CONTINENTAL CREDIT CORPORATION,FROM A DISTRICT COURT APPELLANT, v. WOLFE CITY NATIONAL BANK, APPELLEE

 
COURT OF APPEALS
FIFTH DISTRICT OF TEXAS
AT DALLAS
NO. 05-88-01460-CV
CONTINENTAL CREDIT CORPORATION,FROM A DISTRICT COURT
 
        APPELLANT,
 
v.
 
WOLFE CITY NATIONAL BANK,
 
        APPELLEE. OF HUNT COUNTY, TEXAS
 
 
 
BEFORE JUSTICES MCCLUNG, ROWE, AND BURNETT
OPINION BY JUSTICE BURNETT
JUNE 22, 1989
        Continental Credit Corporation appeals from an adverse summary judgment rendered in favor of Wolfe City National Bank for conversion of the assets of Pawn Partners, Inc. In four points of error, Continental asserts that Wolfe City's motion for summary judgment was granted in error because material fact questions exist as to whether Judy Summers could grant a security interest in the inventory and accounts receivable of the Greenville Pawn Shop. We agree with Continental's contentions and for the reasons discussed herein, reverse the judgment of the trial court and remand the cause for a new trial on the merits.
        The undisputed summary judgment evidence establishes that Pawn Partners, Inc. purchased the Greenville Pawn Shop in Greenville, Texas from Greenville Pawn Shop, Inc. in 1982. Pawn Partners, Inc. filed an assumed name certificate in the Hunt County records and obtained a State of Texas lending license both of which reflected that the corporation was doing business as Greenville Pawn Shop. The lending license which reflected the assumed name was on display at the pawn shop.
        On November 1, 1985 and December 13, 1985, Olin Summers and Judy Summers, d/b/a Greenville Pawn Shop, executed two combination promissory notes/security agreements payable to Wolfe City in renewal of prior obligations to the bank. The promissory note dated November 1, 1985, granted to Wolfe City a security interest in "all inventory in Greenville Pawn Shop located at 3510 Wesley in Greenville, Texas ...." The promissory note dated December 13, 1985 granted to Wolfe City a security interest in "all inventory of pawn shop located at 3510 Wesley in Greenville, Texas, all accounts receivable and all loans...." Based upon prior promissory notes and security agreements which had been executed by the Summers, a UCC-1 financing statement which listed Judy and Olin Summers d/b/a Greenville Pawn Shop as debtors and covered "all inventory in Greenville Pawn Shop located at 3510 Wesley in Greenville, Texas . . . ." was already filed of record with the Texas Secretary of State on October 17, 1984. Following the execution by debtors of the renewal notes dated November 1, 1985, and December 13, 1985, another UCC-1 financing statement was filed with the Secretary of State on December 18, 1985, which listed Judy Summers d/b/a Greenville Pawn Shop as debtor and covered as collateral "all of debtors inventory now existing or hereafter acquired . . . All accounts receivable." In addition to these financing statements, a UCC-1 had previously been filed by Wolfe City with the County Clerk of Hunt County covering "all inventory in Greenville Pawn Shop located at 3510 Wesley in Greenville, Texas . . ." and listing the Summers d/b/a Greenville Pawn Shop as the debtors. None of the financing statements and security agreements reflected the name of the corporate entity, Pawn Partners, Inc.
        On March 29, 1986, following the Summers' execution of the combination renewal notes/security agreements and the filings of the UCC-1 financing statements with the Secretary of State, Continental purchased the inventory and accounts receivable of the business known as Greenville Pawn Shop from Pawn Partners, Inc. Approximately ten days later, Wolfe City made demand upon Continental for the return of the inventory and accounts receivable on which Wolfe City purportedly held a security interest; however, Continental refused to return the inventory and accounts receivable to Wolfe City. Continental has sold the assets and deposited the proceeds into the registry of the court pending the outcome of this suit.
        At the time of the purchase of the inventory and accounts receivable by Continental, Continental performed no UCC search to determine if there was any indebtedness owed against the inventory and accounts receivable. At the time of the purchase of the inventory and accounts receivable, Continental knew that the business had been and was then operating under the name of Greenville Pawn Shop.
        The contract whereby Continental purchased the inventory and accounts receivable in question was executed by Olin Summers on behalf of Pawn Partners, Inc. and attested by Judy Summers, individually. The combination promissory notes/security agreements, which form the basis of the obligation owed to Wolfe City were executed by Olin Summers and Judy Summers d/b/a Greenville Pawn Shop or Judy Summers d/b/a Greenville Pawnshop.
        In four points of error, Continental maintains that the trial court improperly granted Wolfe City's motion for summary judgment because genuine issues of material fact exist as to whether Judy Summers owned or had an interest in Greenville Pawn's inventory and accounts receivable. Thus, Continental asserts that a fact question exists regarding whether or not Judy Summers could properly grant the security interest in the collateral.
        At the outset, we note that a summary judgment is proper where there is no genuine issue as to any material fact. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 679 (Tex. 1979). See also American Petrofina Co. v. Crump Business Forms, Inc., 597 S.W.2d 467, 470 (Tex. Civ. App.-- Dallas 1980, Writ ref'd n.r.e.); TEX. R. CIV. P. 166a(c). In determining whether there is a genuine issue of fact in a case, the evidence must be construed in the light most favorable to the party opposing the motion, and all doubts must be resolved against the movant. First Nat'l Bank v. Rector, 710 S.W.2d 100, 103 (Tex. App.--Austin 1986, writ ref'd n.r.e.). Further, the appellate court must accept as true the non-movant's version of the evidence and make every reasonable inference in the non-movant's favor. Sabine Pilot Service, Inc. v. Hauck, 687 S.W.2d 733, 744 (Tex. 1985); Bayouth v. Lion Oil Co., 671 S.W.2d 867, 868 (Tex. 1984).
        A security interest is an interest in personal property which secures the payment or performance of an obligation. TEX. BUS. & COM. CODE ANN. § 1.201 (37) (Tex. UCC) (Vernon Supp. 1989). Such a security interest is not enforceable against a third party unless the debtor has signed a security agreement which describes the collateral, value has been given, and the debtor has rights in collateral. TEX. BUS. & COM. CODE ANN. § 9.203(a) (Tex. UCC) (Vernon Supp. 1989). The requirement that the debtor have rights in the collateral is consistent with pre-code cases which held that a person could not use property which he did not own as collateral. See Finger Furniture Co., Inc. v. Chase Manhattan Bank, 413 S.W.2d 131, 134 (Tex. Civ. App.--San Antonio 1967, writ ref'd n.r.e.); Walker v. Security Loan Inv. Co., 259 S.W.2d 599, 601 (Tex. Civ. App.--Texarkana 1953, writ ref'd n.r.e.).
        Under Texas Law, a corporation is a separate entity from the individuals who hold an interest in the corporation. Commonwealth of Mass. v. Davis, 140 Tex. 398, 168 S.W.2d 216, 222 (1942); See Angus v. Air Coils, Inc., 567 S.W.2d 931, 932 (Tex. Civ. App.--Dallas 1978, no writ). Thus, the property of the corporation is the property of that separate entity and not property of the individual shareholders. Commonwealth, 168 S.W.2d at 223.        
        In the instant case, although there is summary judgment evidence that the assets were owned by Pawn Parter's Inc., there is no summary judgment evidence which reflects whether or not Judy had authority to bind the corporate assets. Thus, a fact question arises as to whether she could properly encumber the assets. We sustain Continental's four points of error, reverse the judgment of the trial court and remand this cause for a full trial on the merits.
 
 
                                                          
                                                          JOE BURNETT
                                                          JUSTICE
 
 
 
 
 
DO NOT PUBLISH
TEX. R. APP. P. 90
 
88-01460.F
 
 
File Date[01-02-89]
File Name[881460]