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 inwriting" under 4V.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 ofwhich the seller retains title topersonal property, constitutes a 'security interest in writing' so that, should the purchaser of the property **remove** or fraudulently dispose of same, there is aviolation of Section 25.02, Business and Commerce Code." Since your question refers to the Business and Commerce Code, wewill assume for the purpose of this opinion that the conditional sale contract or retail installment contract towhich you referred was executed after the effective date of the Code and is otherwise incompliance with theprovisions 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 inwriting on personal property or a growing crop of farm produce may not, with intent todefraud the secured party, (1) remove the property or crop from the county inwhich the property or cropwas located when the security interest attached: (2) sell the property or crop; or (3) otherwise dispose of

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of the property or **crop. ”**  The Business andCommerce Code superseded existing legislation dealing with such security devices as chattel **mortgages,** conditional sales, trust receipts, and factor's liens. Gone are thedefinitional difficulties and transactional fictions of the chattel **mortgage,** the conditional sale, the trust receipt. In their stead isa general set of rules for the **creation** of a security interest in the secured party. Therefore, to answer your question, theprovisions of theCode that arepertinent toyour question **must** be examined.

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

"'Security interest' means an interest inpersonal property or fixtures which secures payment orperformance of an obligation. The retention or reservation of title by a seller of goods notwithstanding shipment ordelivery to thebuyer (Section 2.401) is limited in effect toa reservation of a 'security interest.'"
Texas Business and Commerce Code, Section 9.202 states: "Eachprovision of this chapter

with regard torights, obligations and remedies applies whether title to collateral is in the secured party or in thedebtor." Therefore, it is the opinion of this office that a conditional sale contract or retail installment contract, under the terms ofwhich the seller retains title topersonal property, constitites a "security interest inwriting", sothat, should the purchaser of the property **remove or**  fraudulently dispose of same, there is aviolation of Section 25.02, Business and Commerce Code.

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

SUMMARY

A conditional sale contract or aretail installment contract, under the terms ofwhich the seller retains title topersonal property, constitutes a 'security interest inwriting' so that, should the purchaser of theproperty remove or fraudulently dispose of same, there is aviolation of Section 25.02, Business and Commerce Code. Verfiruly yours,

Prepared byDunklin 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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