Ray v. City Bank & Trust Co. of Natchez, Mississippi

• Decision Date: 09 May 1973
• Docket Number: Civ. No. 71-210.
• Citation: 358 F. Supp. 630
• Parties: Louis M. RAY, Plaintiff, v. CITY BANK & TRUST COMPANY OF NATCHEZ, MISSISSIPPI, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

358 F. Supp. 630

Louis M. RAY, Plaintiff, v. CITY BANK & TRUST COMPANY OF NATCHEZ, MISSISSIPPI, et al., Defendants.

Civ. No. 71-210.

United States District Court, S. D. Ohio, E. D.

May 9, 1973.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Gordon K. Bolon, Applegate, Bolon & Alban, Columbus, Ohio, for plaintiff.

Edgar A. Strause, Vorys, Sater, Seymour & Pease, Columbus, Ohio, for City Bank.

Bernard V. Fultz, Pomeroy, Ohio, for Sheriff Robert C. Hartenbach.

CARL B. RUBIN, District Judge.

A. STATEMENT OF THE CASE

This diversity action was instituted by the plaintiff, Louis M. Ray, a Louisiana resident, against The City Bank and Trust Company of Natchez, Mississippi, and Robert C. Hartenbach, Sheriff of Meigs County, Ohio. The complaint sounds in tort and alleges the wrongful attachment of plaintiff's oil drilling equipment. The jurisdiction of this Court is invoked under Title 28, United States Code Annotated, Section 1332. After non-jury trial conducted on December 14 and 15, 1972, and upon the pleadings, briefs and exhibits submitted by the parties, the Court, pursuant to Rule 52(a), Fed.R.Civ.P., enters the following findings of fact and memorandum opinion of law.

B. FINDINGS OF FACT

1. The Rig

The central piece of equipment involved in this matter is a mobile oil well drilling rig, Serial Number 5616. Plaintiff's first allegation is that the defendant bank did not have a security interest in this particular rig, and accordingly had no authority to attach it. In support of this proposition, plaintiff offered evidence that the Universal Supply Company, which sold him the rig and from whom the bank obtained its security interest, had two or three other rigs similar in make and description. We do not think that such evidence is alone sufficient to carry plaintiff's burden of proof. What is more, the defendant introduced substantial documentary evidence of its interest in the rig in question.

While the equipment is described in different terms in different documents, it is agreed that it was a Wilson Mogul Model 42 self-propelled drilling rig, equipped with a double drum draw works and a 90 foot Wilson derrick that the plaintiff owned and maintained in Ohio in 1971. Oil drilling equipment consists, however, of replaceable parts and appurtenances. From 1965 to 1970, the equipment was, at various times, mounted on different carriers and powered by different engines.

Prior to November of 1965, the rig in question, serial numbered 5616, was owned by one R. H. Read, Jr. On November 23, 1965, Mr. Read gave a security interest in the equipment to the C. I.T. Corporation to secure an indebtedness of $35,812.00. At that time the equipment was described as follows:

"Wilson Mogul double drum unit Model 42, Serial 5616, together with 90 foot derrick mounted on W. C. White four-axle truck carrier Model WC2464, Serial 486275, powered by White propane engine Model 39A."

(Exhibits 0-1, 0-2, 0-3, 0-4)

At some time between November of 1965 and January of 1968, the mounting was changed from a White carrier to a Champion carrier.

On January 23, 1968, an insurance policy issued by the United States Fire Insurance Company described the following equipment:

One (1) Wilson 42 Mogul double drum unit with 90 foot derrick and 671-N diesel engine mounted on and including International chassis C-100, National Pump No. C102330, and 1091 International diesel engine UPE2320.

This insurance policy is identified as Defendants' Exhibit X. It consists of fifteen separate sheets of paper, including correspondence, notations and endorsements of policies. Included in the papers of Exhibit X is a second description. This description is:

Wilson 42 Mogul double drum with 90 foot Wilson derrick and 671-N diesel engine, self-propelled tandem front end, tandem rear, 10:00 × 20 tires, rear wheels, hydraulic rasing sic rams. (emphasis added)

In tracing the history of this equipment, Exhibit X contains two items of substantial significance. The phrase, "hydraulic rasing rams," is used in future descriptions. The Court notes that "hydraulic rasing rams" is a misspelled reference to hydraulic raising rams, the equipment used in a mobile drilling rig to elevate the derrick to a vertical position.

Of further significance in Exhibit X is a photograph. While the policy at one point describes an International chassis and previously the equipment had been carried on a White chassis, the picture is of a Champion chassis and is identical to the equipment pictured in plaintiff's Exhibit 13. Exhibit 13 is a photograph of the plaintiff's rig, numbered 5616, at approximately the time of its attachment.

On September 13, 1968, the Universal Supply Company executed a security agreement¹ to City Bank and Trust Company in the following equipment:

Wilson 42 Mogul double drum with 90 ft. Wilson derrick and 671-N diesel engine, self-propelled, tandem front end, tandem rear, 10:00 × 20 tires, rear wheels, hydraulic rasing rams (emphasis added).

It is this security agreement upon which the defendant relies in this action.

It can be asserted that the equipment owned by R. H. Read, Jr., identified with Serial No. 5616, is not the same as the equipment upon which City Bank and Trust Company obtained a security agreement. The evidence, however, of Exhibit X with the picture of the equipment acquired by plaintiff and with the identical misspelled word in the description that is subsequently used in all security transactions by defendant, is such that the Court finds as a matter of fact that the Wilson 42 Mogul drilling rig acquired by plaintiff was covered by defendant's security agreement.

2. The Security Transaction

The transaction between Universal Supply Company, plaintiff's predecessor in title, and defendant City Bank and Trust Company is evidenced by Defendant's Exhibits B, C, D, E, and F. Defendant's Exhibit B is a security agreement for the sum of $91,783.77. It covers two separate drilling rigs, a Wilson 42 Mogul and an H30 Ideco self-propelled, plus collateral equipment for each rig. The description of the Wilson is identical to that contained in Exhibit X, to-wit: One Wilson 42 Mogul double drum with 90 foot Wilson derrick and 671-N diesel engine, self-propelled tandem front end, tandem rear, 10:00 × 20 tires, rear wheels, hydraulic rasing ram.

In the preparation of the financing statement, however, a significant omission is made in the description. In Exhibit C, which was filed in Adams County, Mississippi, Exhibit D, which was filed with the Secretary of State of Mississippi, Exhibit E, apparently filed with the Secretary of State of Austin, Texas, and Exhibit F, filed with the Secretary of State of Ohio, the identical error in description occurs. In each of these exhibits the equipment is described as follows:

One Wilson 42 Mogul double drum with 90 foot Wilson derrick and 671-N diesel engine.

This does not describe a self-propelled drilling rig. It describes instead, according to the custom of the industry, a stationary piece of equipment with a diesel engine to operate it. (R. 225 & 228)

A Wilson 42 double drum drilling rig with a 90 foot Wilson derrick and a 671-N diesel engine is a standard piece of equipment for oil well drilling. There are many such rigs in operation. Under the circumstances of this case, and for reasons which will be discussed more fully, we find that the description in the defendant's financing statement, containing as it did, no reference to self-propelling equipment, was insufficient to place the plaintiff on notice that the equipment he had purchased was covered by a security agreement.

3. The Attachment

Between December of 1968 and February of 1970, ownership of the equipment in question changed hands several times. On December 10, 1969, Universal Supply sold the rig and related equipment to the Ace Investments, Ltd. (whose president is the plaintiff), in consideration of which plaintiff paid Universal $40,000.00 in cash and released G. L. Fife, its president, from an antecedent personal obligation owing to him (Plaintiff's Exhibit 1; R. 87). On February 22, 1970, plaintiff personally purchased the equipment from Ace Investments and thereafter transported it to Ohio (Plaintiff's Exhibit 2). At no time prior to this sale was plaintiff aware that the equipment was subject to the City Bank's security interest, which had attached on September 13, 1968 (Defendants' Exhibit B).²

At some point prior to March 24, 1970, G. L. Fife, Jr. defaulted on his loan with the City Bank. The collateral for this loan was the Wilson rig and the separate Ideco rig, which had already been attached and sold. Feeling itself no longer secure, the bank, acting through its attorney in Ohio, initiated attachment proceedings against the Wilson rig in Meigs County. On March 24, 1970, the Sheriff of Meigs County, Ohio, was ordered to attach certain personal property, described as follows:

1-Wilson 42 Mogal Double Drum with 90' Wilson Derrick and 671-N Diesel Engine, self propelled Tandem front end, Tandem rear 10:00 × 20 tires rear wheels, Hydraulic rasing rams; 1500' 1" Drill Line; 3 Sheive shorty Brewster block & hook; 1 set hydraulic tongs (Hillman & Kelly); C-100 National Pump, S/N C-102330; J-2 Drilling Head; 2 3/8 Elevators; 2 7/8 Elevators; 2 7/8 Slips; 1091 Int. Engine Deisel, S/N UPE2320; H-30 Ideco Self-Propelled W/6110 GMC Engine W/300, 000#; Ideco Derrick & Trailer mounted sub-structor Serial # 114; 7¼ × 14 Gardner Denver Pump, Serial #108705; 1 set 671 G.M.'s Serial #5152825-R; 1 Three Sheive McKissit Block & Hook; 1 Type F Emsco Swivel; 1 12" Bewruster Rotary Powered & Waukesha Engine & Transmission; 1 45' Kelley Hose; 1 set Hy. Tongs; 1 7½ × 12 Steel Tool House; 1 10 K.W. Light Plant; 1 Dowell Triplex Hi-Pressure Pump s/220 Cummings Deisel Engine w/5-speed transmission and 3-speed transmission unitized w/chains & sprockets, bearing serial Nos. 74556 (pump) and 4000100 (engine) together with all equipment, parts,

...