Kelman v. Bohi

550 P.2d 671, 27 Ariz. App. 24, 1976 Ariz. App. LEXIS 531
CourtCourt of Appeals of Arizona
DecidedJune 10, 1976
Docket1 CA-CIV 2618
StatusPublished
Cited by8 cases

This text of 550 P.2d 671 (Kelman v. Bohi) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kelman v. Bohi, 550 P.2d 671, 27 Ariz. App. 24, 1976 Ariz. App. LEXIS 531 (Ark. Ct. App. 1976).

Opinion

*28 EUBANK, Judge.

This appeal raises as its primary issue the propriety of the trial court’s granting of a partial summary judgment immediately prior to trial, on a portion of the damage which appellees sought. Rules 56 and 54(b), Rules of Civil Procedure, 16 A.R. S., are analyzed with regard to this issue. 1

The Bohis, appellees, were the owners of $35,500 worth of bearer bonds issued by the Evening Light Crusade for Christ, Inc. Jack and Alice Kelman, appellants, owned the Arizona Ranch House Inn at which Jerome Joseph, a friend of Bohi, was a resident. Joseph had represented Jack Kelman in occasional business dealings.

Bohi gave Joseph some of his bearer bonds in an attempted sale of them to Kel-man. Kelman took the bonds from Joseph and held them to determine whether they would be redeemable When he found that they were good, he refused to pay for or return them to Bohi.

According to Kelman, Joseph owed several thousand dollars to Kelman and to the hotel, and Joseph offered the bearer bonds, representing them as his own, in satisfaction of his debts. Kelman accepted the bonds in satisfaction of Joseph’s debts to him.

The Bohis filed a complaint seeking relief for the loss of the bonds alleging fraud by Joseph, conversion by Kelmans, conversion by Joseph, conspiracy to defraud by both Joseph and Kelmans, and wrongful detention by Kelmans. Kelmans answered, denying most of the allegations but admitting ownership and' redemption of certain of the bonds, and they cross-claimed against Joseph.

Prior to the jury trial, Bohis moved for “partial summary judgment” against the Kelmans. That motion was granted, and later, following the trial, the jury returned its verdict in favor of the Bohis. The Kel-mans have appealed and raise numerous questions on appeal.

I. THE PARTIAL SUMMARY JUDGMENT

Four of the issues raised by the Kelmans in this appeal concern the propriety of the “partial summary judgment.” 2

A. The pledge defense

The Bohis interpreted appellants’ defense to be a pledge defense. Appellants admitted that Joseph owed them and their corporation $11,001.56 and that Joseph had paid them $10,313.03, and thus an amount of $688.53 remained unpaid by Joseph. Before the trial, appellants redeemed the bonds for $18,242.40. The Bohis thus moved for a partial summary judgment in the amount of $17,553.87, representing the difference between the $18,242.40 redeemed by the Kelmans' and the $688.53 still owed by Joseph. As noted earlier, this motion was granted.

Appellants disagreed with this characterization of their defense. They said that the facts “could very well be interpreted as creating a security interest, but they could also be interpreted as being an absolute sale with an option back.”

We disagree. Both parties rely upon a document executed by Joseph which reads in part:

I, Jerome Joseph, do hereby agree that if Jack Kelman does not have, at the time of 3:00 P.M. February 1st, 1972, all money due and owing him by me, I will forfeit all bonds in his possession.

Language of forfeiture is inconsistent with the creation of an option. An option is simply an agreement which gives the op-tionee the power to accept an offer for a *29 limited time. The option expires when the time passes with no acceptance having been made; there is no “forfeiture” of the subject property to the optionor. This document indicates clearly to us that the parties intended to create a security, or pledge, relationship and that, consistent with such a relationship, Joseph had a right to redeem the bonds. We are not persuaded by appellants’ transcript references that a sale was intended, nor does the evidence support this theory.

Therefore, in our opinion the trial court was correct in characterizing the appellants’ possession of the bonds as a pledge, and appellants’ response to appellees’ motion for summary judgment was insufficient to preclude summary judgment on that basis.

We hold also that the court’s view of the law, concerning the disposition of the excess of the amount pledged over the amount owed, was correct. Both A.R.S. §§ 44-3148 (B) and 44-3150(B) [UCC §§ 9-502 and 9-504] state, in part, “If the security agreement secures an indebtedness, the secured party must account to the debtor for any surplus. . . .’’Of course, where the creditor is in possession of the collateral, no written security agreement is required. “Creditor’s possession satisfies 9-203 [A. R.S. § 44-3116] and the oral understanding on the security aspects satisfies 9-204’s [A.R.S. § 44-3117’s] agreement requirement.” White and Summers, Uniform Commercial Code § 23-3 (1972). The trial court thus properly determined that the surplus from the redemption of the bonds was not the Kelmans’.

Appellants claim that the statute which applies to this set of facts is A.R.S. § 44-3151 (B) [UCC § 9-505(2)]. This section allows a secured party in possession to retain the collateral in satisfaction of the obligation, provided that written notice of the proposed retention is sent to the debtor. Appellants’ response to the motion for summary judgment gave no indication that the notice requirement of A.R.S. § 44-3151(B) had been complied with, and we find no indication of compliance elsewhere in the record. Since no controverting facts were developed to establish that A.R.S. § 44-3151 (B) might apply, the court was correct in following those sections which clearly did apply to the facts.

B. No genuine issues of material fact

Appellants also argue that genuine issues of material fact existed, which precluded the granting of the summary judgment. Without going into laborious detail, we find that no genuine issues of material fact existed. First, appellants contend that the issue of ownership of the bonds was never established clearly. We find that it was clear from the record that the appellants had only a pledgee’s right of possession and that the issue of ownership (as between Joseph and the appellees) was not relevant in the summary judgment against appellants.

Second, appellants argue that it was not clearly established that they were not bona fide purchasers of the bonds. In view of the determination that appellants were pledgees, we fail to see the importance of this issue. If they were bona fide purchasers, they were purchasers solely to the extent of the amount secured by the pledge. McCune v. Dynamics Research, Inc., 8 Ariz.App. 13, 442 P.2d 550 (1968).

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Bluebook (online)
550 P.2d 671, 27 Ariz. App. 24, 1976 Ariz. App. LEXIS 531, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kelman-v-bohi-arizctapp-1976.