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Page 1
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
Missouri Court of Appeals,
Southern District,
Division One.
CABOOL STATE BANK, Plaintiff–Respondent,
v.
RADIO SHACK, INC., d/b/a Tandy Corporation, Defendant–Appellant.
No. 24381.
Jan. 30, 2002.
Bank sued franchisor, which had taken possession of inventory after franchisees had ceased operations, claim-
ing that bank had perfected security interest in inventory superior to any claim franchisor had. After a bench trial,
[1] Appeal and Error 30 846(1)
30 Appeal and Error
30XVI Review
30XVI(A) Scope, Standards, and Extent, in General
30 Appeal and Error
30XVI Review
30XVI(I) Questions of Fact, Verdicts, and Findings
30XVI(I)3 Findings of Court
30k1010 Sufficiency of Evidence in Support
30XVI Review
30XVI(I) Questions of Fact, Verdicts, and Findings
30XVI(I)3 Findings of Court
30k1012 Against Weight of Evidence
30k1012.1 In General
Page 2
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
The decision in a court-tried case will not be disturbed on appeal unless the judgment is not supported by sub-
stantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law.
Appeal and Error 30 931(1)
30 Appeal and Error
30XVI Review
30 Appeal and Error
30XVI Review
30XVI(A) Scope, Standards, and Extent, in General
30k851 Theory and Grounds of Decision of Lower Court
30XVI(A) Scope, Standards, and Extent, in General
30k851 Theory and Grounds of Decision of Lower Court
30k854 Reasons for Decision
30k854(2) k. Review of Correct Decision Based on Erroneous Reasoning in General. Most Cited
Cases
349A Secured Transactions
349AII Perfection of Security Interest
349Ak92 Financing Statement
349Ak92.1 k. In General. Most Cited Cases
Page 3
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
Change of franchisees' business name could not have seriously mislead franchisor such that bank had to file
new UCC-1 financing statement to perfect security interest in store inventory; franchisor stipulated that it sold in-
ventory to franchisees and new business, franchisees bought original inventory in their individual names, bank per-
fected security interest in original and future inventory by filing UCC-1 financing statements listing franchisees and
original business as debtors, and franchisor had actual knowledge of loan transaction between bank and franchisees.
KENNETH W. SHRUM, Presiding Judge.
In this court-tried case, Radio Shack, a division of Tandy Corporation (“Radio Shack”), appeals from a money
judgment adverse to it and in favor of Cabool State Bank (“Bank”). The judgment amount ($15,529.43) represents
the value of merchandise Radio Shack took from one of its franchised stores after the store closed. Bank alleged it
had a lien on the merchandise superior to Radio Shack's claim, and the trial court agreed. Radio Shack's appeal
showing error. Walker v. Hanke, 992 S.W.2d 925, 930[2] (Mo.App.1999). “The appellate court is primarily con-
cerned with the correctness of the trial court's result, not the route taken by the trial court to reach that result.” Busi-
ness Men's Assur. Co. v. Graham, 984 S.W.2d 501, 506 (Mo.banc 1999). Therefore, the judgment will be affirmed
under any tenable theory, no matter if the reasons advanced by the trial court are wrong or insufficient. Id. at 506[2].
STATEMENT OF FACTS
ferring to them individually, we call them “Michael” and “Debra.” In doing so, we intend no disrespect.
Michael and Debra borrowed money from Bank to buy this business. The loan documents included (1) a note
that Michael and Debra signed individually and purportedly on behalf of “D & J Enterprises, Inc.,” (2) a security
agreement signed solely by Michael and Debra and which identified them, both in the body of the document and on
signature lines, as borrowers and owners of the collateral, and (3) UCC–1 financing statements signed by Michael
Page 4
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
The stipulation and attached documents (from which the stipulation is largely drawn) are confusing and often
contradictory in describing what role two corporate entities (D & J Enterprises, Inc. and Tri–B Enterprises, Inc.)
played in this business. Even so, according to the stipulation, in January 1998 “[t]he Boudreauxes and Tri–B ...
notice] that the [franchise] Agreement # C068 was terminated.” The inventory on hand when the store closed “had
been acquired by the Boudreauxes and Tri–B ... from Radio Shack after January 1997.” Although Radio Shack had
no security interest in the inventory, it took possession of it from “the Boudreauxes and Tri–B Enterprises, Inc.” At
the time, Radio Shack claimed the Boudreauxes and Tri–B owed Radio Shack $6,394.73. Bank then sued Radio
Shack, and claimed Boudreauxes still owed Bank money and that Bank had a perfected security interest in the in-
1995[;]” (2) Tri–B was the only entity with which Radio Shack did business from November 1995 until January
1998; (3) the inventory Radio Shack took from the store after it closed had been sold to Tri–B, and no one else; and
(4) because of the so-called change of name, § 400.9–402(7) was implicated.FN2
FN2. All statutory references are to RSMo (2000) unless otherwise stated. We note that effective July 1,
2001, some of the provisions formerly in § 400.9–402, RSMo (2000) were amended and moved to 400.9–
FN3. In pertinent part, § 400.9–402(7) provides:
“Where the debtor so changes such debtor's name or in the case of an organization its name, identity or
organizational structure that a filed financing statement becomes seriously misleading, the filing is not ef-
fective to perfect a security interest in collateral acquired by the debtor more than four months after the
shows. Contrary to Radio Shack's post-trial assertions that after November 1995 it only did business with Tri–B and
the inventory taken from the closed store had been sold exclusively to the corporate entity, Radio Shack stipulated it
had sold the subject inventory to Tri–B Enterprises and Boudreauxes, and it took the inventory from both parties—
not just Tri–B Enterprises—after the store closed. Radio Shack confirmed that it recognized and treated Michael, in
his individual capacity, as having an ownership interest in the franchise and dealership after November 1995 when it
Page 5
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
1998, Mr. Boudreaux and Tri–B ... were given official notice ... that the [franchise] agreement # C068 was terminat-
ed.” Similar confirmation is found in documents that Michael submitted to Radio Shack after November 1995
(which it accepted) in which he described himself, individually, as Radio Shack's “Dealer” or “Franchisee.”
We cannot discern exactly what role D & J Enterprises, Inc., played in this business, if any, nor do we know if
transaction between Bank and Boudreauxes, and (5) the subject inventory was sold to both the Boudreauxes and
Tri–B. Throughout the relevant period, Boudreauxes were “Debtors” of Bank within the meaning of § 400.9–402(7),
they never changed their name during the period, and (according to the stipulation) the subject inventory was sold to
Boudreauxes and Tri–B. Under the circumstances, the potential defense under § 400.9–402(7) was not available to
Radio Shack, and the trial court's holding regarding that section is surplusage.
FN4. See n. 2.
“A financing statement sufficiently shows the name of the debtor ... whether or not it adds other trade names or
the names of partners.” § 400.9–402(7). From the outset, Bank listed Boundreauxes (who admittedly had an owner-
ship interest in the inventory) as “Debtors” on the UCC–1 filings. Because the financing statement was filed under
dreauxes' ownership interest, whereas Radio Shack had no lien or security interest in the inventory. Section 400.9–
402(7) was not implicated and the trial court did not err in entering judgment for Bank.FN5 Point denied.
FN5. Radio Shack cites Matter of Lintz West Side Lumber, Inc., 655 F.2d 786 (7th Cir.1981)(which Radio
Shack says “is the identical situation to the instant case”), In re Thomas, 466 F.2d 51, 53 (9th Cir.1992),
Citizens Bank of Eldon v. Sportswear Shoppe Ltd., 15 B.R. 970 (Bankr.W.D.Mo.1981), In re Janmar, Inc.,
Glaize, Ltd. v. National Bank of Washington, 89 B.R. 40 (Bankr.W.D.Mo.1988). This case is factually dis-
tinct from the case at bar and is likewise inapposite.
Page 6
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
In its second point, Radio Shack simply reprises the argument it made in Point I but in this instance, claims the
trial court “erred as a matter of law in holding that Radio Shack's actual notice of the initial secured claim of ... Bank
was the only entity that had an interest in the repossessed inventory; consequently, Radio Shack claims Bank had to
comply with § 400.9–402.7 by filing an amended UCC–1 document naming Tri–B as its debtor. Radio Shack insists
the trial court erred when it ruled otherwise.
We will not repeat our Point I discussion and analysis, other than to note that Boudreauxes were named as
“debtors” in Bank's UCC–1 filings and, according to the stipulation, they and Tri–B purchased the subject inventory.
The judgment of the trial court is affirmed.
MONTGOMERY, J., concurs.
BARNEY, C.J., concurs.
Page 2
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
The decision in a court-tried case will not be disturbed on appeal unless the judgment is not supported by sub-
stantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law.
Appeal and Error 30 931(1)
30 Appeal and Error
30XVI Review
30 Appeal and Error
30XVI Review
30XVI(A) Scope, Standards, and Extent, in General
30k851 Theory and Grounds of Decision of Lower Court
30XVI(A) Scope, Standards, and Extent, in General
30k851 Theory and Grounds of Decision of Lower Court
30k854 Reasons for Decision
30k854(2) k. Review of Correct Decision Based on Erroneous Reasoning in General. Most Cited
Cases
349A Secured Transactions
349AII Perfection of Security Interest
349Ak92 Financing Statement
349Ak92.1 k. In General. Most Cited Cases
Page 3
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
Change of franchisees' business name could not have seriously mislead franchisor such that bank had to file
new UCC-1 financing statement to perfect security interest in store inventory; franchisor stipulated that it sold in-
ventory to franchisees and new business, franchisees bought original inventory in their individual names, bank per-
fected security interest in original and future inventory by filing UCC-1 financing statements listing franchisees and
original business as debtors, and franchisor had actual knowledge of loan transaction between bank and franchisees.
KENNETH W. SHRUM, Presiding Judge.
In this court-tried case, Radio Shack, a division of Tandy Corporation (“Radio Shack”), appeals from a money
judgment adverse to it and in favor of Cabool State Bank (“Bank”). The judgment amount ($15,529.43) represents
the value of merchandise Radio Shack took from one of its franchised stores after the store closed. Bank alleged it
had a lien on the merchandise superior to Radio Shack's claim, and the trial court agreed. Radio Shack's appeal
showing error. Walker v. Hanke, 992 S.W.2d 925, 930[2] (Mo.App.1999). “The appellate court is primarily con-
cerned with the correctness of the trial court's result, not the route taken by the trial court to reach that result.” Busi-
ness Men's Assur. Co. v. Graham, 984 S.W.2d 501, 506 (Mo.banc 1999). Therefore, the judgment will be affirmed
under any tenable theory, no matter if the reasons advanced by the trial court are wrong or insufficient. Id. at 506[2].
STATEMENT OF FACTS
ferring to them individually, we call them “Michael” and “Debra.” In doing so, we intend no disrespect.
Michael and Debra borrowed money from Bank to buy this business. The loan documents included (1) a note
that Michael and Debra signed individually and purportedly on behalf of “D & J Enterprises, Inc.,” (2) a security
agreement signed solely by Michael and Debra and which identified them, both in the body of the document and on
signature lines, as borrowers and owners of the collateral, and (3) UCC–1 financing statements signed by Michael
Page 4
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
The stipulation and attached documents (from which the stipulation is largely drawn) are confusing and often
contradictory in describing what role two corporate entities (D & J Enterprises, Inc. and Tri–B Enterprises, Inc.)
played in this business. Even so, according to the stipulation, in January 1998 “[t]he Boudreauxes and Tri–B ...
notice] that the [franchise] Agreement # C068 was terminated.” The inventory on hand when the store closed “had
been acquired by the Boudreauxes and Tri–B ... from Radio Shack after January 1997.” Although Radio Shack had
no security interest in the inventory, it took possession of it from “the Boudreauxes and Tri–B Enterprises, Inc.” At
the time, Radio Shack claimed the Boudreauxes and Tri–B owed Radio Shack $6,394.73. Bank then sued Radio
Shack, and claimed Boudreauxes still owed Bank money and that Bank had a perfected security interest in the in-
1995[;]” (2) Tri–B was the only entity with which Radio Shack did business from November 1995 until January
1998; (3) the inventory Radio Shack took from the store after it closed had been sold to Tri–B, and no one else; and
(4) because of the so-called change of name, § 400.9–402(7) was implicated.FN2
FN2. All statutory references are to RSMo (2000) unless otherwise stated. We note that effective July 1,
2001, some of the provisions formerly in § 400.9–402, RSMo (2000) were amended and moved to 400.9–
FN3. In pertinent part, § 400.9–402(7) provides:
“Where the debtor so changes such debtor's name or in the case of an organization its name, identity or
organizational structure that a filed financing statement becomes seriously misleading, the filing is not ef-
fective to perfect a security interest in collateral acquired by the debtor more than four months after the
shows. Contrary to Radio Shack's post-trial assertions that after November 1995 it only did business with Tri–B and
the inventory taken from the closed store had been sold exclusively to the corporate entity, Radio Shack stipulated it
had sold the subject inventory to Tri–B Enterprises and Boudreauxes, and it took the inventory from both parties—
not just Tri–B Enterprises—after the store closed. Radio Shack confirmed that it recognized and treated Michael, in
his individual capacity, as having an ownership interest in the franchise and dealership after November 1995 when it
Page 5
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
1998, Mr. Boudreaux and Tri–B ... were given official notice ... that the [franchise] agreement # C068 was terminat-
ed.” Similar confirmation is found in documents that Michael submitted to Radio Shack after November 1995
(which it accepted) in which he described himself, individually, as Radio Shack's “Dealer” or “Franchisee.”
We cannot discern exactly what role D & J Enterprises, Inc., played in this business, if any, nor do we know if
transaction between Bank and Boudreauxes, and (5) the subject inventory was sold to both the Boudreauxes and
Tri–B. Throughout the relevant period, Boudreauxes were “Debtors” of Bank within the meaning of § 400.9–402(7),
they never changed their name during the period, and (according to the stipulation) the subject inventory was sold to
Boudreauxes and Tri–B. Under the circumstances, the potential defense under § 400.9–402(7) was not available to
Radio Shack, and the trial court's holding regarding that section is surplusage.
FN4. See n. 2.
“A financing statement sufficiently shows the name of the debtor ... whether or not it adds other trade names or
the names of partners.” § 400.9–402(7). From the outset, Bank listed Boundreauxes (who admittedly had an owner-
ship interest in the inventory) as “Debtors” on the UCC–1 filings. Because the financing statement was filed under
dreauxes' ownership interest, whereas Radio Shack had no lien or security interest in the inventory. Section 400.9–
402(7) was not implicated and the trial court did not err in entering judgment for Bank.FN5 Point denied.
FN5. Radio Shack cites Matter of Lintz West Side Lumber, Inc., 655 F.2d 786 (7th Cir.1981)(which Radio
Shack says “is the identical situation to the instant case”), In re Thomas, 466 F.2d 51, 53 (9th Cir.1992),
Citizens Bank of Eldon v. Sportswear Shoppe Ltd., 15 B.R. 970 (Bankr.W.D.Mo.1981), In re Janmar, Inc.,
Glaize, Ltd. v. National Bank of Washington, 89 B.R. 40 (Bankr.W.D.Mo.1988). This case is factually dis-
tinct from the case at bar and is likewise inapposite.
Page 6
65 S.W.3d 613, 47 UCC Rep.Serv.2d 392
(Cite as: 65 S.W.3d 613)
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
In its second point, Radio Shack simply reprises the argument it made in Point I but in this instance, claims the
trial court “erred as a matter of law in holding that Radio Shack's actual notice of the initial secured claim of ... Bank
was the only entity that had an interest in the repossessed inventory; consequently, Radio Shack claims Bank had to
comply with § 400.9–402.7 by filing an amended UCC–1 document naming Tri–B as its debtor. Radio Shack insists
the trial court erred when it ruled otherwise.
We will not repeat our Point I discussion and analysis, other than to note that Boudreauxes were named as
“debtors” in Bank's UCC–1 filings and, according to the stipulation, they and Tri–B purchased the subject inventory.
The judgment of the trial court is affirmed.
MONTGOMERY, J., concurs.
BARNEY, C.J., concurs.
