Associates Discount Corp. v. Goetzinger, 48386

• Decision Date: 12 January 1954
• Docket Number: No. 48386,48386
• Parties: ASSOCIATES DISCOUNT CORP., Inc. v. GOETZINGER.
• Court: Iowa Supreme Court

Page 191

62 N.W.2d 191

245 Iowa 326

ASSOCIATES DISCOUNT CORP., Inc. v. GOETZINGER.

No. 48386.

Supreme Court of Iowa.

Jan. 12, 1954.

White & White, Harlan, for appellant.

Leonard W. Fromm, Harlan, for appellee.

OLIVER, Justice.

George E. Mickel, Jr., was an automobile dealer at Harlan, Iowa, under the trade name of Mickel Motors. Plaintiff, Associates Discount Corporation, had its principal place of business at South Bend, Indiana, and a branch office at Omaha, Nebraska. Harlan was in the territory of this office. Defendant Goetzinger was a farmer, near Harlan.

October 16, 1948, defendant purchased from Mickel Motors for $2950, a used 1949 Ford coupe. Defendant was allowed $1350 for his old car. The $1600 balance was represented by his note and contract of conditional sale of the Ford to Mickel Motors. To this $1600 was added $293.40 for finance charge and insurance. Mickel assigned the $1893.40 note and contract to plaintiff, and forwarded them to plaintiff's Omaha office. Plaintiff sent Mickel its check for $1600 and retained the $293.40. Later the Ford proved defective and about December 27, defendant returned it to Mickel and exchanged it for a Chevrolet, paying Mickel $175 more. Shortly thereafter Mickel became insolvent, and it developed he had not secured title to the Chevrolet. The real owner, Frank Croke, took it from defendant by replevin.

Thereafter plaintiff brought this suit against defendant for judgment on the $1893.40 note and foreclosure of the conditional contract of sale of the Ford. Defendant pleaded Mickel acted as plaintiff's agent in the financing phases of the transactions and had agreed, for plaintiff, to transfer plaintiff's lien from the Ford to the Chevrolet, that thereafter defendant was dispossessed of the Chevrolet, that he received no consideration for the transaction, that any amount owed by him had been paid and satisfied and that plaintiff was estopped to recover on the instruments in suit. The reply denied Mickel was plaintiff's agent in the financing transactions and alleged plaintiff was a holder in due course of the note and contract. The trial court rendered judgment for defendant. Hence this appeal.

Mickel's dealings with plaintiff started in the spring of 1948. He required financing to handle the many automobiles purchased in various states and received in trades. Plaintiff was not much interested in financing this wholesale business. It wanted retail automobile finance paper. In May, 1948, plaintiff agreed to finance Mickel on a floor plan and Mickel agreed to solicit retail automobile loans for plaintiff. Plaintiff agreed to pay Mickel for retail loans solicited by him. Mickel's earnings for retail loans secured by him between August 28, and October 18, amounted to $636.50. He refers to these earnings as commissions, as does defendant. In account sheets furnished Mickel, plaintiff listed them under the title, 'Dealers participation'. Although it makes little difference what name is given Mickel's compensation, the word 'commissions' probably best describes these items because they were based upon the amount and type of the retail loans secured for plaintiff by Mickel.

Plaintiff furnished Mickel various forms. For wholesale loans Mickel was furnished forms of sight drafts to be used in buying automobiles, by him and such of his employees as he designated by filing their signatures in plaintiff's Omaha office. Apparently these sight drafts were regularly honored without question or investigation. When Mickel received the automobiles he would mortgage them to plaintiff on forms furnished by plaintiff. The dealings between plaintiff and Mickel in connection with the wholesale loans to him are indicative of plaintiff's confidence in him and the powers it permitted him to exercise.

The blank notes and contracts of conditional sale for retail loans furnished Mickel contained printed assignments to Associates Discount Corporation, for execution by Mickel, and printed provisions requiring that payments be made at the office of Associates Discount Corporation, Chicago, Illinois. Mickel was authorized to exercise his discretion as to the rate to be charged on retail loans solicited by him. He testified: 'We had two charts, different type rates. It depended upon the person buying the automobile. If we had competition with the bank, we pushed one rate; if we knew there was no competition anywhere, we pushed another rate. That was following the discussion I had with these gentlemen of the Associates Discount Corporation.'

From August to January, Mickel solicited and handled for plaintiff more than forty retail automobile loans. In the case at bar defendant had told Mickel he proposed to finance the Ford at the local bank. Mickel told defendant of the 'good finance plan at Associates' and persuaded defendant to finance it with plaintiff.

Later, when Mickel suggested the exchange of the Chevrolet for the defective Ford, defendant asked him about the financing. At that time a field representative of plaintiff named Malette or Mailette was in Harlan, checking automobiles mortgaged by Mickel to plaintiff, including the Chevrolet. After conferring with Mailette, Mickel told defendant they would transfer the financing from the Ford to the Chevrolet. Defendant then transferred the Ford to Mickel and took the Chevrolet. Shortly thereafter Mickel sold the Ford at an auction in Omaha and the Chevrolet was taken from...