Honorable Robert R. Barton 

District Attorney 

Second Judicial District 

Kerrville, Texas 78028 

Opinion No. M-440 

RE: Whether a conditional 

sale contract constitutes a "security interest in writing" 

under 4 V.T.C.A., Bus. 

Dear Mr. Barton: & C., Sec. 25.02. 

Your opinion request to this office asks "whether 

a conditional sale contract or a retail installment contract, under the terms of which the seller retains title 

to personal property, constitutes a 'security interest in 

writing' so that, should the purchaser of the property 

remove or fraudulently dispose of same, there is a violation of Section 25.02, Business and Commerce Code." 

Since your question refers to the Business and Commerce 

Code, we will assume for the purpose of this opinion that 

the conditional sale contract or retail installment contract to which you referred was executed after the effective date of the Code and is otherwise in compliance with 

the provisions thereof. 

Section 25.02, Business and Commerce Code, which 

became effective on September 1, 1967, provides that 

"(a) A person who has given a 

security interest in writing on 

personal property or a growing 

crop of farm produce may not, 

with intent to defraud the secured party, 

(1) remove the property 

or crop from the county in which 

the property or crop was located 

when the security interest attached: 

(2) sell the property or 

crop; or 

(3) otherwise dispose of 

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Honorable Robert R. Barton, page 2, (M-440 ) 

of the property or crop.” 

The Business and Commerce Code superseded existing 

legislation dealing with such security devices as chattel 

mortgages, conditional sales, trust receipts, and factor's 

liens. Gone are the definitional difficulties and transactional fictions of the chattel mortgage, the conditional 

sale, the trust receipt. In their stead is a general set 

of rules for the creation of a security interest in the secured party. Therefore, to answer your question, the provisions of the Code that are pertinent to your question 

must be examined. 

Texas Business and Commerce Code, Sec. 1.201 (37), 

states that: 

"'Security interest' means an interest in personal property or 

fixtures which secures payment 

or performance of an obligation. 

The retention or reservation of 

title by a seller of goods notwithstanding shipment or delivery to the buyer (Section 2.401) 

is limited in effect to a reservation of a 'security interest.'" 

Texas Business and Commerce Code, Section 9.202 

states: 

"Each provision of this chapter 

with regard to rights, obligations and remedies applies whether 

title to collateral is in the secured party or in the debtor." 

Therefore, it is the opinion of this office that a 

conditional sale contract or retail installment contract, 

under the terms of which the seller retains title to personal property, constitites a "security interest in writing", 

so that, should the purchaser of the property remove or 

fraudulently dispose of same, there is a violation of Section 

25.02, Business and Commerce Code. 

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, I 

Honorable Robert R. Barton, page 3, (M-440 ) 

SUMMARY 

A conditional sale contract or a retail installment contract, under the 

terms of which the seller retains title 

to personal property, constitutes a 'security interest in writing' so that, 

should the purchaser of the property remove or fraudulently dispose of same, 

there is a violation of Section 25.02, 

Business and Commerce Code. 

Verfiruly yours, 

Prepared by Dunklin Sullivan 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE: 

Kerns Taylor, Chairman 

George M. Kelton, Vice-Chairman 

Roy W. Mouer 

Ed Esguival 

Malcolm Quick 

Harold Kennedy 

W. V. GEPPERT 

Staff Legal Assistant 

HAWTHORNE PHILLIPS 

Executive Assistant 

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