Wаrd ALLEN and Allen‘s Excavating, Appellants-Plaintiffs, v. FIRST NATIONAL BANK OF MONTEREY and Claiborn Wamsley, Individually and in his capacity as President, George Wamsley, Individually and in his capacity as Sr. Vice President, Randy Howard, Individual and in his official capacity, and Dick Gearhart, Individually and in his official capacity, Appellees-Defеndants.
No. 66A04-0506-CV-364
Court of Appeals of Indiana.
April 18, 2006.
845 N.E.2d 1082
MAY, Judge.
OPINION
Ward Allen (“Ward“) appeals summary judgment in favor of the First National Bank of Monterey, Claiborn Wamsley, George Wamsley, Randy Howard and Dick Gearhart (collectively “the Bank“).1 Allen contends the trial court erred in granting the Bank‘s motion for summary judgment because the Bank‘s perfected security interest does not preclude all liability for damages. We reverse and remand.
FACTS AND PROCEDURAL HISTORY2
On May 20, 1999, Cheyenne Allen (“Cheyenne“) borrowed $35,000 from the Bank. The note was secured by a mortgage on real property and by four pieces of equipment including a 1982 Case 580D Backhoe (“the backhoe“), a 1969 JD350 Dozer, a 1983 International Dump Truck and a 1981 Tandem Trailer Beavertail. George Wamsley, the Bank‘s senior vice president, signed the note for the Bank. The Bank filed Finаncing Statements on the backhoe with the Pulaski County Recorder on May 25, 1999 and with the Indiana Secretary of State on May 28, 1999.
Ward made monthly payments to the Bank until February 2001.3 The Bank subsequently notified Ward and Cheyenne that Cheyenne‘s loan was in default. Dick Gearhart called Ward and his wife Melissa numerous times concerning Cheyenne‘s note. According tо Melissa, Gearhart stated the Bank had no intention of taking the backhoe from them. George Wamsley asked Ward to encourage Cheyenne to make payments but did not ask Ward to pay Cheyenne‘s note.
On August 28, 2001, George Wamsley and another man went to Ward‘s house and, after a heated discussion and over Melissa‘s objections, took the backhoe.4 Melissa‘s mother was present during this incident and because she feared for her safety and that of her daughter and grandchildren, she went to her house next door “to get [her] gun.” (App. at 115.) Melissa called the policе because she felt threatened by George Wamsley and his companion.
In subsequent discussions with the Bank‘s president, Claiborn Wamsley, Ward learned the Bank had a perfected security interest in the backhoe. In January 2003, Ward sued the Bank for damages, alleging breach of contract, сonversion and fraud. In April 2005, the Bank moved for summary judgment on the grounds that its perfected security interest was superior to any interest Ward may have had in the backhoe. The trial court granted summary judgment for the Bank on June 1, 2005, entering findings of fact and conclusions of law.
DISCUSSION AND DECISION
Summary judgment is appropriаte when there are no genuine issues of material fact and the moving party is entitled to a judgment as a matter of law.
Specific findings of fact and conclusions of law are neither required nor prohibited in the summary judgmеnt context. City of Gary v. Ind. Bell Tel. Co., Inc., 732 N.E.2d 149, 153 (Ind.2000). Such findings aid our review of a summary judgment, but they are not binding on this Court. Id.
Ward argues: “The crux of this appeal is whether or not [the Bank‘s] perfected security interest absolved the Bank of any liability for acts regarding [the backhoe] that would be a tort, fraud or breach of contract.” (Br. of Appellant at 10.) He
We assume for purposes of summary judgment there was an oral contract between Ward and the Bank regarding the purchase of the backhoe. As the contract was not reduced to writing, the issue is whether the Bank‘s perfected security interest trumps the oral contract between Ward and the Bank. It does.
The security agreement Cheyenne signed provided he would “not try to sell the property unless ... [he] receive[d] [the Bank‘s] written permission to dо so.” (Appellant‘s App. at 29.) Although Ward discussed the purchase of the backhoe with the Bank, the security agreement required written permission from the Bank before Cheyenne could sell the backhoe. The security agreement stated: “No modification of this security agreement is еffective unless made in writing and signed by [the Bank] and [Cheyenne].” (Id.) While Ward and the Bank may have orally agreed to modify the security agreement and allow Ward to purchase the backhoe, the modification was not effective under the Code because it was not in writing.
Because the modification intended by the oral contract was not effective, the Bank‘s security interest in the backhoe was superior to any interest Ward may have had. When Cheyenne defaulted on the loan, the Bank as the secured party had the right to take possession of the backhoe.
A secured party may take possession of collateral after a default “without judicial process, if it proceeds without breach of the peace.”
The case ... presents the question whether the owner of personal property, who is entitled to its possession, may by force retake it against the resistance of
the one in possession. Blackstone, who is the source of most of our present law, says, on page 4, volume 3, of his Commentaries, that the owner of goods, who has been deprived of the property in them, “may lawfully claim and retake them wherever he happens to find them, so it be not in a riotous manner, or attended with a breach of the peace; * * * that this natural right of recaption shall never be exerted where such exertion must occasion strife and bodily contention, or endanger the peace of society.”
Singer Sewing Mach. Co. v. Phipps, 49 Ind.App. 116, 123, 94 N.E. 793, 796 (1911), reh‘g denied, trans. denied.
We addressed what constitutes a “breach of the peace” under a similar predecessor statute: “[I]f the repossession is verbally or otherwise contestеd at the actual time of and in the immediate vicinity of the attempted repossession by the defaulting party or other person in control of the chattel, the secured party must desist and pursue his remedy in court.” Census Fed. Credit Union v. Wann, 403 N.E.2d 348, 352 (Ind.Ct.App.1980).
Melissa contested the repossession verbally and called the police. Melissa‘s mother felt sufficiently threatened by the events to retrieve her gun from her home next door. Despite this, the Bank did not desist from repossessing the backhoe and pursue a judicial remedy.
(a) If it is established that a secured party is not proceeding in accordance with
IC 26-1-9.1 , a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.(b) Subject to subsеctions (c), (d), and (f), a person is liable for damages in the amount of any loss caused by a failure to comply with
IC 26-1-9.1 . Loss caused by a failure to comply may include loss resulting from the debtor‘s inability to obtain, or increased costs of, alternative financing.(c) Except as otherwise provided in
IC 26-1-9.1-628 :(1) a person that, at the time оf the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under subsection (b) for its loss[.]
Ward had an interest in the backhoe as a purchaser of the collateral. He accordingly may be able to rеcover damages, if any, caused by the Bank‘s failure to comply with
The Bank‘s perfected security interest is superior to Ward‘s interest in the backhoe. However, the Bank may be liable for its failure to comply with
Reversed and remanded.
KIRSCH, C.J., concurs.
ROBB, J., conсurring in part, dissenting in part with separate opinion.
ROBB, Judge, concurring in part, dissenting in part.
I agree with the majority‘s resolution of the breach of the peace issue. However, because I believe there are issues of material fact with respect to whether the Bank should be estopped to assert a superior interest in the backhoe, I respectfully dissent from the majority‘s resolution of this issue.
There are several estoppel doctrines, including equitable estoppel, all of which are
The majority assumes there was an oral contract regarding Ward‘s purсhase of the backhoe. See op. at 1085. Yet, despite knowing of its security interest in the backhoe, the bank did not disclose this interest to Ward prior to entering into the agreement—concealment of a known material fact. True, a financing statement disclosing the security interest was properly filed. However, the security interest was not disclosed to Ward, and given the informality of the dealings between Ward and the Bank, the Bank had reason to know that Ward would not independently search the records before acting on the Bank‘s agreement that he need not take out a new loan to purchase the backhoe. Moreover, according to the evidence favorable to Ward, the non-movant, the Bank affirmatively stated an intention not to take the backhoe when Cheyenne‘s loan went into default. Ward paid the full amount fоr the backhoe before finding out about the security interest—relying to his detriment on the Bank‘s agreement without knowing the material facts. Given this evidence, I would hold that there is at least a question of fact regarding the Bank‘s entitlement to assert its security interest given its conduct and statements prior to repossessing the backhoe.