*1 525 authorization, were nei and the agreement required to nor certified
ther sworn BANK IN FIRST NATIONAL GRAND Corpo A(e). Texas National See Rule 166— PRAIRIE, Appellant, International, Systems v. United ration v. Inc., (Tex.Sup.1973); 493 Gard S.W.2d 738 Martin, 156, 274 v. 162 Tex. ner STAR LIFE INSURANCE LONE Neuhaus, (1961); Kain v. 45 COMPANY, S.W.2d Appellee. (Tex.Civ.App. Corpus Christi — 18487. No. subject writ). Plaintiff’s affidavit was then Texas, Appeals Civil exception because verified or certified Dallas. two instruments were not copies served with the to or Smith affi attached Feb. Youngstown Tube v. Sheet & Co. davit. May Denied Rehearing Penn, (Tex.Sup.1963). Ob S.W.2d jections kind not be raised for appeal time on fairly ap
the first when it
pears (including from record the affida genuine there is
vit) issue as to moving party fact and that the
material judgment
entitled as a matter of law.
Youngstown Penn, Sheet & Tube Co. v.
supra; Compress Farmers & Merchants & Dallas, Company City
Warehouse (Tex.Civ.App. — Dallas e.). However, n. r. ref’d since the
writ
plaintiff has failed to show he is entitled to here, deficiencies, judgment have been upon proper
should corrected ex court, trial
ception noted. of the errors hereinbefore set
Because
forth, judgment of the trial court is and the cause remanded for trial.
reversed
Reversed and remanded.
527 *2 pay
bank refused to on a deposit payable to T. H. Ham- alleged Lone Star that it ilton. owns the deposit by virtue of foreclo- security agreement under a between sure and Hamilton. The certificate of *3 purchased by was Hamilton with from Lone simultaneously funds closing of a real estate loan transaction Star, Hamilton and between Lone pledge of the certificate of deposit was one of the conditions of the loan. Hamilton security agreement signed covering the delivered the se- curity agreement and certificate of deposit Star. to Lone present bank was An officer transaction, and, as the trial throughout evidence, he had on sufficient found court knowledge that the certificate of de- actual pledged to Lone Hamilton Star. posit all and Lone Star foreclosed on defaulted security, including deposit, the bank. The bank then and notified equitable an to offset Hamil- claimed to the indebtedness bank previous ton’s at- the certificate against so. tempted to do Lone Star contends that the bank could its claims not offset the certificate because the bank had notice of funds, interest Star’s as National Indemnity such decisions Co. v. Branch Spring State 162 Tex. (1961), which hold knowledge a bank has deposi- where that a funds, funds are trust tor’s bank Boone, Dallas, Templin, Haynes & Don C. and detain such not seize funds to offset a appellant. for depositor bank. The debt contends that these bank decisions are not Jr., Sims, Gilchrist, D. Jenkens & William controlling in this case because the Uniform (cid:127) Dallas, appellee. . Code, which was adopted Commercial 1967, requires the filing of a financing AKIN, Justice. statement for perfection of a security inter- Company Life Insurance sued est in such a agree We with the Bank in Grand Prairie to National here, applies First Code1 but we $30,000 interest plus which the agree with Lone also Star’s alternative con- recover to the Code are to the 1. All references Tex.Bus. & Comm.Code Ann. 1968). deposit.” a certificate of denced tention that conclusion is bank’s that since the certifi- from an distinguished “instrument,” cate of excluded respect to account, is an 9.104, which enumerates transactions ex- security interest can be from article cluded and since a without possession, only by transfer statement, deposit is not account under under Tex. of a filing 9.105(a)(5), then this entire transaction Bus. & Comm.Code solely by governed the Code. We Indemnity with this conclude that the National contention. We We provisions interpret concerning se apply opin- here because that does rule ion, curity respect interests as exclusive with adoption which was written before Code, perfection in such a treats the certificate interpretation This *4 account. The how- certificate. accord like policy of the ever, sharp provide with Code to a distinction between ance makes certainty uniformity and the rules 9.105(a)(5) gov Article of the in its Code two. erning scope. transactions within its specifically Tex. “deposit of account” definition (Tex. Ann. 1.102 a “certifi- Bus. & Comm.Code UCC § an account evidenced excludes 1968). Furthermore, 9.104(12) deposit.” of § cate
provides apply that article 9 does not Supreme Court the recent cites The bank “deposit an interest of transfer and Trust Tyler v. Bank of Hudnall cases (except provided respect account” (Tex.1970) and Co., 458 S.W.2d proceeds). priorities and proceeds Hill, of Dallas National Bank Citizens Therefore, regard- of a certificate arose aft- (Tex.1974), which falls within the ambit negotiability, of less proposition for the of the adoption er article 9 of the Code. of upon impress a trust seeks to who one that was to show that the funds or such here is not affected The situation (as “special a manner some restricted 9.104(9), “any right of which excludes § agreed that show must deposit”) 9. requirements from the of article set-off” of a restriction provision, of this context means In the as trustee. to act agreed a of setoff is not the claimant with the comply Code. does required point because we reach this We do not successfully that a setoff can be mean later, reasons to be hold, for discussed party perfected who has asserted security perfected prescribed interest in the manner of the certificate under taking possession by article agreement. We do not consider holding the National cases these alleged pledge bank asserts that The Indemnity applies rule to certificates of still governed by here, Code, because no deposit as under the 9.102(b), which that article 9 of the states § were involved. The certificates security interests “applies to created “deposit in each were deposits involved including pledge, assignment,” by contract definition in 9.104 accounts” is not a therefore, and, coverage by excluded from as defined under Tex. account” “deposit Consequently, Supreme article 9.105(a)(5) (Tex. Ann. § Bus. application no occasion consider the had provides: de- Supp.1974), “[A] UCC deposit.” to a “certificate the Code time, like mand, savings, passbook or v. First that Martin State also note bank, savings We maintained account (Tex.Civ.App.— association, or like credit union loan 1973, writ), follows apparently no Amarillo evi- than an account organization, part pa- which constitute of chattel ments However, Indemnity rule. National only by the can be secured per) presented, under the Code was question . . .” taking possession party’s distinguishable [Em- facts. The on its Martin phasis added.] turned on the construction of a decision party between Martin and a third
contract whether or upon then turns question The had assigned been to the bank. is an “instru- not the the bank had of the certifi Since Tex.Bus. & Comm.Code Ann. ment” pledge agreement cates under a Supp.1974) of the 9.105(a)(9) Martin, under the Code the ambit Code, thereby bringing it within The case simply raised. was one of 9.304(a). of § ambiguous of an written con interpretation that a certificate bank asserts Martin and the bank with tract between cannot be an “instrument” under application proceeds reference 9.105(a)(9) of the Code because the re the certificates of “Non-Negotiable” legend strictive We conclude that the rule in Nation from be prevent Indemnity except is still the law in Texas al ing transferred in the course of like the present, cases in which it has assignment. We business displaced by the Code. Tex.Bus. & been instrument is nonn Comm.Code egotiable.2 Nevertheless, we hold that *5 it is an “instrument” 9.105(a)(9). within § Although agree we with the bank This section is not negotiable limited to that the Code applies perfection to the of a provides: instruments. security interest in a certificate of deposit, cannot requires we the Code ‘Instrument’ means a negotiable instru- filing financing of a statement with the (defined 3.104), ment in Section or a se- Secretary in of State a case like the (defined curity 8.102) in Section or any undisputed Here it is present. that Lone writing which evidences a right to did not file a statement. money and payment is not itself a Therefore, question is: Did Lone Star security agreement or lease and is of a security perfect interest in the certificate in ordinary which is type course of busi- question by in deposit taking possession ness transferred to a security agreement? pursuant necessary indorsement or assignment. 3.104(c) [Emphasis Section provides: the Code added.] title, in other chapters “As used of this A certificate of a writing is context require, as the the terms payment money. evidences ‘draft’, ‘check’, ‘certificate deposit’ question is whether The or not it may be may refer to ‘note’ instruments which are ordinary transferred course of busi negotiable not within this chapter as well as delivery by ness necessary en instruments which negotiable.” so assignment. “Instrument” dorsement in [Emphasis added.] 9.105(a)(9) non-negotiable covers docu § 9.304(a)provides: of the language Section “A ments because security in- “in (other in instruments of business terest course delivery than instru- This certifies T. H. negotia- Hamilton has is a certificate 2. Whether payable deposited deposi- in this bank non-negotiable determined ble or Thirty funds the writing “non-negotiable” tor in current Thousand sum of labeling the but negotiable pay- No/100 Dollars which To be it must be its terms. agrees pay “bearer;” otherwise, deposi- amount “order” or it is able to non-negotiable. upon presentation of this 3.104(a). tor certificate. § question in The certificate non-negotiable. It states:
530 . any necessary . 817 assignment.” (Tex.Civ.App.-Corpus 1974, be no reason writ) for the
There insertion Christi similar certificates of language aforesaid if we held to of the construed were be “instruments” with 9.105(a)(9). “instrument” only term to mean a in We have reviewed the instrument, as the bank would have record in Southview and find that both concept us do in this case. The certificates of there non-nego were tiable, 9 of the provide of article Code is to inas this case. whereby security all method interests in Nothing in the certificate of property per- and fixtures can be
personal
prohibits
question
assignability
its
instances,
In some
filing
fected.
is re-
transferability. The fact that it is non-ne
and, in others possession of the
quired,
col-
gotiable simply
party
means the third
can
In re Atlan
all that is necessary.
lateral
be a holder
due course and does not
Inc.,
Times,
259 F.Supp.
(N.D.Ga.
ta
deny
the certificate of
the status of
affirmed,
1966),
Sanders v. National Ac
an “instrument.” Tex.Bus. & Comm.Code
America,
ceptance
(5th
Co. of
Star of this case are sim- relatively The facts interest on the accrued rights being sued Lone Upon ple. deposit prior to foreclosure certificate upon recover 16, 1972, May modify on we thereon any liability because such cer- denied bank the bank’s of setoff to
judgment
tificate
$275, representing
interest
extent
setoff
also
was entitled to
prior
Hamilton
accruing to
foreclosure
obliga-
certificate of
against
However,
Star.
after foreclosure
bank,
Hamilton to the
were
tions
owned the certificate of
Therefore, the primary question
default.
therefore,
and,
entitled to
by this case is whether or not the
presented
accruing thereafter.
Bell
Southwestern
was entitled to a
setoff
Co.,
v.Co. Crown Ins.
Tel.
I
consider Tex.Bus.
City Mo.Ct.App.1967).
(Kansas
9.104(9) (Tex.
demonstrating
provi-
Supp.1974),
Although the trial court rested its
sion of the Uniform Commercial
on a
judgment
ground,
judg
different
question.
to the resolution of this
applicable
must be sustained if it
ment
is correct on
majority opinion urges that article 9
any theory
applicable
of law
to the record.
the Texas Business and Commerce Code
Paving Co. v. Cimarron Construc
Austin
1968)
applicable
Annotated
tion, Inc.,
do WILLIAMS, Justice CLAUDE Chief First, the fact that a certificate of (concurring). not fall within the Uniform Commer- does “deposit with, cial Code definition account” con- agreement I am in While 9.105(a)(5) Ann. Tex.Bus. & Comm.Code by majority § the in, the result reached cur Supp.1974) is no reason to hold (Tex. UCC judgment of the trial court should the Texas Business Code Any the and Commerce herein to the refers to reference Code (Tex. UCC Annotated Code com- the Uniform Commercial is this case. Star has a interest, controlling in this case.2 pletely sole right but the bank’s to the certificate deposit arises from its setoff Second, of de- the fact that a certificate of deposit. Since the is not enumerated in Tex.Bus. & posit presented solely setoff, that of Tex.Bus. (Tex. Supp. UCC Ann. 9.104 § Comm.Code Ann. 9.104(9) § UCC 1974), being coverage excluded from Supp.1974) indicates provision justification 9 is no to hold that of article Uniform Commercial Code is applicable to is control- Uniform Commercial Code question. the resolution The idea that not excluded something ling. Supreme As demonstrated Court’s coverage of the Commercial Uniform from post-UCC opinions in Hudnall v. Tyler Bank it, rejected expressly is included Code Co., and Trust (Tex.1970) S.W.2d 183 & 1.103 Comm.Code Ann. Tex.Bus. and Citizens Hill, National Bank v. 1968), provides that: “Un- (Tex. UCC (Tex.1974), it is clear that displaced by particular provisions less rule of National Indemnity is still the law title,” principles sup- law Texas The majority opinion in Texas. seeks to provisions. the Code’s plement these distinguish cases they fact that did not involve a deposit. certificate of Third, transac- the statement “this entire However, a certificate of deposit may evi- Code,” solely by the governed tion or general special dence a deposit depend- Tex.Bus. & Ann. Comm.Code refuted ing particular upon facts involved. which is enti- Supp.1974), Martin v. First State Chap- “Transactions from Excluded tled: (Tex.Civ.App. writ); —Amarillo part: chapter does says “This ter” Banks and Banking 9 C.J.S. at 641 (9) any right apply ... (1938). Additionally, it should be noted clearly This statement excludes set-off.” applied the Martin court the National controlling is the law idea Code Indemnity rule to a certificate of concerning the in this case right of the bank finding: case against the certificate of a setoff to assert On the hand a made for special application some disposition or is a way analogy, & Comm. By Tex.Bus. special and when a know- 9.104(7) (Tex. Supp.1974) accepts a ingly specific pur- for a a transfer of interest or an provides pose, it cannot thereafter divert it insurance is any policy in or under claim own benefit otherwise act to defeat coverage of article 9. The from excluded for which purpose the deposit was (7) to subsection states: comment special made. ... A one in other Rights specific under life insurance purpose, made for differs from accounts, are often general policies, spe- title to the up collateral. transactions does not put pass cial to the bank. quite special, easily do not fit often the relationship created [A]nd statute and general bailee, commercial is that by the of bailor *8 adequately by existing law. covered that of rather than creditor and debtor. (With therein) authorities cited policy clearly applicable is in this Such parties, We do not have two case points also The Martin out that the situation. variety a inter- with some of of determination whether a is a each of involved in special a general in or turns the est on collections, posits any applicable urged of arti- and section in this has one 2. No Ann. case. & Comm.Code 4 of Tex.Bus. cle banking 1968), de- deals with which by delivery any necessary transferred with intentions and understandings mutual of assignment,” or within indorsement “as revealed parties, agree- the their 9.105(a)(9)of the Code.1 The insists ments and all of the circumstances of the “ordinary the course of business” of involved.” case regarding certificates banks court, findings in its of facts The trial proved. has not been of law, of found that the bank and conclusions knowledge and that the actual notice had of that the status doWe pledged to of an “instrument” within certificate as the to security for the loan of Lone Star Star'as a matter of fact to be left to Codeis $30,000. amount of Hamilton testimony,. oral a of uncertainties in this case shows evidence uncontradicted contrary underly be to the holding would bank, Murdock, at- an officer of the “simplify, clarify of the Code to ing purpose closing between Lone and Star tended governing the law commer modernize and Hamilton This officer observed Hamilton. 1.102(b)(1). It transactions.” Section cial sign security agreement and turn result, instead, uncertainty would agreement and the certificate a person lending money because confusion then to Lone Star. This bank officer over such a the holder of certificate would to $30,000 by Lone accepted supplied in funds difficulty determining whether he have depos- of the certificate of payment perfect by tak his should found that the bank had it. The court the collateral under ing knowledge that the certificate had actual 9.304(a) by filing a statement Star; $30,000 pledged Lone been Secretary of State purchase of that certifi- funded 9.401. 9.302(a) and §§ Star; belonged Lone cate clarity in such transactions Simplicity had an interest in such holding a matter of achieved is better findings the ques- Under these certificate. non-negotiable certificate of de- law definitely banking one of setoff tion as defined is an “instrument” posit long has since been established law Unquestionably, it 9.105(a)(9). satisfies Supreme Court in National Indemni- in this definition of a requirement findings construe these ty. I would “writing which evidences the being the trial court final conclusions money.” that it We conclude payment question to the of whether or regard type ordinary which in course is “of also agreed quasi-trust business Therefore, in this I case. agreement assignment.” necessary indorsement or the offset deny judgment and affirm the court, but not based on trial “type” may interpret be The word of the Uniform construction Com- strained narrowly broadly. light In the either ed Code. mercial purpose of the we do general narrowly only it to refer
not construe character, exactly the same writings of MOTION FOR REHEARING ON case, non-negotiable certifi as, in this GUITTARD, Justice. Instead, we construe it cates which, any writing like a broadly to include in its motion for rehear- argues The bank instrument, negotiable certificate or stock we should remand the case for ing that rights repre as a token there is no evidence that is treated because new trial and, therefore, normally delivered “is of a sents any person to rights whom the are trans- which is in course of business type opinion 1968), in this are to Tex.Bus. references 1. All *9 as amended. depositor by possession bility to the resem- The certificate ferred. assignment. as well as certificate than it resem- instruments more bles accounts, which are ordinary bles Indeed, does not deny all liabili- distinguished from certificates expressly assignee Lone Star as of the certifi- ty to 9.105(a)(5), governed deposit in cate, liability denies only but to the extent 4 of the chapter rules out in set different But, the offset which the bank claims. writing the holder must It is Code. that the we hold certificate is “of a since as right, of his present as evidence keep and is in type course of business expressly provides. language its transferred party to another by one easily be delivered necessary indorsement any assignment,” transaction. of a commercial the course therefore, and, is an “instrument” within can normal- such a certificate Possession 9.105(a)(9), its securi- the issuer and others give expected ly be by taking possession under ty interest inter- possessor claims some notice 9.304(a), per- and the interest so represents. which it rights est over the claimed prevails offset. fected commer- effective and more is more notice overruled. Motion filing a reasonable than cially If Secretary of State. with the statement AKIN, J., opinion. concurs in this assign- accompanied by an original depositor, the issuer from ment WILLIAMS, J.,C. concurs in CLAUDE payment have reason to refuse overruling the motion for rehear- the order Accordingly, we hold that assignee. for the reasons set forth in his ing only law, a matter of question, concurring opinion. ordinary course of which is in type “of a delivery business assignment.” indorsement
necessary
The bank insists that if some party, case, such as Lone
third Star in this certificate, present should UHL, Inge Appellant, required pay would not be because the v. would not party bevihe“depositor” third agreed pay the bank had whom mon Bentley UHL, Appellee. Chell argument ey. erroneously This assumes No. nonassignable the certificate is as well Texas, Appeals of Civil non-negotiable. Although the certificate Fort Worth. “payable because is not within 3.104(a)(4), or to bearer” to order May therefore, and, a transferee could not be a course, in due it is nevertheless holder as like other contract
signable, right not
involving personal trust Ray or confidence. (Tex.Civ. Spencer, ref’d). writ Noth
App. — Texarkana the certificate or the Code limits
ing in If the assignability. party third should bank, together the certificate to the
present assignment signed by depositor, an bank, paying on amount
certificate, protected against would be lia