Unicut, Inc. v. Texas Commerce Bank-Chemical

704 S.W.2d 438
CourtCourt of Appeals of Texas
DecidedJanuary 9, 1986
DocketNo. C14-85-258-CV
StatusPublished
Cited by1 cases

This text of 704 S.W.2d 438 (Unicut, Inc. v. Texas Commerce Bank-Chemical) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Unicut, Inc. v. Texas Commerce Bank-Chemical, 704 S.W.2d 438 (Tex. Ct. App. 1986).

Opinion

OPINION

CANNON, Justice.

Unicut, Inc. (Unicut) appeals a summary judgment in favor of Texas Commerce Bank-Chemical (Texas Commerce) granting Texas Commerce, pursuant to a security agreement between Texas Commerce and Unicut, possession of certain of Unicut’s property. Unicut brings eight points of error, the essence of which challenge (1) the specificity of the collateral description in the security agreement; (2) the specificity of the judgment’s description of property subject to execution; (3) the description of property in the judgment because it varies with the description of property in the motion for summary judgment; (4) the ap-pellee’s prayer for relief because it does not pray for possession of property; and (5) the appellee’s motion for summary judgment because it does not state the basis for the summary judgment. We overrule Uni-cut’s points of error and affirm.

In 1983 Unicut executed five promissory notes and five security agreements. By mid-1984, each of the promissory notes was in default. In June 1984, Texas Commerce filed its First Amended Application [444]*444for Writ of Sequestration and Plaintiff’s Original Petition. It sought a writ of sequestration, a temporary injunction ordering the sheriff or constable to possess Uni-cut’s inventory or ordering Unicut to tender proceeds of the inventory to the registry of the court, a judgment declaring Texas Commerce’s security interest valid and covering all of the described collateral, not just Unicut’s inventory, and foreclosure on this collateral.

On August 30, 1984, Texas Commerce moved for summary judgment. The trial court granted Texas Commerce’s motion concerning four of the promissory notes but severed proceedings on the fifth note. The present appeal concerns only the summary judgment on the four promissory notes.

Unicut first challenges the security agreement’s description of the collateral. Unicut asserts that the description is not specific enough to grant to Texas Commerce a security interest in any of Unicut’s property. A security agreement is not enforceable and does not attach to collateral unless (1) value has been given, (2) the debtor has rights in the collateral, and (3) the collateral is in the secured party’s possession or the debtor has signed a security agreement which contains a description of the collateral. Tex.Bus. & Comm.Code Ann. § 9.203(a) (Vernon Supp.1985). Any description of personal property is sufficient for the purposes of section 9.203 if it “reasonably identifies’’ the property. Tex. Bus. & Comm.Code Ann. § 9.110 (Vernon Supp.1985).

The parties have alerted us to none and our research has found no Texas cases analyzing the specificity of description required to create a security interest. Other jurisdictions divide on the issue. See An-not., 100 A.L.R.3d 940 (1980).- We agree with and adopt the standard put forward in the official comment to section 9.110: “The test of sufficiency of a description laid down by this section is that the description do the job assigned to it — that it make possible the identification of the thing described.” Tex.Bus. & Comm.Code Ann. § 9.110 1972 official U.C.C. comment (Vernon Supp.1985) (emphasis added).

Under this standard we find the present description sufficient. Each security agreement, entitled “Security Agreement-Inventory”, provides the following description of collateral:

[A]ll goods, merchandise, raw material, goods in process, finished goods, and other tangible personal property of whatever nature now owned by Debtor or hereafter acquired, and held for sale or lease or furnished or to be furnished under contracts of service or used or consumed in Debtor’s business and accessions and appurtenances thereto, and all Accounts, Chattel Paper and general intangibles for any of the foregoing (hereinafter collectively called the “Collateral”) and all proceeds of the Collateral.

At any time it is possible to determine whether a given piece of Unicut’s property is subject to Texas Commerce’s security interest. Identification is possible especially since the parties here are in privity. See River Oaks Chrysler-Plymouth v. Barfield, 482 S.W.2d 925, 928 (Tex.Civ.App.-Houston [14th Dist.] 1972, writ dism’d). We overrule Unicut’s first point of error.

Unicut complains in its second through fifth points of error that Texas Commerce identified no specific items of property subject to the security interest. For this reason, argues Unicut, Texas Commerce’s petition and motion for summary judgment are insufficient to support a summary judgment and the judgment is void and unenforceable. Unicut’s only authority for this position is Citizens National Bank of Temple v. Baggerly, 649 S.W.2d 812 (Tex.App.-Austin 1983, no writ). However, Baggerly merely holds that when a secured party attempts to foreclose on a particular item of property, the secured party must prove that the item of property is subject to the secured party’s security interest. The Baggerly court reversed the bank’s summary judgment allowing foreclosure of its interest in a Ford LTD and a Chevrolet Pick-up Truck. The bank’s se[445]*445curity interest would attach only if the vehicles could be considered other than “consumer goods”. The bank provided no evidence on how the vehicles were being used. Therefore, Baggerly does not stand for the proposition that all summary judgment foreclosure proceedings must pertain to and elicit evidence of specific items of property. We have found no authority which so holds. We refuse to adopt such a rule because the parties know the terms of their security agreement and can discern which property is subject to the secured party’s security interest.

Accordingly, we find the present judgment enforceable. Before the debtor relinquishes possession of any property the debtor and the secured party can determine between themselves which of the debtor’s property, if any, may be considered, for example, “goods held for sale or lease”, and thus subject to the security interest. And if they conflict on whether property designated by the secured party is subject to the security interest, a constable, at the instance of the secured party, could levy on the property in dispute. Tex.R.Civ.P. 637 (Vernon 1967). Of course, the constable could require the secured party to offer a bond to indemnify him should the attachment prove wrongful. Bryan v. Bridge, 6 Tex. 137, 143 (1851). Thus, a mechanism exists by which a secured party may exert its rights in the debtor’s property and by which the debtor’s rights in that property may be protected. We overrule Unicut’s points of error two through five.

In its sixth point of error Unicut argues that we should reverse the summary judgment because the judgment is at variance with the Motion for Summary Judgment in its description of the property awarded Texas Commerce. The prayer requests “foreclosure upon the collateral.” The judgment recites the collateral as:

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Day v. State
704 S.W.2d 438 (Court of Appeals of Texas, 1986)

Cite This Page — Counsel Stack

Bluebook (online)
704 S.W.2d 438, Counsel Stack Legal Research, https://law.counselstack.com/opinion/unicut-inc-v-texas-commerce-bank-chemical-texapp-1986.