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WebBank v. American General Annuity Service Corp.8/16/2002
its specific terms are not ambiguous. Id. (citations omitted).
The court reversed the trial court's grant of summary judgment and remanded so that parol evidence as to the parties' intentions regarding the nature and character of the transaction could be presented. Id. at 487-88.
Colonial Leasing , much like the case at hand, involved the issue of the interpretation of an agreement and whether the agreement, depending on its proper characterization, was a security agreement governed by Article 9 of the UCC. Our holding in Colonial Leasing is consistent with the general rules for interpreting security agreements in that, by allowing extrinsic evidence to determine the parties' intent as to whether the agreement was a security agreement, we ensured on remand that the trial court would properly focus the inquiry on the intent of the parties, on the substance, not on the mere form, of the transaction, and on the entire surrounding context of the transaction. See id. at 487 (concluding that "the need for parol evidence also suggested by the nature and the terms of the lease itself and the surrounding circumstances" and outlining factors for determining whether transaction was lease or security agreement); see also 79 C.J.S. Secured Transactions § 24 ("The controlling factor in determining whether a transaction is in fact a security transaction or an absolute sale is the intent of the parties which is ascertained from all of the facts and circumstances surrounding the transaction, including the language of the agreement."); id. § 41 ("It is substance, not form, which is decisive in determining whether an agreement is intended to create a security interest. . . . Parol evidence . . . may be permitted to inform the determination of whether the parties actually intended to create a security interest."). The inquiry as to whether the parties intended to create a secured transaction presents a question of fact for the trier of fact. See 68A Am. Jur. 2d Secured Transactions § 159 ("It is a question of fact whether a writing was intended to create a security interest . . . ."); 8A Anderson on the Uniform Commercial Code § 9-203:34 (same); 79 C.J.S. Secured Transactions § 41 (" he issue of whether there was a meeting of the minds as to whether there was an underlying contractual intent to create a security agreement is a question of fact.").
Here, American General and WebBank have "presented contrary, tenable interpretations" of the nature and character of the contract and the transaction as a whole as either a secured transaction or an assignment or sale transaction. SME Indus., Inc., 2001 UT 54 at 14. American General points to provisions of the security agreement and promissory note, such as the grant of an irrevocable and absolute power of attorney by Soliz to WebBank, the provision that renders the "collateral" the principal source of repayment of the alleged loan, and the explicit reference to the loan payments to be made by Soliz as the " ssigned ayments," that support its interpretation of the contract and the true character of the transaction as a sale or an assignment. WebBank likewise points to other provisions of the contract that are indicative of a loan transaction. Both interpretations are tenable, reasonable, and supportable after a careful review of the documents. Accordingly, it is unclear from the language and provisions contained in the security agreement and promissory note whether WebBank and Soliz intended to effectuate a genuine secured transaction or whether they intended to create a sale or an assignment.
Despite the absence of ambiguity in the contract language and provisions themselves, we conclude that an ambiguity exists as to the nature or chara
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