96-554 La.App. 3 Cir. 12/26/96, Cameron Equipment Co., Inc. v. Stewart and Stevenson Services, Inc.

• Decision Date: 26 December 1996
• Citation: 685 So.2d 696
• Court: Court of Appeal of Louisiana — District of US
• Parties: 96-554 La.App. 3 Cir

Page 696

685 So.2d 696

96-554 La.App. 3 Cir. 12/26/96

CAMERON EQUIPMENT CO., INC., Plaintiff-Appellant, v. STEWART AND STEVENSON SERVICES, INC., et al., Defendants-Appellees.

No. 96-554.

Court of Appeal of Louisiana, Third Circuit.

Dec. 26, 1996.

T. Robert Shelton, Craig A. Ryan, Lafayette, for Cameron Equipment Company.

John Weir Grant, Lafayette, Bryan Forrest Gill, Jr., Lake Charles, Frederick M. Loeber, Jr., Dallas, TX, for Travis Ward et al.

Stephen Hawley Myers, Lafayette, for American General Transportation.

Edwin Gustav Preis, Jr., Richard J. Hymel, Lafayette, for Power International, Inc.

William Joseph Ziegler, Jr., Lafayette, for James W. Davis.

Before YELVERTON, KNOLL and SULLIVAN, JJ.

[96-554 La.App. 3 Cir. 1] KNOLL, Judge.

In this revendicatory action against the seller and subsequent purchasers of two diesel engines, Cameron Equipment 1987, Inc. d/b/a/ Cameron Equipment appeals the judgment of the trial court. We affirm.

FACTS

On June 12, 1987, Cameron Equipment purchased two used General Motors EMD-12-645-E-1 diesel engines from Petroleum Services, Inc. The two engines were purchased along with other used oil field equipment for a total price of $73,000. At the time of this sale, the two diesel engines were located in the equipment yard of Power Rig Drilling Company in Scott, Louisiana.

For two years following the sale, Cameron Equipment left the engines where they were at Power Rig. The engines were not removed from the yard or marked as property of Cameron Equipment.

[96-554 La.App. 3 Cir. 2] On June 12, 1989, Petroleum Services sold the engines to another company, Power International, Inc. for $38,000. Power International immediately resold the engines to American General Transportation Co., Inc. for $60,000. On June 14, 1989, American General brokered the engines to Stewart & Stevenson Services, Inc. for $75,000. Stewart & Stevenson needed the engines for use in a towboat it had contracted to build.

On June 15, 1989, American General removed the engines from the Power Rig yard and transported them to Stewart & Stevenson's facility in Harvey, Louisiana. Coincidentally, Cameron Equipment arrived to remove the engines from the Power Rig yard just hours after they had been taken by American General.

On August 10, 1989, Cameron Equipment filed suit against Stewart & Stevenson and Travis Ward, the president and sole shareholder of Petroleum Services, Inc. In its petition, Cameron sought the return of the engines and damages for their conversion. Eventually, Petroleum Services, American General, and Power International (the subsequent purchasers) were added as defendants.

A bench trial on the merits was held on October 18-27, 1994. The trial court rendered judgment in favor of Cameron Equipment and against Petroleum Services for conversion in the amount of $50,000, which the court determined to be the fair market value of the engines at the time of the second sale. The trial court denied Cameron Equipment's claims against the subsequent purchasers, finding that since Cameron Equipment never took possession of the engines, La.Civ.Code art. 518 operated in favor of the subsequent purchasers, whom it determined were in good faith. The trial court refused to pierce the corporate veil and hold Travis Ward personally liable for the conversion damages awarded against his company, Petroleum Services.

[96-554 La.App. 3 Cir. 3] Cameron Equipment appeals, assigning as error the trial court's determination that it did not take possession of the engines following the initial sale, the trial court's application of La.Civ.Code art. 518 in favor of the subsequent purchasers, and the trial court's failure to pierce the corporate veil.

CIVIL CODE ARTICLE 518

The trial court held that Power International, American General, and Stewart & Stevenson were superior in title to Cameron Equipment under La.Civ.Code art. 518, which states:

The ownership of a movable is voluntarily transferred by a contract between the owner and the transferee that purports to transfer the ownership of the movable. Unless otherwise provided, the transfer of ownership takes place as between the parties by the effect of the agreement and against third persons when the possession of the movable is delivered to the transferee.

When possession has not been delivered, a subsequent transferee to whom possession is delivered acquires ownership provided he is in good faith. Creditors of the transferor may seize the movable while it is still in his possession.

This appeal raises two questions with regard to Article 518: first, whether possession was delivered to Cameron Equipment sufficient to perfect the sale with regard to third parties, and second, whether Article 518 vested the subsequent purchasers with title superior to Cameron Equipment.

POSSESSION

The 1979 Revision comments to Article 518 indicate that "possession" contemplates both actual delivery and constructive delivery. La.Civ.Code art. 2477 provides the following methods for making delivery with regard to movables:

Delivery of a movable takes place by handing it over to the buyer. If the parties so intend delivery may take place in another manner, such as by the seller's handing over to the buyer the key to the place where the thing is stored, or by negotiating to him a document of title to the thing, or even by the mere consent of the [96-554 La.App. 3 Cir. 4] parties if the thing sold cannot be transported at the time of the sale or if the buyer already has the thing at that time.

Cameron Equipment first asserts that it took actual possession of the engines when Baker Littlefield, the owner of Power Rig, possessed the engines as Cameron Equipment's agent. The record reflects that the engines were originally purchased in 1986 as a joint venture between Petroleum Services and Baker Littlefield. Soon thereafter, Petroleum Services bought out Baker Littlefield's interest in the engines, but Littlefield continued to store the engines at Power Rig on behalf of Petroleum Services.

Baker Littlefield never agreed to store the engines on behalf of anyone other than Petroleum Services. He testified that had he known the engines had been sold by Petroleum Services, he would have told the new owner to remove them from his yard. Travis Vollmering, an agent for Cameron Equipment, knew that Baker Littlefield would not allow the engines to remain at Power Rig if he was aware of the sale. The record evidence clearly indicates that Baker Littlefield did not take possession of the engines as an agent of Cameron Equipment.

Cameron Equipment alternatively asserts that it took constructive possession of the engines under La.Civ.Code art. 2477. Cameron Equipment asserts that Petroleum Services "handed over the keys" to the building where the engines were kept when Petroleum Services made arrangements with Baker Littlefield to store the engines indefinitely at Power Rig. In effect, Cameron Equipment asserts that Petroleum Services transferred its storage agreement with Baker Littlefield incident to the sale. This assertion is also without merit. Petroleum Services had limited access to the Power Rig yard, extended only as a courtesy by Baker Littlefield. As noted above, Baker Littlefield was kept in the dark about the sale to Cameron [96-554 La.App. 3 Cir. 5] Equipment, and he never agreed to store the engines at Power Rig for Cameron Equipment. The record amply reflects that Baker Littlefield would not have allowed the engines to remain in the Power Rig yard if they belonged to anyone other than Petroleum Services. We find the record supports the trial court's conclusion that there was no act between Cameron Equipment and Baker Littlefield which would equate to "handing over the keys," or that would put a third party on notice that Cameron Equipment was owner of the engines.

Cameron Equipment asserts that because of the enormous size and weight of the engines, they were insusceptible of transport at the time of the sale. Cameron Equipment therefore alleges that possession of the engines was transferred by the mere consent of the parties under La.Civ.Code art. 2477. The record clearly shows that although the engines were very heavy, they were susceptible of transport. We note with significance that after American General sold the engines to Stewart & Stevenson it took only one day to transport the engines from the Power Rig yard in Scott, Louisiana to Stewart & Stevenson's yard in Harvey, Louisiana. We find that because the engines were susceptible of transport, ownership could not be transferred by mere consent of the parties under ...