Sheppard Federal Credit Union v. Michael A. Palmer
408 F.2d 1369
5th Cir.
1969
Check Treatment

*2 * GEWIN, Bеfore PHILLIPS GOLDBERG, Judges. Circuit GEWIN, Judge: Circuit argument Subsequent oral case, study of record appeared an errone- disclosed what to be proof. ous of Since allocation parties argued pоint, had requested court received from parties supplemental addressed to briefs questions (1) whether district court had erred in its instruction to jury on burden of if there error, plain was error whether it was reсognition requiring despite this court’s objection fact that no made it in the court After careful below. facts, consideration of the law district court we have concluded that the error, in the circum- erred and error; case, plain stances judgment accordingly, reverse the district court. dispute

The crux ap trial of this case pellant ap Credit seizure pellee legally Palmer’s autоmobile justifiable. mon borrowed ey purchase Union to taken a se car and latter had curity security agree interest it. The following ment contained the accelera tion clause: mortgagee any time f at said shall [I] chattels, mortgagor, deem said said said debt or insecure, unsafe said happening upon the then contingencies any them, said remain- whole amount herein secured * JudgеHarry Phillips Circuit, designation. sitting by of the Sixth ing unpaid, mortgagor emphasized said ad- The charge court payable, repeating mitted to be due and the substance of it in its rath- mortgagee may said mort- er at sаid Moreover, brief instructions. the first gagee’s option (notice special option of which issue out of six submitted to the hereby expressly waived), foreclose was couched in the same terms. The *3 mortgage by otherwise, charge clearly action or placed proof the of mortgagee hereby upon and said is author- the Credit Union to the establish upon premises to ized enter the where However, reasonableness of its conduct. goods may be, said the chattels Texas UCC states: “The burden of equity establishing remove and sell the good same and all lack of faith on the is redemption mortgagor of of the there- party against power whom the accel- [to in 3 ... has erate] been exercised.” The error patent. committed here is Under the insecurity Although so-callеd law, Texas the presumed creditor is to possible clause is drafted in the broadest good have acted in faith. The trial court terms, the Uniform Commercial Texas in this case presumption turned Codе it' clear that the secured makes good placed around party “only when it can if he in ‍‌‌‌​‌​‌‌​​​‌‌​‌‌​​​‌​​‌​​​‌​​​​​​‌​‌​‌​‌‌​​‌​​‌‌‍accelerate burden of pay proof prospect faith of believes that on the creditor. performance impaired.”1 ment or is appeal When the record on Deeming insecure, itself the Credit discloses that an error has been com Union in this seized Palmer’s auto case misсarriage mitted which results in a mobile which was still under the Credit justice, this court must control at the' these reverse time even proceedings. question primary though party in prejudiced raised no the court bеlow the credi was objection in the court below.4The er det reasonable, tor’s action from a stemmed justice mination of whether has mis good-faith security belief its always easy. carried is not The criterion impaired.2 about to become certainly ap not whether the court proves disapprove or does not the result In its instructions to many instances, case. such a part:

district court stated in permit standard would the court to sub damages Palmer is entitled unless to policy judgment stitute its own for that preponder- proves Credit Union a legislature. Indeed, of the state of the it had rea- ance evidence that present case, policy, as a matter of grounds to that on sonable believe disapprove court does not in result February 9, the debt involved 1967 court, the district . . bеcause . “[t]he security herein or said unsafe decision to throw burden of on insecure .... Property 43.4, (1965). 1, § at 1197 This 1. Tex. Bus. & Com. Code tit. § 1-208 (1967). The Uniform Commercial Code is not inconsistent with the rule in Texas originally adopted 1965, previous adoption Texas in to of the UCC. 30, 1966; g., See, Equipment with an effective date June e. Commercial Credit subsequently recodified, Corp. Elliott, 35, (Tex. the Code was ef- 414 v. S.W.2d 44 September 1, 1967, Civ.App.1967). fective and included part of as the Texas Business Com- 1, 3. Tex. Bus. & Com. Code tit. § 1-208 merce Code. . 2 In his excellent treatise Up-Right, Inc., 4. See Ross v. 402 F.2d Gilmore, interests, Professor indicates (5th 1968) ; Chagas 946 Cir. v. language of UCC 1-208 means Berry, (5th 369 F.2d 641 ‍‌‌‌​‌​‌‌​​​‌‌​‌‌​​​‌​​‌​​​‌​​​​​​‌​‌​‌​‌‌​​‌​​‌‌‍Cir. that “[t]he substаnce creditor has the 1966) ; Haugh Curlee, v. 265 130 F.2d right if, to under all accelerate the cir (5th 1959) (per curiam) ; Cir. Sadacca cumstances, man, a reasonable motivated Nylonet Corp., (5th 254 F.2d 238 Cir. by good faith, would have done so.” 1958) (per curiam). Security Gilmore, Interests Personal 5 However, service, ing applied we he debatable.” debtor salary reject accept time his liberty the Union for a loan. At that to not at Texas; per month. Other than summer legislative policy state of $400 is, part-time work, apply it as worked a to state law we are bound entering period of might it total six months before were. wish that not^as approval After the his service. plain Thus, purposes application, he E authorized a Class person rule, justice is done when error Allotment in the to amount $110.19 everything substantially recеived has paid to the Credit Union once a applicable he is entitled under month. convinced the court law. If resignation to his submitted . Palmer would in this case verdict award February less Air Force on substantially same under have been *4 receiving the months after than four proof, proper on burden of instructions day the to Credit next he loan. The went affirmed, judgment the would have to be appro- the offices informed and received Union have for the Credit would resignation priate and of officer of his substantially everything it to which was being accepted. possibility He the of its However, on entitled under Texas law. that he was consid- informed the officer us, say that the record before we cannot ering moving The to work. to Dallas charge made no sub a correct would have keys then to officer demanded the proof difference. Burden of stantial them car secured and Palmer handed and, always major importance in this protested had, that he al- over. close on the ease question evidence where making ways prompt pay- his in been good faith, crucial. it was ments and that nurse’s license would his during the introduced forty-eight get job The evidence permit in him to a facts fa- some retesting. to establish tended fifty trial states Nev- without to both some detrimental ertheless, vorable car retained the officer non- awas parties. The Credit Union keys subsequently Palmer to drove cоrporation un- governmental chartered repossession his home. This without Unions Bureau of Federal Credit prior contrary der the clearly notice to Sheppard Base Air Force and located on Department’s suggested Defense Stand- manager, According to its in Texas. ard of Fairness the Credit Union organiza- non-profit was “a Credit Union adopted.6 Subsequently, had Palmer’s tion, provides to its сost that low loans resignation Air Force ac- a fair them members and also offers cepted and he Dallas moved to where savings.” mem- their dividend on job nursing a at a secured substantial primarily of the. Union bers Credit salary. spite increase in Credit including military personnel, Palmer who car, Union’s retention of his he continued at the second lieutenant stationed was a monthly payments fully to make the bаse. air 5, 1967, promptly. May On Palmer filed year-old twenty-four a suit United District Court Palmer was States joined Air Force on the Northern District Texas. Af- man who trial, jury special May 28, years ter a answered of service as full 1966 for two interrogatories registered effect nurse. October that On malicious; after enter- Credit Union’s action had been some and a half months four (1) Gilmore, Security given You reasonable in Per- will bе no- 5. 2 Interests writing Property 43.4, tice in our intention to re- sonal at possess. repos- part: provided You after will be notified 9 of the Standard Item your obligation your session of to is re- total loan If your sаtisfy possessed union. This will include or reduce credit and sold to balance, your debt, following will to date loan interest due conditions repossession other costs to incident be met: sale. damages having requested punitive polled that the Court it awarded Palmer rehearing (Rule $4,225 banc, on as well as actual en the amount of 35 Federal damages. Appellate Procedure; Rules of Local 12) Fifth Circuit the Petition for Rule say we cannot On these facts Rehearing En Banc is denied. proper instructions would not have It is further ordered that costs of in some substantial altered outcome aрpeal equally be divided between debtor, way. regards As Appellant Appellee. and the it Union’s determination was inse certainly erroneous; cure it could

hardly a more conscien have asked ‍‌‌‌​‌​‌‌​​​‌‌​‌‌​​​‌​​‌​​​‌​​​​​​‌​‌​‌​‌‌​​‌​​‌‌‍for However, responsible

tious and debtor.

it more takes than mere error to show faith,

unreasonableness bad

mention malice. Thus on real issues closely divided,

the evidence was and we reasonably

think that a could decide against liability depending

either for or Accordingly, MASSENGALE, on its view of facts. Jack Petitioner- C. Appellant, opinion district charge erroneous re *5 miscarriage justice. sulted in a COMMISSIONER INTERNAL REV OF ENUE, Respondent-Appellee. brief, supplemental In his No. 13123. argues that his cause of action was based Appeals United States Court upon tort rather than contract and there Fourth Circuit. fore, the Texаs Uniform Commer April 1, 1969. provisions inapplicable. cial Code We accept cannot this contention. Some of underlying

the main reasons for enact simplify, ment of the Code ‍‌‌‌​‌​‌‌​​​‌‌​‌‌​​​‌​​‌​​​‌​​​​​​‌​‌​‌​‌‌​​‌​​‌‌‍“to clar ify govеrning law modernize the pur

commercial transactions.” These

poses completely would be if undermined provisions could be side Code stepped merely by labeling a suit as a tort

rather Any than a contract action. tort previously

action which existed for un repossession

lawful must be considered

displaced to the extent it conflicts applicable provisions.8

with Code

Reversed.

ON PETITION FOR REHEARING

AND PETITION FOR REHEAR- EN BANC

ING

PER CURIAM: Rehearing

The Petition for is denied Judge panel and no member of this nor ‍‌‌‌​‌​‌‌​​​‌‌​‌‌​​​‌​​‌​​​‌​​​​​​‌​‌​‌​‌‌​​‌​​‌‌‍regular active service the Court 1-103 § tit. 7. Tex. Bus. & Com. tit. Tex. Bus. & Co. Code Code 1-102 (b) (1967).