Civic Western Corp. v. Zila Industries, Inc.

This appeal has been taken by defendant and cross-complainant Zila Industries, Inc. (hereinafter, Zila), from a summary judgment granted to plaintiff and cross-defendant Civic Western Corporation (hereinafter, Civic) on Zila’s cross-complaint. We affirm in part, and reverse in part.

In order to more clearly understand the contentions of the parties, we deem it advisable to set forth both procedural and substantive details of this litigation.

Plaintiff Civic filed an action against defendant Zila on October 8, 1971; in its complaint, Civic alleged that, in 1969, Zila had executed two promissory notes in Civic’s favor for $125,000 and $342,500 respectively. These notes were secured by Zila’s business personal property, inventory and accounts receivable — evidenced by five security agreements executed' by Zila pursuant to the California Uniform Commercial Code. The complaint further alleged that Zila had defaulted on various of these obligations in August 1971, and that Civic had exercised its right to accelerate payment of the loans; Civic claimed that $232,597.40 was due.

Contained in the security agreements executed by Zila were provisions requiring Zila, in the event…