978-1285770178 Case Problem Case CPC-21-04

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65 S.W.3d 613, 47 UCC Rep.Serv.2d 392

(Cite as: 65 S.W.3d 613)

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

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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

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65 S.W.3d 613, 47 UCC Rep.Serv.2d 392

(Cite as: 65 S.W.3d 613)

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

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65 S.W.3d 613, 47 UCC Rep.Serv.2d 392

(Cite as: 65 S.W.3d 613)

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

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65 S.W.3d 613, 47 UCC Rep.Serv.2d 392

(Cite as: 65 S.W.3d 613)

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.

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65 S.W.3d 613, 47 UCC Rep.Serv.2d 392

(Cite as: 65 S.W.3d 613)

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.