Rehearing Denied March 17, 1976.

Robert L. Vale, Southers, Goldberg, Lyons & Huson, Inc., San Antonio, for appellants.

Ted D. Lee, Cox, Smith, Smith, Hale & Guenther, San Antonio, for appellee.

KLINGEMAN, Justice.

This is a suit by the National Bank of Commerce of San Antonio against Alfred D. Pruske, Patricia Pruske Harden, and Alfred D. Pruske, R.V., Inc., jointly and severally, under a floor plan agreement for motor homes, secured by installment loan security agreement, trust receipts, various promissory notes, and backed by personal guarantees of Alfred D. Pruske, to recover the unpaid balance remaining due after the sale of the mobile homes. Trial was to the court, which decreed: (a) Plaintiff recover from all defendants, jointly and severally, the amount of $17,519.54, interest, attorney's fees, and consequential damages, with defendant, Patricia Pruske Harden, being granted indemnity and judgment over and against co-defendant, Alfred D. Pruske, for any sums paid by Patricia Pruske Harden on such judgment; (b) plaintiff recover from defendant, Alfred D. Pruske and Alfred D. Pruske, R.V., Inc., the further sum of $6,169.98, interest, and attorney's fees. Patricia Pruske Harden has not perfected an appeal from such judgment.

By three points of error appellant complains: (a) appellee has exercised an election of remedies by looking to other parties to satisfy its claim, even to the extent of securing final judgments against such other parties, thereby releasing appellant from his obligations; (b) the sale or disposition of the collateral was not conducted in a commercially reasonable manner, and therefore, appellee is not entitled to any recovery; (c) the court erred in granting judgment on behalf of appellee against appellant for that portion of the judgment represented by appellee's exhibits, 'Q' and 'R' (the Kroeger unit), in the amount of $12,388.73, for the reason that appellee did not make demand on appellant for the payment of the overdue installments before exercising its option of acceleration.

On January 24, 1972, appellant executed a floor plan agreement, security agreement, and a personal guarantee for the floor plan financing of motor homes by appellee. Pursuant to said agreements, appellee advanced credit to appellant for various motor homes, and in connection therewith, appellant executed numerous trust receipts and promissory notes, which are shown in the record as exhibits. After appellant incorporated his business as Alfred D. Pruske, R.V., Inc., additional personal guarantees were executed by Alfred D. Pruske on January 11, 1973, guaranteeing the payment of all debts of the business. Subsequently, appellant obtained a divorce from his wife, Patricia, but continued to operate the business. During the year 1973, appellant began falling behind in the payments; and after several demands for payment were made, appellant finally obtained possession of the various motor homes. In 1973, appellant also advanced credit to appellant for a used Kroeger motor home under an installment loan security agreement, and a promissory note. Appellant also became delinquent in the payments of this loan, and appellee thereafter obtained possession of this motor home.

At the time that appellee entered into the floor plan agreement appellee also required repurchase agreements to be executed by each of the manufacturers of the new motor homes before it would finance such motor homes. After repossession of the new motor homes demand was made on each manufacturer for repurchase of these motor homes, with some manufacturers honoring their repurchase agreements, with the amounts received from such manufacturers being applied to reduce the debt of appellant. In addition, judgments were taken against two manufacturers, Ute Liner and Sooner. No payments on those judgments have been made by such manufacturers.

Appellee sold some of the new motor homes at private sales with appellant given an opportunity to submit an equal or higher bid; which he did not do. Thereafter, after notifying appellant of its intention, appellee advertised the remaining new mobile homes and the used Kroeger motor home for sale by ads run in both of the leading newspapers in San Antonio for three days, with the motor homes being made available for inspection by any prospective purchaser from 12 a.m. to 3 p.m. for five consecutive days at Playland Park on Broadway. Appellant was given an opportunity to submit bids, but did not. After receiving bids, appellee accepted the highest overall bid. After liquidating all mobile homes by the above described method and applying all amounts received to the debt of appellant, appellee made demand on appellant for payment of the remaining unpaid balance, and thereafter brought suit in March of 1974.

We first consider appellant's point of error that appellee has released appellant from his obligations by exercising an election of remedies and securing final judgments against two of the manufacturers. Appellant cites and relies on the provisions of Section 9.501(a) of the Business and Commerce Code, which reads as follows:

(a) When a debtor is in default under a security agreement, a secured party has the rights and remedies provided in this subchapter and except as limited by Subsection (c) those provided in the security agreement. He may reduce his claim to judgment, foreclose or otherwise enforce the security interest by any available judicial procedure. If the collateral is documents the secured party in possession has the rights, remedies and duties provided in Section 9.207. The rights and remedies referred to in this subsection are cumulative.

Appellant concedes in his brief that the remedies provided a secured party in said article are cumulative, and that the doctrine of election of remedies is not applicable in situations where the secured party is seeking to satisfy his claim for any deficiency due to a default and subsequent sale of the collateral (see page 5 of appellant's brief). However, it is apparently his contention that while a secured creditor may first attempt to enforce his rights by one method, and if that proves unsuccessful, to pursue another, he should not be permitted to harass a debtor by simultaneously pursuing two or more of the several remedies available to him; that this constitutes a double-barrel attack, which is not proper; that in the instant case appellee somehow lost his rights against appellant by obtaining judgments against two of the manufacturers, Ute Liner and Sooner. It is also apparently appellant's contention that a satisfaction occurred in this case by the obtaining of these judgments, even though it is undisputed under the record that no payments have ever been received under such judgments.

We find no authority to support appellant's contention. The rule is set forth in 51 Tex.Jur.2d, § 288, at 557, as follows:

The remedies given the secured party upon default, including obtaining a judgment, foreclosing, or otherwise enforcing the security interest by available legal procedure, taking possession of the collateral, making direct collection from any account debtor or obligor on an instrument, disposing of the collateral, purchasing the collateral, or proposing to take the collateral in satisfaction of the obligation are expressly made cumulative under the Code. There is no necessity for the secured party to elect between remedies; he may take any permitted action or combination of actions .

See also Loiseaux, Default Proceedings Under the Texas Uniform Commercial Code, 44 Texas L.Rev. 702, 711 (1966), wherein it is stated:

Then in section 9--501(1) it is provided that after default the secured party has the rights and remedies given in part 5 of article 9, and those given in the security agreement; it provides also that the secured party may reduce his claim to judgment, foreclose, or otherwise enforce the security interest by any available judicial procedure. The concluding sentence of the subsection then proceeds to state: 'The rights and remedies referred to in this subsection are cumulative.' It would seem that the purpose of the Code is quite clear, namely, to abolish the doctrine of election of remedies when a security interest is enforced. The secured party is entitled to only one satisfaction, but he may seek it in a number of ways, even though they may presently be considered inconsistent.

We are unable to see how appellee's action in pursuing one of his cumulative rights and remedies against the manufacturers on their repurchase agreement, collecting on some and crediting such payments on appellant's debt, and in two instances obtaining judgments against certain manufacturers, is a harassment of the debtor, or amounts to a double-barrel attack upon the debtor. In actuality it is an aid and benefit to the debtor as the effect is to reduce his debt, and is specifically authorized by the Code.

Appellant's argument that the obtaining of a judgment against another party is a satisfaction of the debt is also without merit where such judgment has not been collected nor has any payment been made on it. The cases cited by appellant do not support such contention. See Armour Bros. Banking Co. v. Addington, 1 Ind.T. 304, 37 S.W. 100, 102 (1896), wherein it is said:

But a second judgment obtained upon the first is of no higher security than the first. Both should stand until the debt which is evidenced by them is fully paid off and satisfied. The first judgment is neither satisfied, merged, nor extinguished by a second judgment on the same cause of action, or by an affirmance thereof by a superior court. 'Satisfaction' is a technical term, and in its application to a judgment it means the payment of the money due...