Vacura v. Haar's Equipment, Inc., ALLIS-CHALMERS
| Decision Date | 08 March 1985 |
| Docket Number | ALLIS-CHALMERS,No. C8-83-990,C8-83-990 |
| Parties | 40 UCC Rep.Serv. 1493 Jerald W. VACURA, et al., Appellants, v. HAAR'S EQUIPMENT, INC., et al., Defendants, Borg-Warner Acceptance Corporation, d.b.a. Borg-Warner Leasing, Appellants.CREDIT CORPORATION, et al., defendants and third-party plaintiffs, Respondents, v. Jim POHLMAN, Third-Party Defendant,CREDIT CORPORATION, et al., defendants, third-party plaintiffs and fourth-party plaintiffs, Respondents, v. Harry MARKS, Fourth-Party Defendant. |
| Court | Minnesota Supreme Court |
1. Authority may be inferred when an agent regularly exercises some power not expressly given to him and the principal, knowing of the practice, tacitly sanctions its continuance.
2. Under Minn.Stat. § 336.9-318(3) (1984), notification of an assignment will not cut-off the account debtor's right to pay his original creditor unless the debtor is also explicitly directed to make payment to the assignee.
3. When a secured party consents to the sale of the collateral, the collateral is transferred free of the claims of the secured party even though consent was conditioned on the debtor remitting the proceeds of the sale to the creditor and the proceeds were not remitted.
4. It is not the subjective intent of the grantor of a security interest but his manifest intent which is determinative of the validity of the security interest.
5. The "security interest created by his seller" as used in Minn.Stat. § 336.9-307(1) (1984), refers only to a security interest given by the seller as debtor and does not include any other security interest even though it was created in an agreement to which the seller was a non-debtor party.
6. It is impermissible for a judge to issue any order relating to the merits after he has removed himself from the matter.
Bruce E. Goldstein, St. Paul, for Vacura.
Rolland Roers, Minneapolis, for Borg Warner.
Charles Zierke, Fairmont, for Allis-Chalmers.
Considered and decided by the court en banc without oral argument.
Jerald and Karen Vacura and Borg-Warner Acceptance Corporation appeal from an order of the Jackson County District Court awarding Allis-Chalmers Credit Corporation summary judgment in the amount of $66,017.35 against the Vacuras and from an earlier order summarily declaring that Allis-Chalmers holds a security interest, superior to the interest of any other party, in a farm tractor and disc. We reverse and remand.
Haar's Equipment, Inc., was the Allis-Chalmers dealer in Jackson, Minnesota. Allis-Chalmers Manufacturing Company supplied to Haar's its equipment and parts inventory pursuant to a floor plan; Allis-Chalmers Credit Corporation financed Haar's retail installment sales; and Allis-Chalmers Distribution Service Corporation owned 200 shares of Haar's preferred stock and held irrevocable voting proxies for all other outstanding shares, both common and preferred. An Allis-Chalmers employee was a director of Haar's.
In November of 1978 Jerald Vacura, a Lakefield farmer, told Jim Pohlman, a Haar's salesman, that he wished to enter into a lease of an Allis-Chalmers tractor and other farm implements. They agreed that Vacura could have possession of the model 8550 tractor and a disc while Pohlman attempted to find a lessor--someone who would buy the equipment and lease it to Vacura. When, however, Allis-Chalmers discovered the tractor and disc were not at the dealership, as required by the floor plan agreement, it insisted that the equipment either be paid for or returned to Haar's. In order to keep the equipment on his farm, Jerald Vacura signed a retail installment contract dated January 2, 1979, in which he agreed to buy and grant Haar's security interest in the tractor and disc. On the face of the contract, in handwriting, Jerald Vacura is identified as the buyer and Haar's Equipment, Inc., is identified as the seller. The name and logo of Allis-Chalmers Credit Corporation is printed in the upper right hand corner of the form and this printed legend appears in a lower corner:
ACCEPTED and assigned to the Holder under assignment number (3) on the reverse side of this contract on ______________, 19____.
Although the assignment number has been filled in, the date has not. At the same time Vacura signed a Uniform Commercial Code financing statement in which Haar's is named as the secured party. On January 3, 1979, the handwritten financing statement was filed. In that statement Allis-Chalmers Corporation is identified, in typewritten form, as the assignee of the secured party.
Before a lessor was found, the first payment on the retail installment contract, $14,499, came due. On or about May 2, 1979, Vacura paid Haar's $20,799. Haar's did not transmit that payment to Allis-Chalmers but remitted only $410.84, representing two months' interest, and secured a two-month extension of the due date for the first payment. Allis-Chalmers was aware when it granted the extension that Haar's and Vacura were attempting to negotiate a lease agreement and that the equipment was to be paid for when the lease was arranged.
When Pohlman's attempts to arrange a lease proved unsuccessful, he enlisted the services of Harry Marks, an independent lease broker, who arranged a lease from Borg-Warner. Borg-Warner was to purchase the farm equipment from Haar's and to lease it to the Vacuras for a term of seven years. The parties executed the lease for the tractor, disc, and other equipment and a U.C.C. financing statement in which the Vacuras were named as lessees and Borg-Warner was designated as lessor. To secure their performance of the lease, Jerald and Karen Vacura also executed a second mortgage on a parcel of real estate.
On September 26, 1979, Borg-Warner's branch manager, Hugh Schultz, delivered a $120,000 check to Haar's in payment of the total cash purchase price for the tractor and disc and three other pieces of equipment also listed on Haar's dealer's retail purchase order and included in the lease between Borg-Warner and the Vacuras. At the dealership Schultz was introduced to two Allis-Chalmers employees who said they had been waiting for Schultz and asked what had taken so long. Although he did not otherwise discuss the transaction with them, Schultz believed the Allis-Chalmers representatives had been waiting for the funds he was delivering. On receipt of the Borg-Warner check Haar's did not remit the balance due Allis-Chalmers as assignee of the retail installment contract but made only a $14,744 payment on the account.
By a letter dated February 12, 1980, Allis-Chalmers instructed Vacura not to make any future payments under the retail installment contract to Haar's and to send payments to Allis-Chalmers. Haar's was in bankruptcy. The Vacuras, who had been paying Borg-Warner pursuant to the lease, instituted this action to determine their rights and the rights of Allis-Chalmers, Borg-Warner, and Haar's in the tractor and disc and to enjoin Allis-Chalmers from foreclosing or repossessing the equipment. Allis-Chalmers asserted a security interest in the equipment and counterclaimed for the unpaid balance of the retail installment contract.
On cross-motions for summary judgment, the district court declared that Allis-Chalmers holds a security interest, superior to the interest of any other party, in the tractor and disc. Subsequently, the trial court ordered summary judgment awarding Allis-Chalmers the sum of $66,017.35 representing the balance due it under the retail installment contract, against both Jerald and Karen Vacura.
Summary judgment may be granted only if, after taking the view of the evidence most favorable to the nonmoving party, the movant has clearly sustained his burden of proving that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Although summary judgment is intended to secure a just, speedy, and inexpensive disposition, it is not intended as a substitute for trial where there are fact issues to be determined. Sauter v. Sauter, 244 Minn. 482, 70 N.W.2d 351 (1955). The inquiry of the trial court in its consideration of a motion for summary judgment is whether or not any genuine issues of material fact exist, not how such issues should be resolved. Hinrichs v. Farmers Cooperative Grain & Seed Association, 333 N.W.2d 639, 641 (Minn.1983).
A careful scrutiny of the record before us, including the affidavits, depositions and exhibits contained in the file, leads us to the conclusion that the trial court erred in granting summary judgment. We have frequently held that the existence of an agency relationship is a question of fact. White v. Boucher, 322 N.W.2d 560, 566 (Minn.1982); PMH Properties v. Nichols, 263 N.W.2d 799, 802 (Minn.1978). And we have held that the existence of an agency relationship may be proved by circumstantial evidence of a course of dealing between the two parties. A. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d 285, 290 (Minn.1981). On this record we cannot hold that, as a matter of law, the plaintiff's assertion that Haar's was Allis-Chalmer's agent is baseless.
That Allis-Chalmers owned preferred shares of Haar's, held...
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