Southview Corp. v. Kleberg First Nat. Bank, 863
| Decision Date | 20 June 1974 |
| Docket Number | No. 863,863 |
| Citation | 512 S.W.2d 817,15 UCCRep.Serv. 408 |
| Parties | 15 UCC Rep.Serv. 408 SOUTHVIEW CORPORATION, Appellant, v. KLEBERG FIRST NATIONAL BANK et al., Appellees. |
| Court | Texas Court of Appeals |
William R. Anderson, Jr., Sorrell, Anderson & Sorrell, Corpus Christi, for appellant.
Nelson R. Sharpe, Glusing & Sharpe, Kingsville, Shelby A. Jordan, Wood, Burney, Nesbitt & Ryan, Corpus Christi, for appellees.
This is a garnishment case. Southview Corporation filed a garnishment action against the Kleberg First National Bank claiming funds on deposit in said bank. Stonewall Bank intervened in the garnishment contending that two certificates of deposit, represented by the garnishee bank as deposits, were not subject to garnishment since Stonewall Bank had perfected a security interest therein and that such security interest had priority over the asserted garnishment lien. The case was tried to the court without a jury. The trial court entered judgment denying Southview's claim to the certificates of deposit. The findings of fact filed by the trial court are not contested by Southview Corporation.
The Kleberg First National Bank issued two certificates of deposit to Bishop Mobile Homes, Inc. Thereafter Bishop assigned these certificates of deposit to Stonewall in exchange for the release by Stonewall of certain mobile home titles held by Stonewall as security for debts than owing to it by Bishop. Stonewall took possession on the certificates of deposit pursuant to this assignment and a security agreement and maintained possession of the certificates of deposit until ordered to deliver them into the registry of the court.
Southview Corporation was the assignee of a judgment against Bishop. In order to attempt collection on the judgment Southview filed an application for writ of garnishment by which it sought funds held by the Kleberg First National Bank which belonged to Bishop. Kleberg Bank admitted that it was indebted to Bishop and tendered $140.43 into the court and answered that it had previously issued two certificates of deposit in the sum of $1,000.00 each to Bishop Mobile Homes. The garnishee bank informed the court that the original certificates of deposit were believed to be in the possession of Stonewall Bank. The original hearing of the garnishment suit was then recessed for the purpose of issuing a subpoena duces tecum ordering the Stonewall Bank to produce the two certificates of deposit. The court further ordered the issuance of a citation directed to Bishop. Bishop, although duly cited, failed to appear and wholly defaulted. The original certificates of deposit were admitted into evidence and leave was granted to Stonewall Bank to intervene in the suit.
Trial was had without the intervention of a jury resulting in a judgment for Southview in the amount of $140.43 and denial of its claim to the two certificates of deposit. The trial court filed findings to the effect that Bishop had assigned the certificates of deposit to Stonewall in exchange for the release of certain mobile home titles that had been held as security for debts then owing to Stonewall by Bishop; that at the time of the assignment, a security agreement was executed listing the certificates of deposit as collateral; that Stonewall took possession of certificates of deposit and maintained exclusive possession until they were deposited into the registry of the court; and that the terms of the security agreement entitled Stonewall to endorse the certificates of deposit as agent for Bishop and that the needed endorsement was provided by Stonewall.
The appellant asserts two points of error arguing that Southview's garnishment lien on the funds represented by the certificates of deposit were not subordinate and inferior to the possessory security interest of Stonewall. Additionally, the appellant contends that the trial court erred in concluding that the certificates of deposit do not come within the exclusion provision of Chapter 9 of the Texas Business and Commerce Code, V.T.C.A.
Appellant asserts that a certificate of deposit is a transaction specifically excluded from Chapter 9 of the Texas Business and Commerce Code. It argues that a security interest cannot be perfected in a certificate of deposit since Code § 9.104(11) provides:
'This chapter does not apply . . . (11) to a transfer in whole or in part of any of the following: any claim arising out of tort; Any deposit, savings, passbook or like account maintained with a bank, savings and loan association, credit union or like organization.' (Emphasis added.)
Appellant argues that there are various reasons for the exclusions of the transactions listed under § 9.104. For instance, under this section in comment 7 it states:
Continuing, the appellant asserts that a certificate of deposit is a 'deposit maintained with a bank' and is defined in Chapter 3 on commercial paper as 'an acknowledgment of a bank of receipt of money with an engagement to repay.' Appellant says that although the word 'deposit' is not used in defining this term, this, of course, does not preclude it from being a deposit in the bank.
Section 3.104 of the Uniform Commercial Code reads in part as follows:
' § 3.104 Form of Negotiable Instruments; 'Draft'; 'Check'; 'Certificate of Deposit'; 'Note' . . . (b) A writing which complies with the requirements of this section is . . . (3) a 'certificate of deposit' if it is an acknowledgment by a bank of receipt of money with an engagement to repay it; . . . (c) As used in other chapters of this title, and as the context may require, the terms 'draft', 'check', 'certificate of deposit' and 'note' may refer to instruments which are not negotiable within this chapter as well to instruments which are so negotiable.'
Therefore, under the Commercial Code, a certificate of deposit constitutes a form of 'instrument' which may or may not be negotiable. As applicable to the case at bar, Code § 9.105 reads as follows:
' § 9.105 Definitions and Index of Definitions
(a) In this chapter unless the context otherwise requires:
(7) 'Instrument' means a negotiable instrument (defined in Section 3.104) . . . or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary indorsement or assignment;'
Thus, the classification of a certificate of deposit as an instrument in § 3.104 is made applicable to ...
To continue reading
Request your trial
-
FDIC v. Eagle Properties, Ltd.
...or at a time which must certainly arrive. Strom v. Dickson, 360 S.W.2d 823 (Tex.Civ.App.— Waco 1962, no writ); Southview Corporation v. Kleberg First National Bank, 512 S.W.2d 817 (Tex.Civ.App.—Corpus Christi 1974, no writ). Every note, negotiable or nonnegotiable, must be a contract before......
-
In re Amco Products, Inc.
...Citizens National Bank of Orlando v. Bornstein, 374 So.2d 6, 27 U.C.C.Rep. 242 (Fla. 1979); Southview Corp. v. Kleberg First National Bank, 512 S.W.2d 817, 15 U.C.C. Rep. 408 (Tex.Civ.App.1974); and First National Bank in Grand Prairie v. Lone Star Life Ins. Co., 524 S.W.2d 525, 17 U.C.C.Re......
-
Wightman v. American Nat. Bank of Riverton
...First National Bank in Grand Prairie v. Lone Star Life Ins. Co., Tex.Civ.App., 524 S.W.2d 525 (1975); Southview Corp. v. Kleberg First National Bank, Tex.Civ.App., 512 S.W.2d 817 (1974); and Howick v. Bank of Salt Lake, 28 Utah 2d 64, 498 P.2d 352 (1972). Upon analysis it would seem to be t......
-
Matter of Van Kylen
...deposit' if it is an acknowledgment by a bank of receipt of money with an engagement to repay it."); Southview Corp. v. Kleberg First Nat'l Bank, 512 S.W.2d 817, 819-20 (Tex.Civ. App.1974) ("The promissory note theory of certificate of deposit has been incorporated into the Code. . . ."). I......