Clovis National Bank v. Thomas

425 P.2d 726 (1967)

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Nature of the Case

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Facts

P loaned Bunch money on a number of occasions. To evidence and secure the indebtedness Bunch gave P a promissory note and a security agreement by which he granted a security interest in the cattle belonging to him and branded 'W D Bar.' On July 29, 1963, Bunch deposited $3,507 with P. This money represented proceeds from the sale by him of 35 head of cattle covered by the security agreements. Of this amount, $3,300 was applied by P on the indebtedness then owing. On October 29, 1963, Bunch deposited with the sum of $5,613.17, which was applied to his indebtedness, and which amount represented proceeds from the sale by him of 56 head of cattle covered by the security agreements. P was aware that Bunch was making sales of cattle covered by the security agreements. In September 1963, Bunch applied for an additional loan to purchase additional cattle. P approved the loan, and cattle were acquired. On November 12, a new note in the principal amount of $21,500 and a new security agreement covering 283 head of cattle branded W D Bar were presented by P to evidence, and secure Bunch's then indebtedness. There was $2,007.67 still owing on the original note of March 27, $2,743.10 credited to his checking account on November 12, and amounts loaned or advanced to him during the intervening period. The security agreement was duly recorded in both Curry and Quay counties. Cattle covered by the November 12 security agreement were consigned to D for sale at public auction. P had no actual knowledge of these sales and had not given any express consent to make the sales. The total value of these cattle was $16,450.34, and P sought recovery from D of this amount. Bunch's son was the owner of a brand referred to as 'Swastika K.' At least 90 head of cattle were acquired by either Bunch or his son and were branded Swastika K. There was some evidence tending to show that these cattle, at least to some extent, were actually the property of Bunch. On July 15, 1964, P requested that Bunch sell the remainder of his cattle, including the Swastika K cattle. Ninety head of Swastika K cattle were trucked to D's place and were carried on D's records as belonging to the son. P told D that P claimed some interest in the cattle. D was not told the nature or extent of the claimed interest. P was aware of the sale and advised D that it would be 'nice' if the check in payment for these cattle could be made payable to one or both of the Bunches and P. P never demanded or requested that D not make payment to the son. The son demanded payment from D. D paid the son $7,777.84, which is the amount of P's claim against D under the second cause of action. P sued D and the Bunches. Judgment was rendered to D. The court held that P consented to the sales of W D Bar cattle covered by the security agreement of November 12, and thus waived any possessory rights it may have had in these cattle, and (2) that P had no perfected security interest in the Swastika K cattle, and failed to prove an unperfected security interest in these cattle of which D had knowledge. P appealed.