Law School Case Brief
Clovis Nat'l Bank v. Thomas - 1967-NMSC-061, 77 N.M. 554, 425 P.2d 726
Even after New Mexico's adoption of the Uniform Commercial Code (U.C.C.), a broker is still liable to the secured party for conversion of the collateral. Additionally, under the U.C.C., the secured party may consent to the sale of the collateral, and thereby waive his rights in the same.
The Clovis National Bank (hereinafter, “plaintiff”), brought an action against Harold THOMAS, d/b/a Clovis Cattle Commission Company (hereinafter, “defendant”), claiming that defendant wrongfully converted cattle in which plaintiff had an enforceable security interest. At trial, it was admitted that plaintiff was aware that the debtor was making sales of the cattle covered by the security agreements. The trial court ruled in favor of defendant, finding that plaintiff by common practice, custom, and usage permitted and consented to the sales of the cattle covered by the security agreement with debtor and consented to debtor's receipt of the proceeds. Thus, the trial court concluded that plaintiff had permitted, acquiesced in, and consented to the sales and by its conduct waived any possessory rights. Plaintiff appealed.
Did the trial court err in its decision to rule in favor of the defendant?
The court affirmed the trial court's judgment because plaintiff had permitted, acquiesced in, and consented to the sales of cattle in which plaintiff had an enforceable security interest and by its conduct waived any possessory rights. Further, according to the court, New Mexico's adoption of the Uniform Commercial Code (U.C.C.) did not change the law where the holder of the security interest in farm products had the same protection under the U.C.C. that he had under pre-code law, and where waiver by consent to the sale still existed.
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