SATURN OF KINGS AUTOMALL, INC. ET AL., APPELLANTS AND CROSS-APPELLEES, v. MIKE ALBERT LEASING, INC., APPELLEE AND CROSS-APPELLANT.
No. 00-1478
Supreme Court of Ohio
August 15, 2001
92 Ohio St.3d 513 | 2001-Ohio-1274
Submittеd April 24, 2001. APPEAL and CROSS-APPEAL from the Court of Appeals for Hamilton County, No. C-990703.
Motor vehicles—Certificate of motor vehicle title—Evidence of ownership—Harm to leased vehicle—In determining competing claims of ownership of a motor vehicle,
SYLLABUS OF THE COURT
In determining competing claims of ownership of a motor vehicle,
DOUGLAS, J.
{¶ 1} This appeal involves a dispute concerning the ownership of three motor vehicles. The parties have stipulated to the following facts.
{¶ 2} On Nоvember 19, 1998, Gallatin Auto Sales (“Gallatin“) contracted with Saturn of Kings Automall, Inc. (“Saturn“) whereby Gallatin agreed to purchase five motor vehicles from Saturn. Among the motor vehicles Gallatin agreed to purchase were a 1996 Honda Accord LX and a 1995 Honda Accord EX. The purchase price for the 1996 Honda was $13,500 and the purchase price for the 1995 Honda was $13,100.
{¶ 3} Saturn permitted Gallatin to remove all five vehicles from its dealership prior to Gallatin‘s tendering payment. Although Gallatin was allowed to take physical possession of the five vehicles, Saturn withheld the certificate of titlе to each vehicle pending receipt of payment from Gallatin.
{¶ 4} On November 20, 1998, Gallatin entered into a purchase contract with Cronin Motor Company LLC (“Cronin“). Gallatin agreed to buy a 1998 Dodge Durango from Cronin for the purchase price of $25,500. Cronin also allowed Gallatin to take possession of the vehicle prior to receiving payment. Likewise, the certificate of title to the Dodge remained in the possession of Cronin pending receipt of payment from Gallatin.
{¶ 6} Gallatin failed to pay Saturn any sums toward the purchase of the Hondas and also failed to pay Cronin the purchase price for the Dodge. As a result, neither Saturn nor Cronin would release the certificates of title for the three vehicles to Gallatin and, thus, Gallatin never provided title of the vehicles to Albert Leasing.
{¶ 7} On March 3, 1999, Saturn and Cronin filed an action in the Court of Common Pleas of Hamilton County against Albert Leasing and Gallatin. The complaint sought rеplevin and money damages arising from the alleged conversion of the three motor vehicles. On March 9, 1999, Albert Leasing filed an answer and counterclaim against Saturn and Cronin. In its counterclaim, Albert Leasing alleged that it had lawfully purchased the three vehicles from Gallatin and therefore requested that the trial court order Saturn and Cronin to deliver the certificates of title to Albert Leasing. A cross-claim was also filed by Albert Leasing against Gallatin raising allegations of breach of contract and fraud.
{¶ 8} On September 29, 1999, the trial court granted summary judgment in favor of Saturn and Cronin on their replevin сlaim. The trial court held that
{¶ 9} On October 7, 1999, Albert Leasing appealed the trial court‘s summary judgment decision to the Court of Appeals for Hamilton County. The court of appeals reversed the judgment of the trial court, concluding that the trial court had erred in finding that ownership of the vehicles in question was controlled by
{¶ 10} This cause is now before this court upon the allowance of a discretionary appeal and cross-appeal.
{¶ 11} The primary issue prеsented for our review is whether a person may acquire legal ownership of a motor vehicle without transfer to that person of the vehicle‘s certificate of title. In order to resolve this issue we must consider the interplay between Ohio‘s adoption of Article 2 of the UCC, codified at
{¶ 12} Saturn and Cronin, appellants and cross-appellees (“appellants“), contend that Ohio‘s Certificate of Motor Vehicle Title Law governs disputes involving competing claims of ownership of a motor vehicle. Appellants urge this court to interpret the language of
{¶ 13}
“No person acquiring a motor vehicle from its owner, whether the ownеr is a manufacturer, importer, dealer, or any other person, shall acquire any right, title, claim, or interest in or to the motor vehicle until there is issued to the person a certificate of title to the motor vehicle, or delivered to the person a manufacturer‘s or importer‘s certificate for it; and no waiver or estoppel operates in favor of such person against a person having possession of the certificate of title to, or manufacturer‘s or importer‘s certificate for, the motor vehicle, for a valuable consideration.”
{¶ 14}
“(B) Any entrusting of pоssession of goods to a merchant who deals in goods of that kind gives the merchant power to transfer all rights of the entruster to a buyer in ordinary course of business.
“(C) ‘Entrusting’ includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor‘s disposition of the goods have been such as to be larcenous under the criminal law.”
{¶ 15} The Ohio Certificate of
{¶ 16} Since the enactment of G.C. 6290-4,1 the precursor to
{¶ 17} In 1968,
value without notice, although the certificate of title used in the purported transfer appears valid on its face.” Id. at paragraph three of the syllabus.
{¶ 18} Beginning with Gall, it is apparent that a less restrictive construction regarding the Ohio Certificate of Title Law began to evolve from the earlier case law that strictly construed
{¶ 19} Similarly, in Smith v. Nationwide Mut. Ins. Co. (1988), 37 Ohio St.3d 150, 524 N.E.2d 507, this court considered whether the Ohio Certificate of Title Act or the Ohio UCC determines the issue of whether an alleged seller‘s policy of automоbile liability insurance “applies with respect to risk of loss or damage after the
{¶ 20} The issues presented in Hughes and Smith were not the same as the issue before the court in this matter. In Hughes and in Smith, the court was asked to decide whether the Ohio Certificate of Title Act or the Ohio UCC controlled in order to identify the owners of motor vehicles for purposes of determining which party was responsible for the risk of loss (Hughes) and insurance coverage (Smith) for damаges that occurred to a motor vehicle prior to the lawful transfer of title.
{¶ 21} We are once again called upon to decide, upon the facts before us, whether Ohio‘s Certificate of Motor Vehicle Title Law or Ohio‘s UCC applies. In Hughes and in Smith, however, it bears repeating that the issues were risk of loss and insurance coverage. Conversely, the question now before us involves competing claims of ownership of three motor vehicles. Here, contractual rights between the parties are not at issue. Notwithstanding the differences between the questions presented in Hughes, Smith, and this case, we nevertheless find the court‘s decisions in those cases dispositive of the case at bar.
{¶ 22} In Hughes, the court stated that ” ‘R.C. 4505.04 was intended to apply to litigation where the parties were rival claimants to title, i.e., ownership of the automobile; to contests between the alleged owner and lien claimants; to litigation between the owner holding the valid certificate of title and one holding a stolen, forged or otherwise invalidly issued certificate of title; and to similar situations. Kelley Kar Co. v. Finkler (1951), 155 Ohio St. 541 [44 O.O. 494, 99 N.E.2d 665]; 5 W. Reserve L. Rev. 403, 404 (1954).’ ” Hughes, 65 Ohio St.2d at 115-116, 19 O.O.3d at 310, 418 N.E.2d at 1358, quoting Grogan Chrysler-Plymouth, Inc. v. Gottfried (1978), 59 Ohio App.2d 91, 94-95, 13 O.O.3d 154, 156, 392 N.E.2d 1283, 1285-1286.
{¶ 23} In Smith, the court relied on the languagе and rationale set forth in Hughes and reiterated that ” ‘[t]he purpose of the Certificate of Title Act is to prevent the importation of stolen motor vehicles, to protect Ohio bona-fide purchasers against thieves and wrongdoers, and to create an instrument evidencing title to, and ownership of, motor vehicles.’ ” Smith, 37 Ohio St.3d at 152-153, 524 N.E.2d at 509, quoting Hughes at 115, 19 O.O.3d at 310, 418 N.E.2d at 1358. The court further stated that “[i]t is apparent that
{¶ 24} We find that the
{¶ 25} Furthermore, we find that the provisions at issue,
{¶ 26} Even assuming, arguendo, that
“Any entrusting of possession of goods to a merchant who deals in goods of that kind gives the merchant power to transfer all rights of the entruster to a buyer in ordinary course of business.” (Emphasis added.)
{¶ 27} In resolving apparent conflicts between statutory provisions,
“If a general provision conflicts with a special or local provision, they shall be construed, if possible, so that effect is given to both.”
{¶ 28} In this regard, we agree with the analysis of the Texas Court of Appeals construing the Texas Certificate of Title Act and Texas‘s version of the UCC in the case of Pfluger v. Colquitt (Tex.Civ.App.1981), 620 S.W.2d 739. In harmonizing the UCC‘s entrustment statute with Texas‘s Certificate of Title Act, the court stated in Pfluger:
“[T]he merchant‘s power ‘to transfer all rights of the entruster’ is intended to give the merchant the same power to transfer which the owner of goods can exercise himself, even though the owner may not actually have authorized the merchant to make such a transfer. [The entrustment provision] need not be interpreted to give the merchant greater power than the owner himself has tо transfer the title to a motor vehicle. The power of the owner of a motor vehicle to transfer the title is limited by the Certificate of Title Act * * * which provides that no motor vehicle shall be disposed of at a subsequent sale and no title shall
pass without a transfer of the certificate in the manner prescribed by the Act. Under this provision, if the owner has no power to dispose of the vehicle without a proper transfer of the certificate, then no merchant to whom the vehicle is entrusted has the power to dispose of it without a proper transfer of the certificate. A purchaser from the merchant to whom the vehicle is entrusted acquires exactly the same rights
as if he had purchased from the owner, but no more. If he purchased from a merchant without a proper transfer of the certificate, he gets no better title than if he had purchased from the owner without a proper transfer of the certificate.” Id. at 741.
{¶ 29} Finally, we take note of the discussion of amicus curiae, the Ohio Automobile Dealers’ Association, regarding the historical nature of the automobile dealer industry‘s practice of handling and transferring certificates of title. According to amicus curiae, allowing a buyer to take physical possessiоn of a motor vehicle while the seller retains the certificate of title to the vehicle until payment is tendered is, in fact, an industrywide practice.3 We see no reason to alter that practice by our decision today.
{¶ 30} Accordingly, we hold that in determining competing claims of ownership of a motor vehicle,
Judgment reversed.
MOYER, C.J., RESNICK, F.E. SWEENEY and LUNDBERG STRATTON, JJ., concur.
PFEIFER, J., dissents.
COOK, J., dissents.
COOK, J., dissenting.
{¶ 31} As the majority opinion suggеsts, the interplay between Ohio‘s Certificate of Title Act,
I. Statutory Purpose
{¶ 32} The majority notes—on two separate occasions—that the General Assembly enacted Ohio‘s CTA in order to, among other things, “protect innocent purchasers of motor vehicles.” Kelley Kar Co. v. Finkler (1951), 155 Ohio St. 541, 545, 44 O.O. 494, 496, 99 N.E.2d 665, 667; see, also, Hughes, 65 Ohio St.2d at 115, 19 O.O.3d at 310, 418 N.E.2d at 1358. Yet, the majority‘s elevation of the CTA over the Code in the instant case thwarts that purpose by favoring the seller/title holder (“Saturn“)—not the apparently innocent party (“Mike Albert“) who purchased the vehicles from Saturn‘s vendee (“Gallatin“).
{¶ 33} If the purpose of the CTA is to protect innocent purchasers of motor vehicles, as everyone seems to agree, then the Code‘s entrustment provisions that shelter the “buyer in [the] ordinary course of business” seem better adapted to fulfill that purpose in this case than the CTA. See
II. Hughes and Smith
{¶ 34} I also disagree with the manner in which the majority first distinguishes, then deems “dispositive,” this court‘s decisions in Hughes and Smith. According to
{¶ 35} As an additional justification for distinguishing Hughes and Smith and finding the CTA controlling, the majority asserts that “[h]ere, contractual rights between the parties are not at issue.” This assertion oversimplifies the case. Saturn‘s complaint includes a breach-of-contract claim against Gallatin, and Saturn attached the relevant “Vehicle Purchase Contract” as Exhibit A to its complaint. Although Saturn‘s breach-of-contract claim is not before us now, given the trial court‘s grant of summary judgment in favor of Saturn on its replevin claim, the trial court expressly relied on the purchase agreement between Saturn and Gallatin when it disposed of Saturn‘s replevin claim.4 In any event, the applicability of the Code‘s entrustment provisions does not depend upon the terms of a sales contract.
{¶ 36} In all events, I would eschew resolving our new cases on the basis of dicta from old cases that involved different issues. I agree with the majority insofar as dicta from Hughes, later resurrected in Smith, states that the CTA—not the Code—should control litigation ”where the parties [are] rival claimants to title.” (Emphasis added.) Hughes, 65 Ohio St.2d at 115-116, 19 O.O.3d at 310,
418 N.E.2d at 1358; see, also, Smith, 37 Ohio St.3d at 152-153, 524 N.E.2d at 509,
III. Pfluger v. Colquitt
{¶ 37} Finally, I disagree with the majority‘s application of Pfluger v. Colquitt (Tex.Civ.App.1981), 620 S.W.2d 739. The majority applies Pfluger in support of its argument that, even if the Act and the Code conflict, the sections may be construed so as to give effect to each per
{¶ 38} The majority also fails to note that the Pfluger court ultimately decided in favor of the innocent consumer of the vehicles at issue—a disposition completely at odds with the majority‘s disposition here in favor of Saturn. See id. at 743 (deciding that, as between the seller/title holder and the ultimate consumer, the defalcation of the seller‘s agent should be borne by the seller). In any event, the Pfluger majority‘s analysis is suspect. The concurring judge in Pfluger noted that the majority‘s application of the general law of agency in this context was unprecedented since the enactment of Texas‘s CTA four decades earlier. See id. at 744 (Stephens, J., concurring, arguing that “the Code should govern“). More recent authority from Texas states that “the Code controls over the Act‘s provision that purports to void the sale of an automobile absent the transfer of
IV. Conclusion
{¶ 39} For the foregoing reasons, I respectfully dissent. In disputes such as this one between a seller/title holder and a third party who has purchased motor vehicles from the seller‘s merchant-entrustee, application of the Code‘s entrustment provisions would advance the shared purpose of both the CTA and the Code to protect innocent purchasers, and would align this court with the apparent weight of authоrity on the subject. See Epling, Priorities Disputes, 41 Bus.Law at 368-369; see, also, Martin v. Nager (1983), 192 N.J.Super. 189, 205-206, 469 A.2d 519, 527 (collecting cases from twelve jurisdictions); Fuqua Homes, Inc. v. Evanston Bldg. & Loan Co. (1977), 52 Ohio App.2d 399, 370 N.E.2d 780; Executive Coach Builders v. Bush & Cook Leasing, Inc. (1992), 81 Ohio App.3d 808, 612 N.E.2d 408. Moreover, application of the Code‘s entrustment provisions in these cases would correspond to the equitable principle that, where one of two innocent persons (Saturn or Mike Albert) must suffer a loss by reason of the fraud or deceit of another (Gallatin), the loss should fall upon the individual whose act or omission has enabled the wrongdoer to commit the fraud (Saturn).5 See, generally, Kunz, Motor Vehicle Ownership, 39 Bus.Law at 1604; Epling, Priorities Disputes, 41 Bus.Law at 369; Executive Coach, 81 Ohio App.3d at 814, 612 N.E.2d at 411-412. For purposes of this dissent, I express no opinion regarding that portion of the court of appeals’ disposition addressing the parties’ stipulation that Mike Albert purchased the vehicles “in the ordinary course of business.”6
Spraul, Veith & Doan and Terrence M. Veith, for appellant and cross-appellee Cronin Motor Company LLC.
Barron, Peck & Bennie and Michael S. Barron, for appellee and cross-appellant Mike Albert Leasing, Inc.
Cooper & Elliott and David Brown, urging reversal for amicus curiae, Ohio Automobile Dealers’ Association.