Court Opinion

ID: 9517332
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:13:30.916127+00
Date Added: 2024-06-11T09:52:31.651143
License: Public Domain

DISSENTING OPINION

Young, J.
I would reverse the judgment below as being contrary to law.
The judgment of the trial court is not sustained by the special find*122ings of fact and is erroneous. The judgment cannot be sustained as a conclusion of law when it is inconsistent with the findings. See Schwegman v. Neff (1940), 218 Ind. 63, 29 N.E.2d 985.
The trial court found the following facts:
1. That Maxford Fox owned a 1957 Chevrolet automobile.
2. That he gave it to his granddaughter, Glenda Sue Sims, as a wedding present.
3. That Boyd Fox, the son of Maxford Fox and father of Glenda Sue Sims, inscribed upon his father’s certificate of title a $1,000 lien in favor of himself.
4. That neither Maxford Fox nor Boyd Fox received any consideration for the transfer of the title.
5. That Glenda Sue Sims received no consideration from either her grandfather or her father for the inscription of the lien.
6. That Boyd Fox has never demanded payment from his daughter of the $1,000 and that his daughter never offered any amount to her father in satisfaction of such inscribed lien.
7. That a prior trial court, in a proceeding between Boyd Fox and Rexall Crites, had found an enforceable lien in favor of Boyd Fox.
Appellant-VanNatta contended that the trial court erroneously determined that Boyd Fox had a valid lien. The majority opines that the validity of the lien was not an issue in this case. They recognize that VanNatta was not a party in a prior suit between Fox and Crites which held the lien to be valid. They hold since VanNatta filed no cross-claim against Boyd Fox, a defendant below, the issue cannot be presented as a defense against Crites.
I disagree.
Validity was an issue and could be presented as a defense. See Ind. R. Tr. P., TR. 8. The validity of the lien was determined by another trial court. One who was a stranger to an action is not bound by the judgment therein. McClure v. Raber (1939), 106 Ind.App. 359, 19 N.E.2d 891. VanNatta was not a party or in privity with a party in the suit between *123Fox and Crites in the Monroe Superior Court II. I agree that the judgment was admissible as evidence of its rendition and legal consequences thereof. But, the judgment was inadmissible to prove a fact upon the supposed existence of which the prior judgment was secured.
Since I would allow VanNatta to present the issue of validity as a defense, which he in fact did, it is necessary to consider the merits of the attack.
The trial court found that the automobile was a gift from grandfather to granddaughter, the father had no pecuniary interest therein. There was no finding that the grandfather reserved a security interest in the auto, only the father. VanNatta argued that there was no underlying obligation which would give rise to a lien. With this I agree. Whether the grandfather may make a gift and retain security interest therein is not an issue. The issue is whether the father, a third party, after the grandfather makes the gift, may create a security interest in himself. He cannot.
None of the elements necessary to create a valid security interest were present here. For example, one of the elements is that it must attach. See IC (1971) § 26-1-9-204, Indiana Comment to U.C.C.. IC (1971) § 26-1-9-204 provides, in part, “A security interest cannot attach until there is agreement... that it attach and value is given and the debtor has rights in the collateral. It attaches as soon as all of the events in the preceding sentence have taken place unless explicit agreement postpones the time of attaching.” (Emphasis added.) Here no value was given. Value is given:
(a) in return for a binding commitment to extend credit or for the extension of immediately available credit whether or not drawn upon and whether or not a chargeback is provided for in the event of difficulties in collection; or
(b) as security for or in total or partial satisfaction of a preexisting claim; or
(c) by accepting delivery pursuant to a preexisting contract for purchase; or
(d) generally, in return for any consideration sufficient to support a simple contract.
*124IC § 26-1-1-201(44). The evidence shows that the father gave no value and the granddaughter gave no value. No security interest was created. With no security interest created, there was no valid lien held by the father. The trial court by finding VanNatta liable, implicitly held the lien to be valid. This is contrary to law because the conclusion is unsupported by the findings of fact. Logic dictates that if there was no valid lien, there could be no negligence in failing to note one on the certificate of title.
It must be recognized that Boyd Fox is entitled to a $1,000 windfall as a result of the judgment lien entered by Monroe Superior Court II. The majority would have that liability fall on the State of Indiana. Such a result is inequitable. The loss must fall on the party (Crites) who failed to pursue an appeal of the Monroe Superior Court II judgment.
NOTE —Reported at 381 N.E.2d 532.