American Container Corp. v. Hanley Trucking Corp.

• Court: New Jersey Superior Court
• Writing for the Court: HERBERT
• Citation: American Container Corp. v. Hanley Trucking Corp., 111 N.J.Super. 322, 268 A.2d 313 (N.J. Super. 1970)
• Decision Date: 31 July 1970
• Parties: , 7 UCC Rep.Serv. 1301 AMERICAN CONTAINER CORP., a New Jersey corporation, Plaintiff, v. HANLEY TRUCKING CORP., a New Jersey corporation, Defendant and Third-Party Plaintiff, v. HERSCHEL TRUCKING CO., a New Jersey corporation, Third-Party Defendant.

Page 322

111 N.J.Super. 322

268 A.2d 313, 7 UCC Rep.Serv. 1301

AMERICAN CONTAINER CORP., a New Jersey corporation, Plaintiff, v. HANLEY TRUCKING CORP., a New Jersey corporation, Defendant and Third-Party Plaintiff, v. HERSCHEL TRUCKING CO., a New Jersey corporation, Third-Party

Defendant.

Superior Court of New Jersey Chancery Division.

July 31, 1970.

Henry Farer, Elizabeth, for plaintiff (Farer & Krueger, Elizabeth, attorneys).

Salvatore Burgio, Ramsey, for defendant and third-party plaintiff.

Herbert F. Savoye, Jr., Bergenfield, for third-party defendant.

HERBERT, J.S.C.

On March 16, 1968 Hanley Trucking Corp. arranged to purchase from Herschel Trucking Co. certain vehicles, including a used 1965 Fruehauf semi-trailer. A week later the semi-trailer was sold to American Container Corp. as a result of negotiations between American and Hanley. The purchase price of $2,800 was paid by American to Hanley; Hanley forwarded $2,500 to Herschel and retained the $300 balance. A bill of sale and certificate of legal title were given to American by Hanley. The bill of sale was written on Hanley's stationery, signed by Hanley's president, and it stated:

This is to certify that we have this date sold 1--1965 Frehauf (sic) semi trailer to your company and have received your check and said unit is paid in full.

However, legal title on the certificate was still in the name of Herschel, which had endorsed the document in blank. Hanley had never taken physical possession of the semi-trailer, but delivery was made nevertheless by Hanley from Herschel directly to American.

American enjoyed full possession and use of the semi-trailer for 16 months until July 23, 1969, when the New Jersey State Police impounded it under the authorization of N.J.S.A. 39:5--47. That statute provides in part:

The commissioner may authorize the seizure of a motor vehicle operated over the highways of this state when he has reason to believe that the motor vehicle has been stolen or is otherwise being operated under suspicious circumstances and may retain it in the name of the department until such time as the identity of ownership is established, whereupon he shall order the release of the motor vehicle to its owner.

After the expiration of ninety days from the date the motor vehicle came into the possession of the commissioner by seizure or otherwise, he shall sell it at public sale, upon notice * * *.

Upon the sale of the motor vehicle all claims for interest therein shall be forever barred and the proceeds realized therefrom shall become the sole property of the state, * * *.

Less than two weeks after the seizure, American notified Hanley that it desired to rescind the contract of sale between them. American offered to assign to Hanley the receipt given for the semi-trailer by the State Police, but Hanley refused to return the $2,800 purchase price. American thereafter instituted this action against Hanley for rescission. Hanley in turn filed a third party complaint against Herschel, alleging that if anyone is liable to American, it is Herschel. Hanley's third party complaint was filed more than 90 days after the semi-trailer was impounded; no allegations were made or evidence adduced of any earlier demands by Hanley on Herschel. Timely answers to both the complaint and the third party complaint were filed in due course.

Now American, Hanley, and Herschel have all moved for summary judgment. The parties having conceded at oral argument that there is no genuine dispute as to any of the material facts set forth above, this case is an appropriate one for partial summary disposition.

American contends that it bought the semi-trailer from Hanley, who impliedly but falsely warranted and represented good title. Hanley denies that it sold the semi-trailer to American and that it warranted good title. Rather, says Hanley, Herschel sold the semi-trailer directly to American and warranted good title to both American and Hanley. Herschel asserts not only that it never warranted good title, but also that in fact good title was conveyed and the seizure of the semi-trailer improper. Moreover, Herschel argues that rescission is an inappropriate remedy here, where American cannot tender the semi-trailer itself, but merely the police receipt.

A 'sale' is defined by the Uniform Commercial Code as 'the passing of title from the seller to the buyer for a price.' N.J.S. 12A:2--106(1). " Seller' means a person who sells or contracts to sell goods.' N.J.S. 12A:2--103(d). Black's Law Dictionary says a 'sale' is 'a contract between two parties called, respectively, the 'seller' (or vendor) and the 'buyer,' (or purchaser), by which the former, in consideration of the payment or promise of payment of a certain price in money, transfers to the latter the title and the possession of property.' These are simply formalized statements of principles known to every layman: A sale is a transfer of goods for consideration, and the seller is generally the party that receives the consideration and effects the transfer.

In this case, if it be assumed that there was any title or participating interest in the allegedly stolen semi-trailer which could be the subject of a sale, there is no question but that there was a sale to American. I think it equally clear that Hanley, not Herschel, was the seller. Hanley was the equitable owner of the vehicle by virtue of its contract with Herschel; moreover, it held the instrument of legal title which, endorsed in blank by Herschel, enabled it to put the registration of title in its own name at will. It was Hanley that arranged the sale to American, received the purchase price, conveyed title and a bill of sale (which expressly acknowledged its status as seller), and effected delivery.

Herschel, on the other hand, had no part in the transaction by which American acquired the semi-trailer. Rather, Herschel was the seller to Hanley in the earlier--and separate--sale by which Hanley had acquired the semi-trailer for itself at a cost of $2,500. For an analogous case, see Pope v. Ferguson, 82 N.J.L. 566, 83 A. 353 (E. & A. 1912). There plaintiff had contracted, first, to buy certain iron plates from defendant and, second, to sell them to B. Nicoll &amp Co. for a profit. Plaintiff had also arranged for all deliveries to be made by defendant directly to B. Nicoll & Co., and this had been done for a while until defendant breached its contract. Plaintiff then brought an action for damages. Defendant unsuccessfully sought from the trial court a nonsuit or a directed verdict on the ground that

* * * there had been an absolute assignment by the plaintiff of his contract with the defendant to B. Nicoll & Co., and that consequently any right of action which had resulted from the breach of the contract by the defendant was in B. Nicoll & Co., and not in the plaintiff. (82 N.J.L. at 569, 83 A. at 354)

Although reversing on other grounds, the Court of Appeals specifically agreed with the lower court's rejection of defendant's claim of an assignment:

The agreement between the plaintiff and B. Nicoll & Co., which has already been recited, did not constitute an assignment of the defendant's contract with the plaintiff, but was a resale to B. Nicoll & Co. of the plates purchased by the plaintiff from the defendant. (82 N.J.L. at 569, 83 A. at 354)

Hanley's assertions of Caveat emptor notwithstanding, there can be no doubt that Hanley impliedly warranted good title when it sold the semi-trailer to American. By the same token, Hanley had received from Herschel an implied warranty of good title with its acquisition of the vehicle. The Uniform Commercial Code provides that in every contract of sale there is implied a warranty of good title unless such warranty is specifically excluded by the language or circumstances of the agreement:

(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that

(a) the title conveyed shall be good, and its transfer rightful; and

(b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.

(2) A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have. (N.J.S. 12A:2--312, N.J.S.A.)

The same principle has long been recognized under the common law. Stein v. Scarpa, 96 N.J.L. 86, 114 A. 245 (Sup.Ct.1921); Gould v. Bourgeois, 51 N.J.L. 361, 18 A. 64 (Sup.Ct.1889).

The facts of this case demonstrate no specific exclusions, and the general rule implying warranties of good title applies.

Herschel argues that good title was in fact conveyed to Hanley, and then to American. This appears doubtful in light of the certification filed by Thomas Cornelissen, a detective with the New Jersey State Police. Cornelissen states that when he examined the semi-trailer, its serial plate had been removed and the die-stamped frame serial number had been ground off. Moreover, the title certificate was invalid, since the serial number it listed was a number used for trailers manufactured in years prior to 1965 and could not have been the proper number for this 1965 vehicle.

Herschel's claim that good title was conveyed would, if sustainable, not only negate any breach of warranty, but also indicate that return of the vehicle could probably have been secured by American within the time (90 days after seizure) allowed by N.J.S.A. 39:5--47.

Other arguments might also have been made within the 90-day period to contest the validity of the seizure by the State Police. Challenge might have been made as to the constitutionality of the statute, a startling and confiscatory provision which ignores the bona fide purchaser for value whom the law is so careful to protect in other situations. But Cf. ...