190 So. 2d 399 | Fla. Dist. Ct. App. | 1966
Lead Opinion
Defendants Richard T. Starke, Wiley Bratcher and General Finance Corporation appeal from an adverse judgment finding that they had converted certain automobiles belonging to East Lake Auto Sales Company, Inc. of Birmingham, Alabama.
Young Motors, Inc., while engaged in the automobile business in Pensacola, Florida,
Young Motors ordered 4 cars to be shipped from East Lake on July 2, 1964, and 4 others on July 6, 1964. These cars were shippéd and received on those dates and financed immediately in the usual manner with General Finance Corporation accepting East Lake’s bills of sale as evidence of ownership. The uncontroverted evidence is that all of East Lakes’ bills of sale for these 8 cars were received by General Finance not later than July 7, but it was not until July 10 that General Finance learned that Young Motors had not paid East Lake for the cars.
On Friday, July 10, 1964, Mr. Young called William Smith, branch manager for General Finance, to inform him that Young Motors had sent Smith two checks totaling $26,000 but that there were insufficient funds in the bank to cover payment. After a conference with Young, Smith “pulled the collateral that was held under the trust receipt” — that is, he took from Young Motors’ lot 43 cars including 6 of the 8 mentioned above. The other two had already been sold by Young Motors, one to defendant Starke and the other to defendant Bratcher. After obtaining additional bills of sale from Young Motors, General Finance sent a courier to Tallahassee on Sunday, July 12, 1964. Early Monday he obtained title certificates from the Motor Vehicle Commission for the 8 cars, including title for Starke and Bratcher showing General Finance as the first lien holder.
Meanwhile Ryder and King representing East Lake arrived in Pensacola. On Saturday, July 11, they succeeded in getting Young to sign a check predated July 9, a date prior to the day that General Finance “pulled” its collateral. On Monday, July 13, they obtained a lawyer, who after failing to locate Mr. Smith on the telephone, sent him a telegram, stating that East Lake claimed ownership and demanded return of the 8 cars. This telegram addressed to “William E. Smith, Care GFC, 730 West Garden Street,” Pensacola, was delivered to that address at 11:00 a. m. Monday. An employee of General Finance delivered it to Smith unopened at Young Motors at about 5:00 p. m. that same day — some two hours after he had sold the remaining 6 cars to Cook Motor Company.
East Lake brought suit against Young Motors, General Finance, Starke, and Brat-cher for conversion of its eight automobiles valued at $17,350.00. The trial judge, without a jury, heard the case and entered final judgment for plaintiff, East Lake, and against Young Motors for conversion of all eight cars ($17,350.00 plus interest), against General Finance for 6 cars ($12,-650.00 plus interest) and against Starke and Bratcher for the value of their cars plus interest. The form of this judgment is not questioned by this appeal.
We will first consider the controversy between General Finance and East Lake. The ultimate question to be resolved between these parties is which one was entitled to the six automobiles in light of the undisputed facts in this cause. We hold that General Finance prevails.
Trumbull Chevrolet Sales Co. v. Seawright, 134 So.2d 829 (Fla.App. 1st, 1961) controls. There, Trumbull, a franchised Chevrolet dealer domiciled in Michigan,
Trumbull sold a car to O. K. Motor Co. for cash by delivering the possession of the car and accepting a check. As was its custom it retained all evidence of title (temporary title certificate and statement of origin) until the check cleared. However, payment was denied so Trumbull never did execute or deliver any documentary evidence of title such as a bill of sale. In the meantime O. K. sold the automobile (with evidence thereon that the franchised dealer was Trumbull of Detroit) to the Pensacola concern which acquired possession together with two documents. All parties agreed that one was “not genuine.” It was entitled “Duplicate Manufacturer’s Statement of Origin” and it reflected transfer from the manufacturer to Trumbull, from Trumbull to O. K., and from O. K. to the Pensacola concern. The other document was an invoice which reflected a sale of the automobile from O. K. to Florida Motor Co.
Florida Motor Company sold one of the automobiles purchased from O. K. to one Seawright who made application for an original Florida title. On that same day, Florida Motor Company learned that O. K. was in bankruptcy, became apprehensive as to the title status of some of the automobiles previously purchased from O. K., so it sought to have the automobiles titled in Alabama, a nontitle state. At the time Florida Motor Company and Seawright acquired possession of the automobile, each had clear notice that Trumbull was a former owner of the subject automobile. The principal points of law decided in Trumbull and which are applicable in the instant cause are:
1. That delivery of possession of an automobile and acceptance of a check in payment of same constituted a cash sale between Trumbull and O. K.
2. Delivery by Trumbull to O. K. made O. K. a bailee with an implied duty to return the automobile if the check bounced.
3. The sale was not consummated because the check was worthless which event rendered the contract an executory one, and title failed to pass out of Trumbull.
4. There being no sale and no transfer of indicia of title out of Trumbull its right of possession was inferior only to that of an innocent purchaser.
5. The window sticker on the subject automobile constituted a clear notice to Florida Motor Company and Seawright that Trumbull was the former owner.
6. The protection afforded an innocent purchaser relying upon the Seller’s possession is based upon estoppel, or more particularly the rule that where one of two innocent purchasers must suffer from the wrongful acts of a third, he who made the wrongful act possible must bear the loss.
7. Trumbull’s right of possession being superior to that of Seawright, who was not an innocent purchaser for value, Trumbull was entitled to possession of the automobile.
Applying the cited principles of law enunciated in Trumbull to the undisputed facts of this case, we find that there was no consummated cash sale of the eight automobiles by East Lake to Young, be
East Lake strenuously contends that General Finance was put on notice that it had not relinquished all of its claims in said automobiles because the respective bills of sale contained the following printed language, viz.:
“The title of the above described vehicle remains in the name of East Lake Auto Sales until all checks clear the banks and clearing houses.”
and it further contained the typed notation after the printed words “Cash on Delivery” of “Check due.” Such language in our opinion adds nothing to the settled law as expressed in Trumbull. First we note that the printed bill of sale also contained a clause which negatives East Lake’s contention that it was retaining title. This clause reads:
“You are required by law to transfer this vehicle by tag number to your name, within ten days from date. Penalty for failure to comply.”
Secondly, the uncontroverted facts are that General Finance had for several years floor planned automobiles purchased by Young from East Lake, upon the same indicia of ownership, and title in Florida had been procured upon these notarized bills of sale without difficulty. However, Plaintiff, East Lake, who claimed that all such sales were cash sales, did not demand payment at the time of delivery of possession of the vehicles, nor did it withhold the issuance of its bills of sale, which act would have protected its title; but instead it delivered possession of the vehicles and furnished bills of sale, all carefully notarized, and then, as was its custom, waited several days for Young to forward payment. The obvious purpose of furnishing indicia of title to Young before receiving payment was to permit Young to floor plan the cars prior to making payment to East Lake.
In view of the above we find that under the facts in this case one purchasing an autqmobile from a licensed Florida used-car dealer who has both possession and indicia of title, would not be put on notice by the wording contained in East Lake’s bill of sale that East Lake had in fact retained an interest in the vehicles. To hold otherwise would put the purchaser under the duty of determining whether as a matter of law East Lake sold the cars to Young by a cash rather than credit sale, and if by cash sale whether Young paid for same by check, and if so whether Young’s check had cleared the banks. Applicable here is the maxim that where one of two innocent persons must suffer from the act or negligence of a third, he who by his conduct created the circumstances which made the wrongful act possible must bear the loss. Otherwise
There is some evidence that at the time General Finance repossessed its collateral, it had actual knowledge that .Young still owed East Lake for some cars. The rights of General Finance were fixed at the time it floor planned the vehicles and knowledge subsequently obtained is immaterial.
It is undisputed that defendants Starke and Bratcher had no actual knowledge of East Lake’s interest. They stand in the same, if not a better, position than General Finance.
Therefore, the judgment as it affects appellants Starke, Bratcher and General Finance Corporation is reversed.
Dissenting Opinion
(dissenting).
I am unable to agree with the conclusion reached by the majority opinion which holds that the trial court erred in finding appellant, General Finance Corporation, guilty of converting six of the eight motor vehicles involved in this case, and in rendering judgment against General Finance in favor of East Lake Auto Sales Company, Inc., for the value of the vehicles.
The bills of sale executed by East Lake Auto Sales Company to each of the vehicles sold by it to Young Motors Inc., contained two important and noteworthy provisions. One was to the effect that title to the vehicles would remain in the seller until all checks given in payment thereof had cleared the bank and clearinghouse. The next provision was to the effect that at the time the bill of sale was issued, a check for the purchase price was due from the buyer, Young, to the seller, East Lake. These bills of sale -were physically delivered to General Finance Corporation at the time it entered into a financing agreement with Young whereby money was advanced on the strength of'a trust receipt. Repayment of the loan was secured by a pledge of the vehicles under the Uniform Trust Receipts Law.
Within ten days after purchasing the vehicles and entering into the floor plan arrangement with General Finance, Young advised the manager of General that his company did not have sufficient funds to cover $26,000.00 worth of checks theretofore delivered by Young to General on separate and unrelated transactions. It was then that Young told General’s managing agent, a fact admitted by him, that Young owed East Lake for the purchase price of the six vehicles which Young had purchased from East Lake and which had been pledged as security under the trust receipt and floor
Although General’s loan to Young under the floor plan arrangement between them was made in apparent good faith, and in accordance with a prior course of business dealings between them, the fact remains that the only security demanded or received by General was a trust receipt issued pursuant to the provisions of the Uniform Trust Receipts Law, F.S. Chapter 673, F.S.A. After Young became financially insolvent, General did not seek recourse under the provisions of the law on which it acted in making its loan, but sought to protect itself by taking from its debtor bills of sale to pledged vehicles which it knew to be either owned or encumbered by another. Its position must therefore be judged in accordance with the law of sales, and not upon equitable principles.
From the foregoing facts it is my view that the evidence was sufficient to support the finding of the trial judge, sitting as a trier of the facts, that General Finance had unlawfully converted the vehicles in question, and deprived East Lake of its ownership therein. The judgment against General Finance and Young Motors should be affirmed.
I concur with the majority opinion with respect to appellants Bratcher and Starke. They each purchased one of the vehicles in question from Young Motors from its sales office in Pensacola. They had no prior knowledge of any indebtedness owed by Young to East Lake, nor that check for the purchase price of the vehicles had not been paid and satisfied. They fall clearly within the category of good faith purchasers for value without notice of East Lake’s interest in the vehicles, and their title should be protected as against the claims of East Lake. I would affirm the judgment with respect to General Finance and Young Motors, but would reverse as to Bratcher and Starke.