On February 2, 1981, the trial court granted plaintiff’s motion for summary judgment. Defendants Antonio and Maria Paletta appeal as of right.
In early 1979, plaintiff owned a 1978 "Silver Edition” Corvette allegedly worth $12,500. On August 9, 1979, plaintiff delivered the car to Colin Brook to transport it to England to sell. Simultaneously, plaintiff transferred the title of the car to Brook. Although he signed his own name on the certificate of title, which was subsequently notarized, he failed to place Brook’s name on it. However, rather than shipping the car to England, Brook sold it to defendants for $8,500 which was borrowed from defendant Liberty State Bank & Trust. 1 Brook failed to turn the money over to plaintiff.
Eventually, plaintiff sued for the car. Defendants responded by filing an answer and a motion for summary judgment. Rather than rule on the motion, the trial court referred the dispute to an officer it called a Master in Chancery for fact finding. Even though defendants objected to the Master in Chancery’s findings of fact, the trial *356 court granted plaintiff’s summary judgment motion based on these findings.
Defendants first argue that the summary judgment should be reversed because the Michigan Constitution prohibits the office of Master in Chancery. Const 1963, art 6, § 5. We need not determine whether or not the parties may stipulate to such a procedure, however, because of our resolution of the next issue. Yet, we suggest trial courts not use this procedure. See
Brockman v Brockman,
The trial judge granted plaintiff’s motion claiming that the undisputed facts showed that defendants were not good faith bona fide purchasers for value. A summary judgment is inappropriate where a material fact is created when the affidavits, pleadings, depositions, admissions and documentary evidence, viewed in the light most favorable to the party opposing the motion, might permit inferences contrary to the facts as asserted by the movant.
Opdyke Investment Co v Norris Grain Co,
Generally, when faced with a choice, as here, between two innocent parties, courts will rule in favor of the party other than the one who made the fraud possible.
Grahan v Sinderman,
Specifically, the trial judge found that defendant Antonio Paletta was not a good faith bona fide purchaser for value:
"[B]ecause he had knowledge of Colin Brook’s unreliability before the Silver Corvette was purchased; because *357 Brook was too willing to sell the Corvette at any price acceptable to the bank even if such price was below market value, and because defendant should have been alerted by the incomplete title to the fact that he should at least have contacted plaintiff to confirm Colin Brook’s statements.”
Plaintiff first argues that defendants
2
could not have been good faith bona fide purchasers for value because the certificate of title did not have the transferee’s name on it.
3
A sale of a car is void where the sale violates the Michigan Vehicle Code.
Endres v Mara-Rickenbacker Co,
A number of cases have stated that the transfer
*358
ee’s name must be on the certificate of title.
E.g., Fick v Mills,
"The statute only requires an owner to 1) endorse the certificate of title and 2) deliver the certificate to the transferee. There is no requirement that the transferee’s name be placed on the certificate.
"Additionally, the purpose of the statute is 'to discourage and to prevent the stealing of automobiles, to protect the public against crime’. * * * This objective is met by requiring that a signed, notarized title be delivered to a transferee in possession in order to transfer title. Requiring the transferee’s name on the certificate of title would not further the statutory purpose. The notarized signature of the transferor sufficiently ensures that the transferor intends to sell the vehicle involved.”
In granting summary judgment, the trial judge relied on
Jackson City Bank & Trust Co v Blair,
"The rule of Willey v Snyder [34 Mich 60 (1876)], casts the burden on the subsequent purchaser or mortgagee to make reasonable inquiry beyond the description in the mortgage itself if it furnishes the means of identification; and if such reasonable inquiry would *359 reveal the complete identification, the filing of the mortgage will constitute adequate constructive notice.”
However, the incomplete certificate of title did not give defendants constructive notice under the present situation. The validly executed and notarized certificate of title sufficiently complied with the motor vehicle code and did not give defendants notice of any contrary claims.
Plaintiff next argues that the low costs of the car put defendants on constructive notice that Brook did not really own it. MCL 440.1201(19); MSA 19.1201(19) defines good faith as: "honesty in fact in the conduct or transaction concerned”. This is a "subjective test of good faith, sometimes referred to as the 'white heart and empty head’ test, rather than the objective or 'reasonably prudent man’ test”. Steinheimer, Practice Commentary to § 1201(19), 21 Michigan Compiled Laws Annotated, p 67. Before Michigan adopted the Uniform Commercial Code, good faith required the absence of participation in the fraud or collusion with the wrongdoer and the absence of knowledge or notice and also of facts to put an ordinarily prudent person on inquiry.
Austin v Hayden,
Plaintiff last argues that defendants Paletta could not have been bona fide purchasers for value because Antonio Paletta’s prior dealings with Brook placed him on constructive notice that Brook did not own the car. In
Jones v Linebaugh,
Reversed and remanded.
Notes
On January 27, 1981, the parties stipulated that defendant Liberty State Bank & Trust be dismissed from the suit.
The trial judge found that Maria Paletta was not a good faith bona fide purchaser for value either because she had seen that Brook’s name had not been placed on the certificate of title or because the car’s price was below fair market value. For simplicity’s sake, we shall refer to either Maria or Antonio or both as "defendants” without distinguishing between them. Obviously, if Antonio is a good faith bona fide purchaser for value, Maria is also.
Drettmann v Marchand,