K.N.C. Wholesale, Inc. v. AWMCO, Inc.

Opinion

CHRISTIAN, J.

K.N.C. Wholesale, Inc. (K.N.C.; appellant) took judgment against AWMCO, Inc. and VANSCO, Inc. To satisfy K.N.C.’s judgment, a writ of execution was levied on certain personal property. JAPE, Inc. and Wells Fargo Bank, claiming through JAPE filed a third-party claim to the property. K.N.C. petitioned for a hearing of the third-party claim pursuant to Code of Civil Procedure section 689, and the execution sale was stayed pending that hearing.

The court allowed the third-party claims of JAPE and Wells Fargo Bank, and directed the sheriff to release the property. The present appeal followed.

AWMCO had given as security for a loan from Wells Fargo Bank a financing statement covering certain equipment. The financing statement was executed August 8, 1972, and filed with the Secretary of State August 23, 1972. AWMCO was a subsidiary of JAPE. In February 1973, JAPE assumed the AWMCO loan and later repaid the bank in full. In consideration for the payment of its loan, AWMCO transferred stock to JAPE.

To obtain a Small Business Administration loan from Wells Fargo, JAPE executed a security agreement with Wells Fargo on February 8, 1973, covering the same equipment which had been pledged by AWMCO to Wells Fargo in 1972; a financing statement was executed February 8, and filed February 14, 1973. No writing was ever executed to transfer title to the equipment or to give a security interest from AWMCO to JAPE.

Appellant contends that there was no evidence of transfer of title to the property from AWMCO to JAPE and that the levy of execution was effective. Janney, president of JAPE, testified that he “assumed” that title had been transferred from AWMCO to JAPE. Janney admitted that there was no writing reflecting such a transfer. The only basis given by Janney for his assumption was a resolution of the board of directors of JAPE on October 26, 1972, which stated: “Resolution adopted for a Continuous Guarantee for AWMCO & VANSCO thru Wells Fargo

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Bank. To be executed by Secretary.” The only guarantee in evidence was executed November 1, 1972, by JAPE to Wells Fargo Bank guaranteeing the credit of VANS CO (as Vantage National Sales Co., Inc.) for an indebtedness of up to $25,000; there is no reference to a transfer of property from AWMCO or VANSCO to JAPE in this document. That was not evidence supporting an inference that the documents acted to transfer title; thus Janney’s “assumption” does not itself constitute substantial evidence that title was ever transferred. No evidence was presented to show perfection of any claimed security interest in the AWMCO property on behalf of JAPE. Therefore, there is no substantial evidence to support an implied finding that title to the property was transferred to JAPE.