In re R & R Contracting, Inc.
| Decision Date | 13 June 1980 |
| Docket Number | Bankruptcy No. B-78-1013. |
| Court | U.S. Bankruptcy Court — Eastern District of Washington |
| Parties | In re R & R CONTRACTING, INC., Bankrupt. Dan PARISH, Plaintiff, v. Robert A. SOUTHWELL, Trustee, Defendant. |
Jack R. Dean of Quackenbush, Dean, Bailey & Henderson, Spokane, Wash., for plaintiff.
Robert A. Southwell of Malott, Southwell & O'Rourke, Spokane, Wash., pro se.
On March 15, 1979 a complaint was filed by Mr. Jack R. Dean, of Quackenbush, Dean, Bailey & Henderson, on behalf of Mr. Dan Parish seeking a determination of whether certain vehicles, to-wit: one 1975 Ford pickup truck and one 1975 Prentice loader, were property of the bankrupt or its president, Mr. Frank Robinson.
Mr. Robert A. Southwell of Malott, Southwell & O'Rourke, acting as the duly appointed trustee, contends that the vehicles in question had been transferred to the bankrupt at some time previous to the filing of the petition herein and therefore title to these vehicles vested in the trustee by operation of law on November 16, 1978. Mr. Parish, on the other hand, claims that the vehicles in question were the personal property of the president of the bankrupt and therefore not property of the bankruptcy estate. To demonstrate this Mr. Parish directs the Court's attention to the certificate of ownership to the 1975 Ford pickup truck and the bill of sale, there being no certificate of ownership, to the 1975 Prentice loader. Both documents name Mr. Robinson as the owner of the vehicles. It is undisputed that no reference is made to the bankrupt on these documents.
The sole issue presented to this Court for its determination is whether title to the two vehicles in question vested in the trustee on November 16, 1978 by operation of law or whether title was vested in Mr. Robinson personally.
If ownership of the two vehicles in question was vested in the bankrupt on November 16, 1978, the day the petition praying for relief as a voluntary bankrupt under the Bankruptcy Act of 1898 was filed by R & R Contracting, Inc., it passed by operation of law to the trustee. Section 70 of the Bankruptcy Act (11 U.S.C. Sec. 110) reads in relevant part as follows:
a. The trustee of the estate of the bankrupt . . . shall in turn be vested by operation of law with the title of the bankrupt as of the date of the filing of the petition initiating a proceeding under this title, except insofar as it is property which is held to be exempt, to all of the following kinds of property wherever located . . . (5) property, . . . which prior to the filing of the petition he could by any means have transferred or which might have been levied upon or sold under judicial process against him, or otherwise seized, impounded, or sequestered . . .
Implicit in this statement is that the trustee acquires no better title than the bankrupt had and, thus, if the bankrupt had no title or interest in the property the trustee would acquire none. San Diego Wholesale Credit Men's Association v. Garner, 325 F.2d 862 (9th Cir. 1963). In determining whether the bankrupt had any interest in certain property resort must be had to state law. Caster v. Miller, 39 F.Supp. 120 (E.D. La.1941).
In support of Mr. Parish's position that ownership of the vehicles vested in Mr. Robinson he cites the Court to R.C.W. 46.01 et seq. Under this statute the "owner of the motor vehicle is the person who has the lawful right of possession . . . that means the registered owner where the reference to owner may be construed as either to registered or legal owner." R.C.W. 46.04.380. Registered owner, according to R.C.W. 46.04.460 means "the person whose lawful right to possession of the vehicle has most recently been recorded with the Department."
Undisputedly, Mr. Robinson was the registered owner of the 1975 Ford pickup truck.1
Assuming, arguendo, that this motor vehicle certificate statute is controlling on the issue of ownership to a motor vehicle it has been held to raise no more than a rebuttable presumption of ownership.
Title to, or ownership of, a motor vehicle may be evidenced by possession of a bill of sale, certificate of title, or a certificate of registration, relating to such vehicle, although such documents do not ordinarily establish conclusively the ownership of such a vehicle, but are merely prima facie evidence thereof. 7 Am.Jur.(2d) Automobile and Highway Traffic § 23 (1963).
Washington has followed this view on several occasions. Gams v. Oberholtzer, 50 Wash.2d 174, 310 P.2d 240 (1957) (); Coffman v. McFadden, 68 Wash.2d 954, 416 P.2d 99 (1966) (); Delano v. La Bounty, 62 Wash. 595, 597, 114 P. 434 (1911) ()
The policy considerations behind the enactment of R.C.W. 46.01 et seq. shed further light on the fact that certificates of ownership are not intended to conclusively establish title as between two competing parties both claiming ownership rights. "The laws administered by the department have the common denominator of licensing and regulation and are directed toward protecting and enhancing the well-being of the residents of the state." R.C.W. 46.01.011. In other words, the statute is intended, among other things, to protect the public against theft and to facilitate recovery of stolen automobiles and help the state in the enforcement of its regulation of motor vehicles. See, Medico Leasing Co. v. Smith, 6 U.C.C.Rep. 786, 457 P.2d 548 (Okla.1969). Simply stated, R.C.W. 46.01 et seq. is a statute in furtherance of the state's police regulatory powers. It is not intended to conclusively determine ownership of vehicles as between two parties each claiming an ownership interest in them.
The Washington statute conclusive on the issue presented to this Court is R.C.W. 62A. et seq. Undoubtedly motor vehicles are goods within the purview of this statute. Nat'l. Exchange Bank of Fond du Lac v. Mann, 81 Wis.2d 352, 260 N.W.2d 716, 23 U.C.C.Rep. 510 (1978); Knutson v. Mueller, 68 Wis.2d 199, 238 N.W.2d 342, 17 U.C.C.Rep. 10 (1975); Guy Martin Buick, Inc. v. Colorado Springs National Bank, 12 U.C.C.Rep. 612, 511 P.2d 912 (Colo.1973); Park County Implement Co. v. Craig, 2 U.C.C.Rep. 379, 397 P.2d 800 (Wyo. 1964).
Under the facts of this case this Court believes R.C.W. 62A.2-401 to be applicable. It reads:
A Washington case of interest is Crawford v. Welch, 8 Wash.App. 663, 508 P.2d 1039 (1973), rev. denied, 82 Wash.2d 1009 (1973). In that case a judgment creditor sought to execute on a number of antique automobiles allegedly owned by the defendant. Subsequent to the sheriff's execution a third party claimed ownership of the vehicles. In holding that the title to the vehicles had passed as of the date of execution to this third party the Court relied on R.C.W. 62A.2-401(3)(a) since delivery was made without moving the goods and documents of title were delivered to the third party. Since the defendant was able to show that the bills of sale and registered titles to the vehicles had been transferred to the third party the Court held this evidence overcame the prima facie case of ownership which the certificates of ownership established.
While both the instant case and the Crawford decision are clearly governed by Article 2 of the Uniform Commercial Code they are distinguishable in the factual circumstances surrounding the alleged transfers. In the present case there has never been a "document of title" transferring ownership from Mr. Robinson to the bankrupt while there presumptively2 were "documents of title" transferred in the Crawford case. Therefore, it is R.C.W. 62A.2-401(3)(b) rather than R.C.W. 62A.2-401(3)(a) which is controlling.
In this case the burden of proof rests upon Mr. Parish to prove, by preponderance of the evidence, that title to the vehicles vested in Mr. Robinson personally. Under Washington law Mr. Parish had established a prima facie case of ownership of the vehicles in Mr. Robinson through the introduction into evidence of the certificates of ownership and the bill of sale in the name of Mr. Robinson. Therefore, the trustee has the burden of producing other evidence to overcome this prima facie case. In Washington the burden of proof never shifts, Guaranty Trust Co. v. U.S., 44 F.Supp. 417 (E.D.Wash.1942) aff'd on other grounds 139 F.2d 69 (9th Cir. 1943), it is only the burden of going forward in response to a prima facie case which shifts to the trustee. Lee & Eastes, Inc. v. Continental Carrier, Ltd.,...
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