Opinion
No. 76-837
Decided April 27, 1978. Opinion modified and as modified petition for rehearing denied May 25, 1978. On modified opinion, petition for rehearing denied June 15, 1978.
In action instituted by Attorney General under Colorado Consumer Protection Act, intervening defendant sought to obtain certain assets seized by the Attorney General. From trial court finding that intervenor had no ownership interest in those assets, intervenor appealed.
Affirmed
1. SECURED TRANSACTIONS — Majority Stockholder — Paid — Secured Creditor — Purported Sale — Corporate Assets — Nothing Transferred — Purchaser — No Right — Intervene — Attorney General — Seizure of Assets. Where secured creditor of corporation was paid by the majority stockholder of the corporation and the corporation books reflected that payment and the relevant financing statements were terminated, that majority stockholder had no interest in the assets and the property of the corporation other than that of a general creditor and stockholder, and therefore when that stockholder purported to transfer all of the corporate assets to a purchaser, the purchaser obtained nothing by the bill of sale, and therefore the purchaser had no standing to intervene in action relative to Attorney General's seizure of those assets.
Appeal from the District Court of the City and County of Denver, Honorable Henry E. Santo, Judge.
J. D. MacFarlane, Attorney General, David W. Robbins, Deputy Attorney General, Edward G. Donovan, Solicitor General, Mary J. Mullarkey, First Assistant Attorney General, David K. Rees, Assistant Attorney General, Gene A. Lucero, Assistant Attorney General, for plaintiff-appellee.
Cogswell, Chilson, Dominick Whitelaw, Phyllis Cox Werkman, for intervening defendant-appellant.
The Attorney General instituted a proceeding against the original defendants under the provisions of the Colorado Consumer Protection Act, § 6-1-101 et seq., C.R.S. 1973, and, as ancillary relief, obtained a writ of attachment to their properties (except for those of Talon Corporation) in order to maintain the status quo of the parties pending the ultimate outcome of the proceedings. Western Food Plan, Inc., (Western) was allowed to enter the case as an intervening defendant. Western, claiming ownership of the properties, moved for a preliminary injunction restraining the Attorney General from enforcing its writ of attachment and directing the return to Western of the assets seized by virtue of that writ. After an evidentiary hearing, the court denied the motion based on a finding that Western had no ownership interest in the assets. Western appeals. We affirm.
In May 1975, defendant Micron Corporation (Micron) and its subsidiaries, including the other original defendants, granted to FNB Financial Company (FNB) a first security interest in all of their assets and property to secure a note evidencing a $3,000,000 line of credit made available to FNB. On May 19 and 20, 1976, Hussel, A.G., a German corporation and the majority stockholder of Micron, paid FNB the full amount then due to it from Micron and its subsidiaries, and the FNB's books reflected the loan as paid. On May 21 as to Micron's and on May 25 as to the subsidiaries' financing statements, FNB executed termination statements which included the language, "The Secured Party certifies that the Secured Party no longer claims a security interest under the financing statement bearing the file number shown above."
Later, by an instrument dated June 10, after some correspondence and conversations between representatives of Hussel and FNB, FNB executed an assignment of each of the financing statements to Hussel.
The trial court found that the payoff of the FNB account was made by Hussel on behalf of Micron, that FNB had terminated its security interests prior to the date of the purported assignments, that the execution of the alleged assignments by FNB to Hussel was an afterthought on the part of Hussel and merely an accommodation by FNB and not as the result of a mistake as to the intent of the transaction between FNB and Hussel concerning the payoff of the Micron account. It therefore held that there was no valid assignment by FNB to Hussel of the security interests and therefore no secured right in Hussel to the assets and properties of Micron and its subsidiaries.
Micron made no payments to Hussel. On August 4, 1976, Hussel, claiming that it was exercising its rights as a secured creditor, executed a bill of sale purporting to transfer all of the assets of Micron and its subsidiaries to Western, a wholly owned subsidiary of Hussel, incorporated on the same date as the bill of sale. The court held that since Hussel did not have a valid security interest to the assets of Micron and its subsidiaries at the time it executed the bill of sale, the purported transfer was a nullity and Western acquired no interest in the assets thereby.
[1] Although there was conflicting evidence as to the events surrounding the May and June transactions between FNB and Hussel, there was sufficient evidence to support the findings of the trial court. Those findings are, therefore, binding on appeal. See Whatley v. Wood, 157 Colo. 552, 404 P.2d 537. The security interest having been terminated at the time of the payoff, Hussel had no interest in the assets and the property of Micron and its subsidiaries other than that of a general creditor and a stockholder, and, therefore, Western acquired nothing by virtue of the bill of sale.
Another claim by Western to ownership of the assets is based on a transaction between another Micron subsidiary, America West Acceptance Corporation, not named as a defendant in this case, and Hussel Holding, A.G., a Swiss subsidiary of Hussel, A.G. Hussel Holding loaned America West $1,000,000 in April 1975, secured by all of the assets of Micron and its subsidiaries, with the security interest subordinated to FNB's security interest. However, there is nothing in the record to show any assignment of Hussel Holding's security interest either to Hussel or to Western, and therefore Western failed to establish any ownership right by virtue of that transaction. These determinations are dispositive of the other contentions raised on this appeal.
Based on the evidence presented, we affirm the trial court's denial of the preliminary injunction. In so doing, we are not precluding Western, at the time of the permanent injunction hearing, from a trial on the merits as to its ownership interest in the assets of Micron and its subsidiaries.
JUDGE ENOCH and JUDGE BERMAN concur.