Case Name: The TALLAHASSEE BANK AND TRUST COMPANY, a Florida corporation, Appellant, v. Gerald D. N. BRYANT, Appellee
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 1972-09-21
Citations: 271 So. 2d 190
Docket Number: No. P-145
Parties: The TALLAHASSEE BANK AND TRUST COMPANY, a Florida corporation, Appellant, v. Gerald D. N. BRYANT, Appellee.
Judges: CARLTON, VASSAR B„ Associate Judge, concurs.
Reporter: Southern Reporter, Second Series
Volume: 271
Pages: 190–197

Head Matter:
The TALLAHASSEE BANK AND TRUST COMPANY, a Florida corporation, Appellant, v. Gerald D. N. BRYANT, Appellee.
No. P-145.
District Court of Appeal of Florida, First District.
Sept. 21, 1972.
Leo L. Foster, and Julian F. Parker, Jr., of Madigan, Parker, Gatlin & Swedmark, Tallahassee, for appellant.
Ben H. Dickens, of Dickens, Rumph, Franson & Miller, Tallahassee, for appel-lee.

Opinion:
RAWLS, Acting Chief Judge.
Appellant-Bank by this appeal seeks reversal of a jury verdict and judgment thereon in the principal sum of $15,250.00 in favor of appellee.
We are here concerned with 1,000 Sperry Rand warrants owned by Bryant and pledged to the Bank as security. These warrants granted to the bearer the right on or before September 15, 1967, to convert each warrant into one share of Sperry Rand common stock upon payment of an additional sum of money. Prior to the expiration date, these warrants were traded on the New York Stock Exchange. After September 15, 1967, the warrants were worthless.
By this appeal the Bank poses two points, viz.: (1) Neither the facts nor the law discloses that the Bank breached any duty owed to Bryant, and (2) Bryant's own testimony conclusively established his contributory negligence as a proximate cause of any damages he may have suffered.
Additional facts in a light most favorable to support the judgment are: In 1965, Bryant borrowed $133,000.00 from the Bank and pledged a number of securities as collateral for repayment. The Bank held a power of attorney from Bryant authorizing it to sell or dispose of each pledged stock certificate or warrant. Bryant actively traded in the stock market through a North Carolina broker during the ensuing two years, and in all trades the Bank required substitution for securities traded. The Bank had physical custody of the pledged securities in its vaults. On several occasions Bryant orally requested the Bank to furnish him a list of his securities held by the Bank but such list was never furnished. Among the securities that came into the Bank's possession were 5800 warrants to purchase common stock of the Sperry Rand Corporation. The following words were imprinted on each of these warrants in boldface:
"VOID AFTER SEPTEMBER 15, 1967."
About four or five weeks prior to the expiration of the warrants, Bryant called the Bank with the specific intent of disposing of all Sperry Rand warrants in its possession. In this respect, Bryant testified: "I knew that the Sperry Rand warrants were going to expire and I made the Bank aware that the Sperry Rand warrants were going to expire and because of this particular reason I wanted them sold and I said I needed to get rid of all my Sperry Rand warrants, that they were going to expire." On July 30, 1967, Bryant authorized his broker to receive from the Bank and sell 4800 warrants. During the period from July 30, 1967, until September 15, 1967, the Bank did not advise Bryant of the 1,000 warrants it continued to hold nor did it attempt to dispose of same before they became worthless. Bryant had in his personal possession records from his brokerage firm which, when totaled, revealed that he had purchased during the subject period 8200 Sperry Rand warrants and sold 7200 of same.
The Uniform Commercial Code adopted by Florida in 1967 apparently gives all things to all people. Bryant relies upon Section 679.207, which provides, inter alia:
"(1) A secured party must use reasonable care in the custody and preservation of collateral in his possession. In the case of an instrument or chattel paper reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.
"(3) A secured party is liable for any loss caused by his failure to meet any obligation imposed by the preceding subsections but does not lose his security interest."
and cites Grace v. Sterling, Grace and Company, as being factually in point. There, convertible debentures, which had been pledged to a bank, were called for redemption before a day certain. The pledg- or was in Europe and had no notice of the call. The trial court entered judgment against the pledgor's broker and the Bank. The appellate court in affirming stated:
"Where pledged convertible debentures are called at par and thereby become payable while in the control of a pledgee, he may be required in the exercise of reasonable care to do more than just stand by and wait for payment of the face value of the securities."
Appellant distinguishes the holding in Grace, supra, from the facts in the instant cause by pointing out that in Grace the Bank had superior knowledge, whereas here it is undisputed that Bryant knew the expiration date of the warrants.
Appellant-Bank also contends that it would have been guilty of a crime if it had sold or disposed of the subject warrants. It further argues that Bryant, as evidenced by his extensive trading in the market during the period of time the warrants were pledged, exercised control over the subject property, and such conduct is consistent with Section 679.311, Florida Statutes, F.S.A., of the Uniform Commercial Code. To the foregoing arguments, appellee responds that Section 679.207 of the Uniform Commercial Code clearly provides that a secured party may use collateral for the purpose of preserving same and that the provisions of Section 818.04, Florida Statutes, F.S.A., cited by appellant only applies where the pledgee converts the collateral to his own use. Bryant in addition urges that under the facts here considered, it is undisputed that the Bank held a number of powers of attorney signed by him authorizing it to dispose of the collateral held by it when necessary, and such instruments exempted the Bank from liability under Section 818.04.
We will not further belabor the arguments of the parties with respect to appellant's first point. As observed at the outset, the Uniform Commercial Code, like a politician's declaration from the stump, contains "something for everyone." We do not hold that the Bank had any specific duty to sell or otherwise dispose of the worthless warrants, or to furnish Bryant with a list of collateral held by it. We do hold that, under the overall facts tendered to the jury, a justiciable issue was presented as to whether the Bank exercised reasonable care as to the preservation of the subject collateral.
The Bank's second point is troublesome. It is uncontradicted that Bryant had knowledge of the expiration date of the subject warrants; that he had records in his own possession which by simple arithmetical addition and subtraction would have disclosed that 1,000 warrants were moldering in the Bank's vault and rapidly becoming worthless. Bryant vehemently argues that the Uniform Commercial Code imposes an absolute duty on the Bank, as the secured party, and that contributory negligence is not a defense available to it. This argument might well be valid in a case where an absolute duty on the part of the pledgee is proven. We have held that the provisions of the Uniform Commercial Code have not cast an absolute duty upon the Bank, but only aided the trial court and the parties in developing the standard of care consistent with the general principle of the law of negligence. The issue of contributory negligence was a proper question and the trial court was correct in submitting the cause to the jury. Upon proper instructions, the question of contributory negligence must be submitted for consideration by the jury where there is any genuine issue as to a material fact. Here, the basic issue was whether the Bank should have advised Bryant of the 1,000 warrants which were reposing in its vault as time ticked away towards the transformation of same from paper of value to only the value of paper; and under these circumstances whether Bryant was precluded, by his knowledge or what he should have known, from assert ing negligence on the part of the Bank. We hold under the facts revealed by this record that the question of contributory negligence was properly submitted to the jury by the trial court.
The judgment is affirmed.
CARLTON, VASSAR B" Associate Judge, concurs.
JOHNSON, J., dissents.
. By stipulation of the parties, the subject warrants had a market value of $15,250.00.
. Florida Statutes, Chapters 671-680, F.S. A.
. Grace v. Sterling, Grace and Company, 30 A.D.2d 61, 289 N.Y.S.2d 632 (1968).
. Section 818.04, Florida Statutes, F.S.A., which prohibits the sale of collateral prior to debt being due without pledgor's consent.
. Section 679.311, Florida Statutes, F.S.A.:
"The debtor's rights in collateral may bo voluntarily or involuntarily transferred (by way of sale, creation of a security interest, attachment, levy, garnishment, or other judicial process) notwithstanding a provision in the security agreement prohibiting any transfer or making the transfer constitute a default."
This Section basically follows the previously existing law and its purpose, as stated in the Uniform Commercial Code Comment, is:
"To make clear that in all security transactions under this Article, the debtor has an interest (whether legal title or an equity) which he can dispose of and which his creditors can reach." Uniform
Commercial Code Comment, Oh. 679, § 679.311, F.S.A.
.Section 679.207, Florida Statutes, F.S.A.:
"679.207 Rights and duties when collateral is in secured party's possession.—
"(1) A secured party must use reasonable care in the custody and preservation of collateral in his possession. In the case of an instrument or chattel paper reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.
"(2) Unless otherwise agreed, when collateral is in the secured party's possession :
"(a) Reasonable expenses (including the cost of any insurance and payment of taxes or other charges) incurred in the custody, preservation, use or operation of the collateral are chargeable to the debtor and are secured by the collateral;
"(b) The risk of accidental loss or damage is on the debtor to the extent of any deficiency in any effective insurance coverage;
"(c) The secured party may hold as additional security any increase or profits (except money) received from the collateral, but money so received, unless re mitted to the debtor, shall be applied in reduction of the secured obligation;
"(d) The secured party must lreep the collateral identifiable but fungible collateral may be commingled;
"(e) The secured party may repledge the collateral upon terms which do not impair the debtor's right to redeem it.
"(3) A secured party is liable for any loss caused by his failure to meet any obligation imposed by the preceding subsections but does not lose his security interest.
"(4) A secured party may use or operate the collateral for the purpose of preserving the collateral or its value or pursuant to the order of a court of appropriate jurisdiction or, except in the case of consumer goods, in the manner and to the extent provided in the security agreement."
. Section 079.208, Florida Statutes, F.S.A.
. Bryant testified:
"Q. And you liad in your possession the sales slips to show that you had bought eighty-two hundred and sold only seventy-two hundred?
"A. Yes, sir."
. Section 679.207(3), Florida Statutes, F.S.A.
. Night Racing Ass'n, Inc. v. Green, 71 So.2d 500 (Fla.1954); Beikirch v. City of Jacksonville Beach, 159 So.2d 898 (1 Fla.App. 1964); and Lopez v. Deatrick Leasing Corporation, 237 So.2d 284 (3 Fla.App.1970).