The Liberty National Bank & Trust Company of Oklahoma City, a National Banking Corporation v. Acme Tool Division of the Rucker Company

540 F.2d 1375
CourtCourt of Appeals for the Tenth Circuit
DecidedSeptember 27, 1976
Docket75-1422
StatusPublished
Cited by54 cases

This text of 540 F.2d 1375 (The Liberty National Bank & Trust Company of Oklahoma City, a National Banking Corporation v. Acme Tool Division of the Rucker Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
The Liberty National Bank & Trust Company of Oklahoma City, a National Banking Corporation v. Acme Tool Division of the Rucker Company, 540 F.2d 1375 (10th Cir. 1976).

Opinion

WILLIAM E. DOYLE, Circuit Judge.

This is an interpleader action brought pursuant to 28 U.S.C. Section 1335, in which one Hazel Bailey has asserted a counterclaim against appellant Liberty Bank, the essence of which is that Liberty Bank conducted sales of property in a commercially unreasonable manner to her injury and damage.

The original controversy commenced in 1966 or 1967. Hazel Bailey at that time had some $20,000 from insurance proceeds, *1377 which had been paid as a result of her husband’s death. She had resided in Texas (she later moved back to Texas). At the time in question she had resided with her daughter and son-in-law in Oklahoma City and it was then that she invested the $20,-000 in U. S. Treasury bills and did so through the Liberty Bank.

In 1969, Mrs. Bailey’s son-in-law and daughter, Michael C. Clark and Jo Ann Bailey Clark, started an oil drilling company called Taurus. In this connection they commenced borrowing from Liberty National Bank, the appellant. In the year 1968 Mrs. Bailey had two outstanding notes - which were payable to Liberty National Bank in an amount exceeding $10,000. One of her treasury bills had been pledged as collateral for payment of this. When the bills matured they were cashed and the $20,000 was deposited in Mrs. Bailey’s checking account at the Liberty Bank. On that day two promissory notes, which were due and payable, were satisfied from her checking account, as was an obligation in the amount of $908.89, which had accrued in connection with her Bank Americard. There was a remaining balance of $8,308.44, which was used by Mrs. Bailey to purchase a certificate of deposit (C.D.) in the name of her daughter. At the same time, she appropriated an additional $11,000 for the purchase of an additional C.D. This was also loaned to her daughter for use as collateral in connection with the business enterprise.

During the times that the described dealings were occurring the Clarks were indebted to Liberty. According to Mrs. Bailey, the monies which she made available to the Clarks in the form of the C.D.’s were loans and were not gifts. Later the C.D.’s which she had turned over were cashed and the proceeds were applied by Liberty to the Taurus note. Bank officers at that time advised Michael Clark that a $19,000 note ought to be given to Mrs. Bailey to evidence her loans and at that time such a note was given, secured by a security interest in the Taurus drilling rig in which Liberty Bank had been given a prior security interest. A financing statement evidencing this transaction between Mrs. Bailey and the Clarks was filed on March 7, 1972, some four months after the note was executed. Needless to say, none of the $19,000 note or interest was ever paid by Taurus to Mrs. Bailey.

As a result of a discussion with one of the Liberty Bank officers, Mr. Clark agreed to surrender the drilling rig to Liberty so that there could be a sale of it and the proceeds could be used to pay the debt of Taurus to Liberty. Accordingly, the rig was surrendered to Liberty in March 1972, and Liberty proceeded to sell it. It had no previous experience in selling an oil rig and so the officers inquired or investigated as to the usual manner of such sales. Liberty was told that the ordinary method for selling a drilling rig was to employ an auctioneer to move the rig to a convenient location to clean and paint it and then' notify interested persons and, in addition, advertise the sale in trade journals and newspapers. The bank followed none of these suggestions. Indeed, it sold the rig without any professional help. Notices were sent to 16 creditors, including Taurus, and to some 19 other companies. Mrs. Bailey did not receive notice except information furnished by her son-in-law. The rig was neither cleaned, painted nor dismantled. Liberty did not move it to a convenient site, but sold it at the place where it had been near Perryton, Texas. The sale was conducted by an attorney for Liberty who had never conducted an auction of an oil rig or oil field equipment and who lacked experience in the oil business. The attorney was assisted by a Liberty Bank officer who knew something about oil production, but was not acquainted with the drilling of wells. Some 40 or 50 people appeared for the sale, but few made bids. In fact, after the price reached $37,000, there were only two bidders. The final sale price, $42,000, was sufficient to pay off the Taurus note and pay the expenses of the sale, but left little for the other creditors. The rig had been appraised at $60,000 to $80,000.

The successful bidder was Raymond Hefner of Bonray Oil Company and Miller & *1378 Miller Auctioneers. In June 1972, Miller & Miller sold the equipment for $77,705.50.

The district court determined that there had not been .a significant change in the market condition between March 28, 1972, the date of the original sale, and June 6, when the property was resold. Bonray Oil and Miller & Miller realized a net profit of $19,175.56. Based upon its finding that Liberty had not acted in good faith and had been preoccupied with recovering their indebtedness, the district court found for the plaintiff, determining that the equipment had not been sold at the current price in a recognized market nor in the usual manner nor in conformity with reasonable commercial practices among oil field equipment drillers.

After payment satisfying its indebtedness, Liberty filed a suit in interpleader and deposited the remaining sum of $4,065.67 for distribution to the remaining creditors. Mrs. Bailey, in turn, filed a counterclaim seeking damages alleging that she had a security interest in the drilling rig and that the sale was not carried out in a commercially reasonable manner in conformance with the U.C.C., Section 9-504.

The trial court found in favor of Mrs. Bailey and entered judgment in her favor and against Liberty in the amount of $19,-000, together with attorney’s fees. 1

On this appeal Liberty raises the following points:

1. That the court lacked jurisdiction to entertain the counterclaim of Mrs. Bailey *1379 for the reason that under the rule of the Tenth Circuit the interpleader action by its nature precluded the consideration of any issues other than entitlement to the sum deposited.

2. That the evidence was insufficient to support findings of conversion or resulting trust on the part of Liberty.

3. That it was error for the court to determine that Mrs. Bailey had a security interest giving rise to an entitlement to damages under the U.C.C.

Liberty also maintains:

That Mrs. Bailey acquired no interest in the drilling rig; that she had notice of the sale; that she had no right to complain about the sale since she made no effort to restrain it or to redeem the collateral prior to sale; that it acted in good faith and conducted the sale in a commercially reasonable manner.

Finally, Liberty says that even if damages were recoverable there was no basis whatever for award of attorney’s fees and it also urges that interest can run only from the date of judgment since the claim was an unliquidated one.

I.

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540 F.2d 1375, Counsel Stack Legal Research, https://law.counselstack.com/opinion/the-liberty-national-bank-trust-company-of-oklahoma-city-a-national-ca10-1976.