Sannerud v. First Nat. Bank of Sheridan

• Decision Date: 06 November 1985
• Docket Number: No. 85-55,85-55
• Parties: 42 UCC Rep.Serv. 751 Chrysanthe SANNERUD, Appellant (Defendant), Edward N. Coleman, Janice E. Coleman, Thomas A. Sawyer, and Loeva M. Sawyer, (Defendants), v. FIRST NATIONAL BANK OF SHERIDAN, Wyoming, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 1236

708 P.2d 1236

42 UCC Rep.Serv. 751

Chrysanthe SANNERUD, Appellant (Defendant) Edward N. Coleman, Janice E. Coleman, Thomas A. Sawyer, and Loeva M. Sawyer, (Defendants), v. FIRST NATIONAL BANK OF SHERIDAN, Wyoming, Appellee (Plaintiff).

No. 85-55.

Supreme Court of Wyoming.

Nov. 6, 1985.

James T. Anest of Marken & Anest, Casper, for appellant.

Tom C. Toner of Redle, Yonkee & Arney, Sheridan, for appellee.

Before THOMAS, C.J., ROSE, ^* ROONEY, and BROWN, JJ., and RAPER, J., Retired.

RAPER, Justice, Retired.

The First National Bank of Sheridan, Wyoming (appellee) filed a complaint to foreclose a mortgage on real property owned by the debtors, Edward and Janice Coleman, and to foreclose its security interest in personal property also owned by the Colemans. Chrysanthe Sannerud (appellant) was joined in the action. The district court granted the appellee's motion for summary judgment, determined that appellee's mortgage and security agreement were first and valid liens on the property superior to the claim of appellant, and ordered the property sold to satisfy the debt owed by the Colemans to appellee. Debtors Colemans and others joined permitted a default to be entered against them. The appellant, who claims to have a security interest in the personal property, has appealed the summary judgment.

The appellant visualizes the issues to be: (1) Did material issues of fact remain which precluded summary judgment; and (2) was appellee's security interest superior to that of appellant. The appellee frames its concept of the issues to be: (1) Is appellant's security agreement which identifies only an intangible interest ("equity" in a contract for deed) sufficient to perfect a security interest in tangible personal property which is subject to appellee's security agreement; and (2) does that description give sufficient notice to appellee that appellant claims a security interest in a class of collateral not described in appellant's security agreement.

We will affirm.

In October 1982, appellant filed with the county clerk for Sheridan County a security agreement and financing statement entered into by debtors Colemans and appellant, as the secured party, on June 1, 1982. The collateral to secure appellant was described in the instrument as:

"$167,500.00 equity in Energy Inn, Sav-Mor Mini Mart and Sav-Mor Service Station on Contract for Deed between Thomas A. and Loeva M. Sawyer and Edward M. and Janice E. Coleman dated June 1, 1982 in escrow at First National Bank of Sheridan, 2 N. Main St., Sheridan, Wyoming 82801. All proceeds from sale of house [and] acreage in Casper, Wyo. owned by Edward [and] Janice Coleman will be paid to escrow at Hilltop Nat'l Ba[nk]." ¹

The Sawyers were sellers and the Colemans were buyers. They are also the defaulting parties to the district court action and not parties to this appeal.

The indebtedness from the Colemans to appellant arose from loans and brokerage fees due appellant from the Colemans. Appellant, as a broker, participated in the sale of the Energy Inn Motel, Sav-Mor Mini Mart and Sav-Mor Service Station. The Colemans agreed, in the standard purchase offer, acceptance and receipt executed by the Colemans and the Sawyers, to pay the Sawyers $1,082,500 for the properties which is the balance after payment of $10,000 as a deposit, $70,000 loaned to the Colemans by the appellant, and a credit of $87,500 which the Colemans agreed to pay as broker's fees to the broker "on terms." Apparently appellant as broker also advanced the $10,000 deposit in that the total of the deposit, loan and brokerage fees equal the amount of the Colemans' note to appellant in the sum of $167,500, the amount of indebtedness set out in the security agreement given by the Colemans to appellant.

While the "Contract for Deed" referred to in the security instrument does not appear in the record, its terms are set out in the escrow instructions to appellee bank dated June 1, 1982, executed by the Colemans and the Sawyers, to which appellant's security agreement and financing statement refers. It was there described as an "Agreement for Warranty Deed and Contract for Sale of the Energy Inn Motel, Sav-Mor Mini Mart and Sav-Mor Service Station Properties."

The terms of the agreement and contract as in the escrow instructions recited set out the rate of payment beginning July 1, 1982, along with other provisions not here involved. A relevant provision, however, is that at the date of such agreement and contract, the "subject property is currently mortgaged to the First National Bank of Sheridan, Wyoming, and the terms of said Promissory Note and Mortgage are subject to renegotiation on September 23, 1983." Payments provided by the agreement and contract were, according to the escrow instructions, to be paid to appellee bank and first applied to the payment of the mortgage "presently on the subject property."

On June 8, 1983, the Colemans executed a promissory note to appellee in the sum of $500,000 secured by a real property mortgage and security interest in the personal property of the three businesses sold as a unit of the same date. The security agreement and financing statement had attached to it a detailed and itemized list of the inventory, supplies, machinery, equipment, furniture and fixtures covered. The real estate mortgage was recorded with the county clerk on June 20, 1983. The instrument covering personalty was in the combined form of a security agreement and financing statement and filed with the county clerk on June 22, 1983.

As of December 3, 1984, the Colemans owed the appellee $499,337.13 with interest at 12 percent from September 16, 1983, on the foregoing described secured debts. There are other secured obligations of the Colemans to the appellee claimed in the district court action, but they are not in issue here, so we are not concerned with them.

Appellant, in her "Affidavit in Opposition to Motion for Summary Judgment," claims that the security agreement and financing statement to her, filed on October 25, 1982, was executed by the Colemans and appellant to secure payment of the Colemans' note in the principal sum of $167,500 and affected only the personalty of the Energy Inn Motel, Sav-Mor Mini Mart and Sav-Mor Service Station. Appellant claims no security interest in the real property subject to appellee's mortgage. She further asserts that the appellant was as a result of the 1982 security agreement filing under an obligation to inquire of appellant what the instrument was intended to cover by way of collateral. Appellant argues that if such inquiry had been made, appellant would have informed appellee that the parties intended the security agreement to cover the personal property included in appellee's security agreement, and the court should hear evidence to that effect rather than granting summary judgment.

The district court in its judgment found that the appellee's security interest in the personalty described in the security agreement and financing statement was as a matter of law a first and valid lien superior to the lien and claims of appellant. We agree.

Appellant argues as an issue that the summary judgment was precipitous in that there were genuine issues of material fact left to be decided as required by Rule 56, W.R.C.P. It is urged by her that Exhibit A was missing from the instrument entitled "Security Agreement and Financing Statement" attached to the affidavit offered by appellee in support of its motion for summary judgment. This position is frivolous in that there is attached an inventory of personal property of the motel, mart, and service station. The same inventory is attached to the same instrument as an exhibit to the complaint filed in the case and served on appellant. It is true that the inventory attached is marked "Exhibit 'B' " rather than Exhibit A, but there is only one exhibit referred to in and forming a part of the security agreement and financing statement. W.S. 34-21-951(e) anticipates small, inconsequential inaccuracies: "A financing statement substantially complying with the requirements of this section is effective even though it contains minor errors which are not seriously misleading." We construe the mislabeling of the attached exhibit as "B" rather than "A" to be minor and not misleading.

Appellant's answer which she filed pro se has attached the security agreement and financing statement given by the Colemans to her upon which she relies for her claim. Such agreement and statement refers to the contract between the Colemans and Sawyers dated June 1, 1982, in escrow at appellee bank. She also includes as an exhibit to her answer a copy of the escrow instructions. Those escrow instructions refer to personal property being part of the transaction.

Aside from those flags of verification of undisputed facts, we are not convinced that there was even a need to have such an inventory attached. A generic description of personal property is sufficient for a security agreement if the description is adequate to make possible identification by inspection. Eggeman v. Western National Bank, Wyo., 596 P.2d 318 (1979). Appellee did more than required in its filing by...