Central Production Credit Ass'n v. Hopkins
810 S.W.2d 108 (Mo. Ct. App.1991)
HOGAN, J.
This is an action for damages arising out of the defendants' alleged
conversion of plaintiff's security interest in 88 head of cattle. A jury trial resulted in
a verdict for the defendants. The plaintiff appealed. Upon review this court found that
prejudicial error had been committed in submitting a question of law to the jury. The
judgment was reversed and the cause was remanded. Ozark Production Credit Association v.
Hopkins, 718 S.W.2d 667 (Mo.App. 1986). On retrial the defendants again had a verdict and
the plaintiff has appealed. We affirm.
Plaintiff Central Production Credit Association, to whom we shall refer as PCA or the plaintiff, financed a continuing farm operation for one Billy Walden. On October 23, 1981 Walden and his wife executed a promissory note payable to PCA in the amount of $346,496.43 and secured the debt by executing a deed of trust and a security agreement. Section 2 of the security agreement describes 851 head of cattle, three farm implements and one brush hog. Paragraph 2.d. of the security agreement provides that after-acquired property, whenever acquired, shall secure the obligation covered by the security agreement.
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Defendants Bruce and Jo Anne Hopkins operated the Fair Play Sales and Auction Company, a livestock sale barn. The record indicates they dealt regularly with Billy Walden, and Bruce Hopkins was aware that PCA had been loaning Walden money to conduct a farming operation. In July 1982 defendant Bruce Hopkins agreed to sell Walden 100 head of cattle to be selected by Walden. The terms of the agreement were that Walden would select or "bid in" 100 head of cattle in lots of varying size and would pay for the cattle when 100 head had been selected. At various times between July 9 and August 10, 1982, 88 head of cattle were "bid in" by Walden at six different sales held at the defendants' auction barn. The sales tickets were made out to Bill Walden but it appears that these tickets were never actually delivered to him. By agreement between Walden and Hopkins, the cattle were held on a farm which belonged to one Morris Bough. Hopkins and Walden agreed that as soon as 100 head of cattle had been accumulated on the Bough farm, Walden "was to write [Hopkins] a check for them and [they would] then [have] been his."
In the fall of 1982, perhaps earlier, the Waldens defaulted in payment of their loan. PCA "picked up and sold" some cattle and defendants Hopkins replevied the 88 head and sold them. Plaintiff thereafter commenced this action. Other facts will be noticed in the course of the opinion.
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The plaintiff's third assignment of error is that its motion for judgment n.o.v. should have been sustained because the rights acquired by Walden in the 88 head of cattle were sufficient for the plaintiff's security interest to attach.
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We are unable to find that Walden ever acquired any rights in the cattle sufficient to permit the plaintiff's Article 9 interest to attach. The provisions of the Uniform Commercial Code may be varied by agreement, @ 400.1-102(3); [Citation omitted] and defendant Bruce Hopkins testified without objection that he and the debtor, Walden, entered into an oral agreement by the terms of which Walden was to "bid in" 100 head of cattle which were to be assembled or held on a farm owned by Morris Bough. When 100 head of cattle had been identified to the contract Walden was to pay for them and the cattle would then become his. Walden agreed, according to Hopkins, not to remove the tags from the cattle, brand them or do anything else to them. During the time the 88 head of cattle were being accumulated, Walden did not care for or feed the cattle. Walden never removed any of the cattle to his farm. Hopkins himself paid $2,900 for feed, veterinary medicine and pasture for the 88 head, and eventually paid the sale price of the cattle. We bear in mind that the agreement between Hopkins and Walden was a contract for the sale of goods for the price of $500 or more. The contract appears to be a contract to which @ 400.2-201, one of the U.C.C. statutes of frauds, applies. The plaintiff made no objection to the evidence which established the contract, however, and its failure to object constituted a waiver of the statute of frauds as a defense. [Citations Omitted.]
To reiterate what we have already said or suggested, it cannot be said that the evidence compels the conclusion, as a matter of law, that Walden ever took possession or became entitled to take possession of the cattle. The defendants vigorously argue that Walden never acquired any rights in the 88 head of cattle, nor took possession of them, and never acquired any rights to or interest in them. In the circumstances presented, we must agree. A holding that Walden could transfer a security interest to the plaintiff would contravene the general principle that one cannot encumber another person's property. We affirm the judgment of the trial court.