Rushton v. U. M. & M. Credit Corp., 5--4741

Decision Date25 November 1968
Docket NumberNo. 5--4741,5--4741
Citation434 S.W.2d 81,245 Ark. 703
Parties, 5 UCC Rep.Serv. 1078 Dr. Joe F. RUSHTON, Appellant, v. U. M. & M. CREDIT CORPORATION, Appellee.
CourtArkansas Supreme Court

Warren & Bullion, Little Rock, for appellant.

W. D. McKay, Magnolia, and Rose, Meek, House, Barron, Nash & Williamson, Little Rock, for appellee.

FOGLEMAN, Justice.

Dr. Joe F. Rushton has appealed from a judgment in favor of U. M. & M. Credit Corporation for the balance due upon an installment note, representing the balance of the purchase price of a piece of equipment called a Loggers Yardster. The purchase was made on August 21, 1964 from Taylor Machine Works. The sale and purchase were on a conditional sale contract, dated on the date of sale, and reciting a purchase by 'the undersigned.' Throughout the contract, the purchaser is referred to by that designation only. The name of Numark Manufacturing Company was signed by John J. Drew, Vice President and General Manager, on lines designated for 'Signature of Purchaser.' Immediately above the name of Numark Manufacturing Company appeared the signature 'Joe F. Rushton, M.D., Trustee.'

Attached to this contract was a promissory note of the same date for the sum of $12,471.58, the balance of the purchase price for the equipment after credit was given for a trade-in allowance. The note was signed in the lower right-hand corner by Joe F. Rushton, Trustee, and by Numark Mfg. Co., Inc. by Mr. Drew as Vice President and General Manager. Taylor Machine Works assigned the contract to U. M. & M. Credit Corporation by assignment printed on the reverse side of the contract and dated August 21, 1964. The note was also endorsed for Numark by its controller. A letter transmitting the conditional sales contract and note to the credit corporation bore the same date. It was signed for the Taylor Machine Works by its controller. A copy of a letter from Taylor Machine Works to the Secretary of the State of Arkansas forwarding a financing statement on the contract was enclosed with the letter to appellee. In its letter Taylor advised appellee that the evidence of filing a financing statement would be furnished when received. On August 24, 1964, U. M. & M. mailed its check for.$10,850.27 to Taylor Machine Works for the purchase of the contract and note.

Numark filed bankruptcy proceedings after having made some payments on the note. After default, appellee accelerated the unpaid balance of the note and filed a claim as a secured creditor in the bankruptcy proceedings. The claim was denied because a copy of the financing statement had not been filed in Columbia County where Numark did business. (See Ark.Stat.Ann. § 85--9--301(3) (Add.1961).) Appellee then filed this suit against Dr. Rushton who defended upon the ground that he was released by reason of the fact that appellee had impaired the collateral for the instrument through failure to properly effect a security interest by filing the financing statement in Columbia County.

The parties entered into stipulations to the following effect:

1. On August 21, 1964, Rushton and Numark purchased the equipment from Taylor Machine Works.

2. Rushton and Numark executed their promissory note in evidence of their agreement to pay the unpaid balance of the purchase price in monthly installments.

3. Rushton signed the contract and note as 'Joe F. Rushton, Trustee,' but did not indicate the trust for which he was signing or undertake to limit his personal liability.

4. For value received, Taylor Machine Works sold the note to U. M. & M. Credit Corporation and the latter acquired the same for value in good faith without notice that it was overdue or had been dishonored, or of any defense against or claim to it on the part of any person.

5. A financing statement pursuant to the Uniform Commercial Code was prepared by Taylor Machine Works and executed by it, Numark and Rushton. A copy of this statement was filed in the office of the Secretary of the State of Arkansas on August 25, 1964. Taylor Machine Works failed to file a copy in the office of the Circuit Clerk of Columbia County--the only county in which either Rushton or Numark had a place of business.

6. That Henry Bassi, if present, would testify under oath that:

a. He is Assistant Manager of the Memphis Office of appellee;

b. appellee is no way participated in the filing of the 'Financial Statement';

c. on August 24, 1964, appellee purchased the note and contract and mailed its check to Taylor Machine Works, and at that time appellee assumed the financing statement had been properly filed.

Bassi testified, on interrogatories, that the note and contract were received by appellee on August 24, 1964, the date of the purchase by it. He admitted that no one in U. M. & M. Credit Corporation, either before or after purchase of the note and contract, made any investigation to determine if the conditional sale contract had been filed so as to perfect a security interest under the Commercial Code.

In rendering judgment, the circuit judge made the following findings:

'The plaintiff is an innocent holder in due course of the instrument sued upon;

The plaintiff has not unjustifiably impaired any collateral for the instruments which were given by or on behalf of the defendant or any person...

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26 cases
  • Schmuckie v. Alvey, 87-SC-670-DG
    • United States
    • United States State Supreme Court — District of Kentucky
    • October 6, 1988
    ...647 S.W.2d 625 (Mo.App.1983); Southwest Florida Production v. Schirow, Fla.App., 388 So.2d 338 (1980); Rushton v. U.M. & M. Credit Corporation, 245 Ark. 703, 434 S.W.2d 81 (1968).8 J. White and R. Summers, Uniform Commercial Code, (2d ed. 1980) pp. 524-525 (Footnote ...
  • Bissonnette v. Wylie
    • United States
    • Vermont Supreme Court
    • June 3, 1994
    ...approach, discharging a comaker under § 3-606 without any showing that the comaker was a surety. See, e.g., Rushton v. U.M. & M. Credit Corp., 245 Ark. 703, 434 S.W.2d 81, 83 (1968) ("any party to the instrument" is broad enough to include all makers under § 3-606); Southwest Florida Prod. ......
  • Fed. Deposit Ins. Corp. v. Blue Rock Shop. Center
    • United States
    • U.S. District Court — District of Delaware
    • June 29, 1983
    ...Beneficial Co. of New York, Inc. v. Husner, 82 Misc.2d 550, 369 N.Y.S.2d 975, 977-78 (N.Y.Supr.1975); Rushton v. U.M. & M. Credit Corp., 245 Ark. 703, 434 S.W.2d 81, 83 (Ark.1968). This conclusion is supported by the Delaware Study Comment 1 to Section 3-606 which provides that a "latent su......
  • Borley Storage and Transfer v. Whitted
    • United States
    • Nebraska Supreme Court
    • March 3, 2006
    ...647 S.W.2d 625 (Mo.App.1983); Southwest Florida Production v. Schirow, 388 So.2d 338 (Fla.App.1980); Rushton v. U.M. & M. Credit Corp., 245 Ark. 703, 434 S.W.2d 81 (1968). Although this court has not specifically addressed this split in authority, we implicitly followed the majority view th......
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