Opinion ID: 1139609
Heading Depth: 1
Heading Rank: 7

Heading: The Dragline

Text: This transaction has its origin in the purchase of the dragline from Simmons by Vernon Quinn on September 13, 1974. (Quinn was not a party to this litigation.) Simmons assigned the purchase contract to Credit Alliance. M & M purchased Quinn's interest in the dragline on October 8, 1975. M & M entered into a transfer and assumption agreement with Quinn and Credit Alliance. Simmons endorsed its approval of the agreement. M & M then took over and operated the dragline. Installment payments were made directly to Credit Alliance by M & M. In January 1977 M & M defaulted on its payments. Credit Alliance accelerated the contract on January 26, 1977, and demanded payment in full. Credit Alliance quoted a payoff amount of $174,369.84, which M & M paid on February 5 or 6, 1977. A letter accompanied M & M's payoff which stated that the payoff was tendered on the basis that the security interest would be satisfied. The check bore a notation M & M Loan, Pay-Off M & M Brokerage, Inc., Account # 35S-52141-9. Unknown to M & M, on February 1, 1977, Credit Alliance executed a reassignment of the dragline contract to Simmons. By letter of March 3, 1977, M & M demanded that Credit Alliance satisfy the security interest or face a law suit. Credit Alliance responded by letter on March 8, 1977, and advised that Credit Alliance's right to collect under the contract had been assigned to Simmons on February 1, 1977. On March 31, 1977, M & M made a demand upon Simmons that it satisfy the security interest. Neither Simmons nor Credit Alliance satisfied the security interest. The trial court granted M & M's motion for summary judgment for failure to satisfy the security interest against both Simmons and Credit Alliance. Summary judgment was granted for the statutory penalty of $100.00 provided by Code 1975, § 7-9-404(1). The issue of compensatory damages for failure to satisfy the security interest was submitted to the jury. The jury found that M & M had not sustained a monetary loss or suffered any damages proximately caused by the failure to satisfy the security interest. Simmons's first contention that the grant of summary judgment was in error centers on the sufficiency of information before the trial court at the time it granted summary judgment. Specifically, Simmons argues that because neither the recorded financing statement evidencing a recorded security interest in the dragline nor M & M's letter to Simmons demanding a termination statement on the security interest, was before the court when summary judgment was granted, it, therefore, was granted inappropriately. Although factually correct, we find Simmons's contention to be without legal merit. It is clear from the record that there was no dispute as to the existence of the recorded security interest in the dragline and the demand letter. The deposition of George Simmons, President of Simmons Machinery Company, Inc., revealed that Simmons acknowledged the existence of the recorded security interest in the dragline and that Simmons did not file a termination statement because of the outstanding mortgage on the Chicago Pneumatic drill held by First Western Bank. The deposition of Johnny McDonald, President of M & M, indicated that M & M's attorney wrote to both Credit Alliance and Simmons about the title in the dragline. The trial court had those and other depositions before it when it granted summary judgment. Our review of the record before the trial court on summary judgment leaves us with no doubt that there was no dispute as to the existence of either document. Simmons, in fact, does not contend that the documents were non-existent, for they were admitted at trial. Instead, it argues that merely because they were not before the trial court at the time of its ruling on summary judgment, that ruling was erroneous. We disagree. Although the preferable practice is to submit such documents to the trial court for its consideration in ruling on a motion for summary judgment, under the facts of this case, we find no error in the trial court's ruling. Simmons next argues that because Credit Alliance was the secured party of record, as evidenced by the financing statement, Simmons had no obligation to file a termination statement. We cannot accept Simmons's argument. In his deposition, George Simmons testified that about February 1, 1977, Simmons received the reassignment of the note from Credit Alliance. As noted already, he testified also that Simmons's reason for not filing a termination statement was the belief that there was an outstanding mortgage held by First Western Bank on the trade-in drill. Simmons, as the secured party, on written demand from M & M, was obligated to file a termination statement under Code 1975, § 7-9-404(1): Whenever there is no outstanding secured obligation and no commitment to make advances, incur obligations or otherwise give value, the secured party must on written demand by the debtor send the debtor a statement that he no longer claims a security interest under the financing statement, which shall be identified by file number. A termination statement signed by a person other than the secured party of record must include or be accompanied by the assignment or a statement by the secured party of record that he has assigned the security interest to the signer of the termination statement. Simmons raises the defense that it was not obligated to file a termination statement because the dragline contract contained a future advances provision. That provision, Simmons says, had the effect of making the dragline security not only for its purchase price, but for all other debts owed by Simmons to the holder of the contract. Because M & M was indebted at all times to Simmons on an open account, Simmons maintains that payment of the dragline debt did not extinguish M & M's indebtedness to it. Therefore, Simmons theorizes that it was justified in maintaining its interest in the dragline as security for M & M's debt on its open account. The difficulty with Simmons's position is that when M & M paid Credit Alliance the outstanding indebtedness on the dragline, it had no notice of Credit Alliance's assignment of the contract to Simmons. Code 1975, § 7-9-318(3), provides that an account debtor is authorized to pay the assignor until the account debtor receives notification that the account has been assigned and that payment is to be made to the assignee. M & M properly paid Credit Alliance. Credit Alliance's acceptance of payment also constituted an acceptance of the terms under which the payment was tendered. Those terms provided that payment was made upon the condition that the security interest in the dragline be satisfied. Consequently, Simmons could not rely on the future advances provision in the contract to negate its duty to file a termination statement. Lastly, Simmons contends that because M & M by evidence and contention questioned the validity and regularity of the transfer of the dragline contract from Credit Alliance to Simmons, the validity of the reassignment was in doubt. In essence, Simmons suggests that if the reassignment was ineffective, it had no duty to file a termination statement. Specifically, Simmons calls to our attention the fact that M & M showed it had no notice of the reassignment of the contract until after it paid its debt, and that Simmons paid no money for the transfer. It also notes that M & M showed that no cover letter accompanied the document effecting the reassignment when it was sent to Simmons, and that Simmons did not know whether M & M paid off the dragline debt before or after the reassignment. We find all of Simmons's contentions to be without merit. Simmons did not contend at the time of summary judgment, nor does it now, that the reassignment was ineffective. It is clear from the record that the validity of the reassignment was not in issue. The appropriateness of granting summary judgment is well established: In determining whether a summary judgment is proper, the ultimate question is whether there remains a genuine issue of material fact, and if there is one, summary judgment is inappropriate, Rule 56(e) ARCP; 6 Moore's Fed.Prac., par. 56.15 (2nd ed. 1971). Put in another way, [W]here the evidentiary matter in support of the motion does not establish the absence of a genuine issue, summary judgment must be denied even if no opposing evidentiary matter is presented. First National Bank of Birmingham v. Culberson, 342 So.2d 347, 351 (Ala.1977). More recently, the court observed in Campbell v. Alabama Power Co., 378 So.2d 718, 721 (Ala.1979), that the scintilla evidence rule applies to summary judgment motions: This rule must be considered in the context of the scintilla evidence rule applicable in Alabama. Thus, if there is a scintilla of evidence supporting the position of the party against whom the motion for summary judgment is made, so that at trial he would be entitled to go to the jury, a summary judgment may not be granted. Donald v. City National Bank of Dothan, 295 Ala. 320, 329 So.2d 92 (1976). Furthermore, all reasonable inferences from the facts are to be viewed most favorably to the non-movant. Tolbert v. Gulsby, 333 So.2d 129 (Ala.1976). Harold Brown Builders, Inc. v. Jordan Company, 401 So.2d 36 at 37-8 (Ala.1981). The above standard was met in this case. The judgment of the trial court is affirmed. AFFIRMED.