Court Opinion

ID: 9772135
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:08:25.032911+00
Date Added: 2024-06-11T07:31:42.279188
License: Public Domain

HUGHES, Justice.
Appellant, Borg-Warner Acceptance Corporation, the retail financier, appeals from a summary judgment rendered in favor of appellee, Massey-Ferguson, Inc., the inventory financier. Both parties moved for summary judgment. The trial court granted Massey-Ferguson’s motion and found that Massey-Ferguson held superior security interests in eight pieces of farm equipment.
We reverse and render as to items two through eight and affirm the judgment of the trial court in regard to item one.
Massey-Ferguson manufactures and sells farm equipment. On March 30, 1976, it established Milam Tractor Company, Inc. (Milam) as a retail dealer of its products. Dale Smith was the president of Milam. Under the terms of the dealership agreement, Massey-Ferguson financed the inventory and retained a security interest in each item Milam sold or financed.
This dispute concerns eight pieces of farm machinery and the circumstances of the sale of each item. On May 7, 1980, Milam entered into a retail installment contract with itself — Milam—for the sale of item one. Borg-Warner financed the sale and paid the purchase price in exchange for an assignment of the retail installment contract by Milam.
Two other similar sales, involving items two through eight, occurred later between Milam and Smith, in his individual capacity. On July 25, 1980, Smith purchased items two and three. He purchased items four through eight on November 24,1980. Both of these retail installment contracts were assigned to Borg-Warner.
Both Milam and Smith defaulted under the terms of their retail installment contracts by failing to make payments to Borg-Warner. As a result, Massey-Ferguson disposed of the machinery by foreclosure upon termination of its sale agreement with Milam. It is uncontested that all the machinery in question remained on Milam’s lot until the foreclosure.
At trial, both parties moved for summary judgment. The trial court granted Massey-Ferguson’s motion on the grounds that it held the superior lien and denied Borg-Warner’s motion.
Borg-Warner raises one point of error on appeal contending that summary judgment should have been rendered for it because it retained the superior security interest as a matter of law. Massey-Ferguson argues that, since the machines remained in Mi-lam’s inventory and were not delivered to Smith, its inventory lien was not displaced because there was no passage of title and, therefore, no sale.
In a summary judgment case, the issue on appeal is whether the movant met his burden for summary judgment by establishing that there exists no genuine issue of material fact and that he is entitled to judgment as a matter of law. TEX.R. CIV.P. 166-A; City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979). The burden of proof is on the movant, and all doubts as to the existence of a genuine issue as to a material fact are resolved against him. Great American Reserve Insurance Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex.1965). Therefore, we must view the evidence in the light most *353favorable to the non-movant. Id. In deciding whether there is a material fact issue precluding summary judgment, all conflicts in the evidence will be disregarded and the evidence favorable to the non-movant will be accepted as true. Montgomery v. Kennedy, 669 S.W.2d 309, 311 (Tex.1984); Farley v. Prudential Insurance Co., 480 S.W.2d 176, 178 (Tex.1972). Every reasonable inference from the evidence must be indulged in favor of the non-movant and any doubts resolved in his favor. Montgomery, 669 S.W.2d at 311. Evidence which favors the movant’s position will not be considered unless it is uncontroverted. Great American Reserve Insurance Co., 391 S.W.2d at 47. If such uncontroverted evidence is from an interested witness, it does nothing more than raise a fact issue, unless it is clear, direct, positive and free from inconsistencies and contradictions. Id. The summary judgment will be affirmed only if the record establishes that the movant has conclusively proved all essential elements of his cause of action or defense as a matter of law. City of Houston, 589 S.W.2d at 678.
TEX.BUS. & COM.CODE ANN. sec. 9.306 (Vernon Supp.1985) defines “proceeds” and sets forth the rights of the secured party to the proceeds received by the debtor upon disposition of the collateral:
(b) Except where this chapter otherwise provides, a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof unless the disposition was authorized by the secured party in the security agreement or otherwise, and also continues in any identifiable proceeds including collections received by the debtor.
Massey-Ferguson argues that Milam’s dealings with itself and Smith were not sales because the lack of delivery and the retention of the machinery as inventory on Milam’s lot precluded the passage of title; therefore, appellee's security interest was never extinguished.
Borg-Wamer claims that, although the transactions between Milam and Smith were not conducted as “regular” sales, a sale did take place under the terms of the Code. We agree with Borg-Wamer’s argument as concerns transactions involving items two through eight.
TEX.BUS. & COM.CODE ANN. sec. 2.106(a) (Vernon Supp.1985) provides that a sale occurs when title is passed from the seller to the buyer for a price. See also TEX.BUS. & COM.CODE ANN. sec. 9.105(c) (Vernon Supp.1985). The applicable test for determining the passage of title is set forth in TEX.BUS. & COM.CODE ANN. sec. 2.401(c)(2), which states that, if goods are already identified at the time of contracting and no documents are to be delivered, title passes at the time and place of contracting unless otherwise explicitly agreed where delivery is to be made without moving the goods. Identification occurs when the contracts are made if it is for the sale of goods already existing and identified. TEX.BUS. & COM.CODE ANN. sec. 2.501(a)(1) (Vernon Supp.1985).
Massey-Ferguson relies on Weisbart & Co. v. First National Bank, 568 F.2d 391 (5th Cir.1978), in support of its contention that lack of delivery prevents the existence of a sale, exchange or other disposition under section 9.306(b) so as to prevent any discharge of a prior lien. We believe Weis-bart is distinguishable on the facts.
In Weisbart, a contract for the sale of cattle which were subject to a security interest did not state when title was to pass, but provided for delivery at the buyer’s ranch. Id. The delivery was not made and the court held that, since there was no delivery effected under the terms of the contract, there was not a “sale” so as to trigger section 9.306(b), which provides that a security interest continues in collateral notwithstanding a sale, exchange, or other disposition of the collateral unless the disposition was authorized by the secured party. Id. The court expressly stated that section 2.401(b) controlled as to when title passed and since the contract called for delivery at the buyer’s ranch if it so desired, title could not pass until this delivery took place. Id.
*354The record shows that the farm machinery existed at the time of contracting and had been identified by the parties. Each of the retail installment contracts specifically identifies the farm machinery by make, model, description, and serial number. Further, no documents of title were required to be delivered. There is no dispute that the contracts were executed.
The contracts did not specify when title to the farm machinery was to pass. Unlike Weisbart, there was no language in the contract providing for delivery to the buyer if desired. We find that to be an important distinction and determinative of which portion of section 2.401 is applicable in the present situation. Since the contract contained no delivery term, that section 2.401(c)(2) is applicable in determining when title passed. See also International Harvester Credit Corp. v. Associates Financial Services Co., 133 Ga.App. 488, 211 S.E.2d 430, 433 (1974). The Weisbart court relied on 2.401(b); therefore, the decision in that case is not applicable here.
A situation very similar to our case was presented in Borg-Warner Acceptance Corp. v. C.I.T. Corp., 679 S.W.2d 140 (Tex.App.—Amarillo 1984, writ ref’d n.r.e.), where to finance its inventory the dealer entered into an arrangement similar to that used by appellee. The dealer executed a conditional sales contract-security agreement to sell two tractors to Deld Farms, Inc., which was owned by the same people who owned the dealership. Id. The dealer then assigned the contracts to C.I.T. Except for one tractor which was hauled to a farm for one day, the tractors remained on display at the dealer’s lot until repossessed by the inventory financier. The dealer carried the tractors as inventory on its books at all times and warranty cards were never issued. Id.
Despite the inventory financier’s contention that a sale never occurred because there was no effective delivery and the goods were retained as inventory, the court found that C.I.T., the retail financier, held the superior lien. Id. The court went on to say:
When Deld Farms took possession of the tractors after the execution of the conditional sales contract-security agreement, this transaction was, when viewed in the light most favorable to Borg-Wamer, at the least a disposition within the meaning of section 9.306. It follows that the conditional sales contract-security agreement assigned to C.I.T. was proceeds of inventory within the meaning of sections 9.308(2) and 9.306(a).

Id.

We find the reasoning in Borg-Warner persuasive despite the factual distinction that in this case none of the farm equipment was ever removed from Milam’s lot. We do not believe this slight difference in the facts is sufficient to subordinate the retail financier’s security interest. We also find that, pursuant to the dealership agreement, Massey-Ferguson authorized dealings such as these transactions which occurred in the ordinary course of business. The sales of items two through eight were thus valid and triggered the operation of section 9.306(b) so as to extinguish Massey-Ferguson’s prior security interest in the farm machinery.
As to item one, we hold that Massey-Ferguson retained the superior lien in that piece of machinery. It is settled in Texas that an owner cannot have a lien on his own property since ownership and the lien are inconsistent interests. See Robinson v. Cleveland State Bank, 282 S.W. 860, 866 (Tex.Civ.App.—Beaumont 1926, writ dism’d w.o.j). Therefore, since item one was purportedly sold by Milam to Mi-lam, appellee’s security interest in that equipment has priority. We accordingly affirm the trial court’s judgment as to item one. However, with respect to items two through eight, we hold that because Borg-Warner has conclusively proven all essential elements of its cause of action as a matter of law, Borg-Wamer holds the superior lien and is therefore entitled to summary judgment as to these items.
We reverse and render as to items two through eight and affirm the judgment of the trial court in regarding item one.
*355Before GUITTARD, C.J., and SPAR-LING 1 and HUGHES2, JJ.

. The Honorable Jon Sparling, Justice, resigned December 31, 1985.

. The Honorable W.A. Hughes, Justice, Second Court of Appeals, Fort Worth, retired, sitting by assignment.