Cox v. Bancoklahoma Agri-Service Corp.

Citations: 641 S.W.2d 400; 35 U.C.C. Rep. Serv. (West) 288Docket: 9354

Court: Court of Appeals of Texas; September 29, 1982; Texas; State Appellate Court

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The case involves Edwin L. Cox, Jr. appealing a summary judgment favoring Bancoklahoma Agri-Service Corp. regarding a dispute over a security interest in cattle. In April 1979, James T. Harmon bought 367 cattle and provided a security interest to the Bank, agreeing not to sell without consent. In September 1979, Harmon sold 206 of these cattle to Cox without the Bank's permission. The Bank sued Cox for conversion, claiming its security interest in the cattle. 

Cox sought summary judgment, asserting he took the cattle free of the Bank's lien under Tex. Bus. Com. Code Ann. 9.307 (a), arguing that Harmon was not engaged in farming. He also claimed the Bank waived its security interest. The trial court granted the Bank's motion for summary judgment and denied Cox's.

Cox presented two points of error on appeal, challenging the trial court's findings on both the farming operations argument and the waiver of the security interest. He contended that the Bank did not prove an essential element of its case in a supplemental brief. The court reiterated that a summary judgment is valid only if the movant has shown no genuine issue of material fact and is entitled to judgment as a matter of law, with all evidence viewed in favor of the non-movant. The court noted that if the non-movant does not respond to the summary judgment motion, only the sufficiency of the movant's grounds is considered on appeal.

In *City of Houston v. Clear Creek Basin Authority*, 589 S.W.2d 671 (Tex.1979), the court examined two key points raised by Cox regarding the classification of cattle and the waiver of a security interest by the Bank. 

Firstly, under sections 9.307(a) and 9.109(3, 4) of the Business and Commerce Code, a buyer in the ordinary course of business can acquire goods free of a security interest, except for specific exemptions related to farm products. The court concluded that Cox failed to prove that Harmon was not engaged in farming operations, as Harmon had purchased cattle, grazed them, and then sold them, meeting the definition of "livestock" as farm products. The court found Harmon’s actions consistent with farming operations, thus ruling that Cox did not conclusively establish that the cattle were classified as inventory rather than farm products.

Secondly, regarding the claim of waiver of the Bank's security interest, Cox argued that Harmon's past sales of cattle without the Bank’s consent indicated a waiver of the security interest. However, the court noted that an affirmative defense must be conclusively established or a fact issue raised, which Cox did not achieve in this instance. Ultimately, both points raised by Cox were overruled, affirming the lower court's decision.

The court in Fisher v. First Nat. Bank of Memphis established that for a waiver defense to succeed, the party claiming waiver must demonstrate reliance on the conduct of the other party. In Nixon Construction Co. v. Downs, it was noted that waiver cannot be implied unless the other party was misled to their detriment. In this case, Cox failed to show reliance on Harmon’s prior sales, thus unable to establish or raise a factual issue regarding waiver. Furthermore, Cox's arguments based on course of dealing (1.205) and course of performance (2.208) were rejected, as these provisions pertain to contracts of sale, not security agreements. The court affirmed that the judgment of the trial court was upheld, and Cox's supplemental brief did not introduce new points for review since it lacked a specific point of error and did not raise fundamental errors. The court confirmed that Cox's cross-motion for summary judgment preserved his defenses for appellate review, following precedent from DeBord v. Muller.