White-Sellie's Jewelry Co. v. Goodyear Tire & Rubber Co.

• Decision Date: 08 March 1972
• Docket Number: WHITE-SELLIE,No. 588,588
• Citation: 477 S.W.2d 658,10 UCCRep.Serv. 888
• Parties: 10 UCC Rep.Serv. 888 'S JEWELRY CO., Inc., Appellant, v. The GOODYEAR TIRE & RUBBER CO., Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 658

477 S.W.2d 658

10 UCC Rep.Serv. 888

WHITE-SELLIE'S JEWELRY CO., Inc., Appellant, v. The GOODYEAR TIRE & RUBBER CO., Appellee.

No. 588.

Court of Civil Appeals of Texas,

Houston (14th Dist.).

March 8, 1972.

Van E. Wittner, Jr., Engel, Groom & Miglicco, Houston, for appellant.

Don Harris, Harris, Archer, Parks & Graul, Houston, for appellee.

BARRON, Justice.

This is a suit for conversion of two television sets. After the submission of evidence the trial court, sitting without jury, rendered judgment for plaintiff in the sum of $1,000.00, the amount stipulated as damages by the parties. From that judgment White-Sellie's Jewelry Store has perfected this appeal.

There appears to be no dispute as to the facts. In December of 1968, appellee Goodyear sold two television sets to Freddie J. Redding and Redding quickly resold them to appellant, a pawnshop and retail business. Any security interest in the sets retained by appellee was never recorded and appellant had no knowledge of such interest. Ralph Goldstein, president of appellant White-Sellie's, testified that he knew Redding and had conducted business with him in the past. Redding assured him the sets were not stolen and Goldstein never received any notification that the sets were stolen property.

After purchasing the television sets, appellant resold them. In the spring of 1969, Goodyear contacted Goldstein and demanded return of the sets. Goldstein replied that the sets had already been sold. Goodyear subsequently filed suit on June 26, 1969, seeking damages for conversion against appellant.

In this appeal appellant contends that there is no evidence to show that appellant repudiated appellee's right or title to the sets; that appellee claimed any right of possession while appellant held the sets; that appellee made demand upon appellant while the sets were in appellant's possession; that appellant had control over the sets when demand was made; or that appellant ever exercised Wrongful control of the two sets. Each of these points asserts that there is no evidence to support the trial court's implied findings.

In determining the legal sufficiency of evidence to support a judgment rendered by the trial court without the aid of a jury, in the absence of findings of fact and conclusions of law, only that evidence in support of the court's implied findings may be considered, and evidence which leads to a contrary finding must be disregarded. Bishop v. Bishop, 359 S.W.2d 869 (Tex.Sup.1962). The evidence supporting the theory upon which judgment impliedly is based need not be strong but only of some probative value. Seaman v . Seaman, 425 S.W.2d 339 (Tex.Sup.1968).

We note at the outset that no copy of the sales agreement between appellee and Redding appears in the record before this Court. Nor does the statement of facts reflect that the agreement was ever introduced into evidence at trial. Thus we have before us no instrument which reserves the security interest upon which appellee relies in seeking recovery for conversion. Nonetheless, appellant has not assigned as a point of error in its brief the lack of evidence of any security interest and consequently it has waived this point. See Getz v. Collins, 303 S.W.2d 818 (Tex.Civ.App.-Texarkana 1957, no writ). Both parties seem to have proceeded on the assumption that a valid security interest in appellee's favor does exist. And, during oral argument before this Court, both parties agreed that the sales agreement between appellee and Redding exists.

Appellant first asserts that appellee's failure to record its security interest renders that interest ineffective as against Goldstein, citing Tex.Bus. & Comm.Code Ann. sec. 9.302(a)(4) (1968), V.T.C.A. And, argues appellant, under Code sections 2.401, 2.403 and 2.702 Redding could pass title to one who, as Goldstein, purchases in good faith for value and without notice of any interest in appellee.

Section 9.302 does not exclude from its provisions a third person not a party to the transaction out of which the security interest arose. It says simply that no financing statement need be filed to perfect '(4) a purchase money security interest in consumer goods,' e. g., television sets. Moreover, sec. 9.306(b) provides, in part,

'. . . a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof by the debtor unless his action was authorized by the secured party in the security agreement or otherwise. . . .'

Comment 3 under that section notes that a security interest continues in collateral conveyed to a transferee in an unauthorized sale by the debtor. The comment expressly says that the transferee takes subject to the security interest and 'the secured party may . . . maintain an action for conversion.' We think, therefore, that appellee is entitled by the Code to bring the instant conversion suit.

Appellant's reliance upon sections 2.401, 2.403 and 2.702 is misplaced. Section 2.401 does not alter the rights and obligations of the parties declared elsewhere in the Code. Section 2.403 concerns only a naked sale of goods and does not speak to a situation involving goods in which is reserved a security interest. Section 2.403(d) directs attention to Chapter 9 of the Code for provisions regarding secured transactions such as the present one. Section 2.702 pertains to insolvency and for that reason is inapplicable here.

If appellant, as transferee of goods in which appellee had a security interest, is to find protection in the Code from appellee's claim, it must be under section 9.307. Subsection (a) of that section provides that a buyer in ordinary course of business takes free of a security interest. However, section 1.201(9) in defining 'buyer in ordinary course of business', specifically excludes pawnbrokers from that class. Moreover, it requires that the transferror, here Freddie J. Redding, must be 'in the business of selling' consumer goods such as those in question. This record will not sustain a conclusion that Redding was 'in the business' of selling television sets.

Section 9.307(b) concerns consumer goods and declares that any buyer takes free of a security interest 'if he buys without knowledge of the security interest, for value and for his own personal, family or household purposes' unless prior to the purchase the secured party has filed a financing statement covering those goods. Although appellee did not file a financing statement, we do not believe that the record demonstrates that appellant, or its president Ralph Goldstein, purchased the sets 'for his own personal, family or household purposes.'

Appellant has sought to bring itself within the definition of a 'buyer in ordinary...