Bauer v. Commercial Credit Co.
| Decision Date | 25 June 1931 |
| Docket Number | 22898. |
| Citation | 163 Wash. 210,300 P. 1049 |
| Parties | BAUER v. COMMERCIAL CREDIT CO. |
| Court | Washington Supreme Court |
Appeal from Superior Court, Adams County; Matt L. Driscoll, Judge.
Action by A. E. Bauer against the Commercial Credit Company. Judgment for plaintiff, and defendant appeals.
Reversed and remanded, with directions.
Lund & Dodds, of Spokane, for appellant.
Miller & Freese, of Ritzville, for respondent.
A. E Bauer instituted this claim and delivery action to establish his title to, and to recover possession of, a Willys-Knight coupé. The trial of the cause to the court resulted in judgment in favor of the plaintiff. The defendant has appealed.
The Dunn Motor Company, distributor for Willys-Knight automobiles at Ritzville, Wash., sold and delivered to the respondent on October 9, 1929, a Willys-Knight coupé. At that time the Dunn Motor Company was being financed by the Pacific Finance Corporation, which held an unrecorded bill of sale to secure an unpaid balance of $851 due from the motor company on the coupé. The motor company did not, when it made the sale to respondent, pay the finance corporation or procure a satisfaction of the conditional sale contract. The respondent did not have actual or constructive notice of the unrecorded bill of sale.
Respondent used the coupé, driving it approximately fourteen hundred miles, until December 26, 1929, when he returned it to the Dunn Motor Company to sell for him. The only limitation imposed was that the car should be sold for not less than $1075. Respondent turned back the speedometer to indicate that the car had been operated a distance of only eighty-seven miles. The car was put in the showroom of the motor company with a number of new cars offered for sale to the public. The automobile remained in the showroom of the motor company continuously from December 26, 1929, to May 12, 1930. Bauer place in a local bank a bill of sale running from the Dunn Motor Company to himself, which bill of sale was never placed of record. Why such bill of sale was deposited in the bank is not disclosed. This is not a factor of any importance. Only the bank, the respondent, and the motor company knew anything about it. The appellant was not aware of the true situation, nor did it have any notice thereof.
In April, 1930, the Pacific Finance Corporation demanded payment by the mother company of the balance of $851 due on the coupé. Appellant, also engaged in the business of financing automobile dealers, had been 'flooring cars' for the motor company for some time. That is, when a shipment of new cars ordered by the Dunn Motor Company arrived, the appellant would take up the draft, which was attached to the bill of lading, and issue a trust receipt to the Dunn Motor Company, which was then permitted to place the cars in its showrooms and sell the same. On April 18, 1930, the appellant wrote to the Dunn Motor Company as follows:
Shortly thereafter the Dunn Motor Company wrote the following to the plaintiff at the bottom the letterhead on which the foregoing was written:
On April 25, 1930, the appellant was advised through the Retail Credit Company that the car was on the floor of the Dunn Motor Company's garage at Ritzville; that it was a new car, and had been run only eighty-seven miles. There is no contention that the loan made by the appellant to the motor company was not made in good faith, nor does respondent claim that appellant had either knowledge or notice that the car belonged to the respondent. It appears from the testimony that the appellant would not lend any money to the motor company until the motor company paid the Pacific Finance Corporation. There is no showing that the appellant supplied the funds with which to pay the Pacific Finance Corporation. The appellant was informed April 25, 1930, by the Pacific Finance Corporation that the balance due the latter of $851 on the coupé had been paid by the Dunn Motor Company. The appellant then advanced to the motor company $851 and took a trust receipt with draft attached due within sixty days. The Dunn Motor Company failed in business the early part of May, 1930. On May 12, 1930, the appellant took possession of the car, and placed same in a garage across the street from the motor company's garage at Ritzville. The respondent then made a claim to the car, which was appellant's first knowledge or notice of respondent's interest in the coupé. This car and others belonging to the appellant were started for Spokane. Respondent commenced replevin action, and the sheriff of Adams county overtook appellant and took possession of the coupé.
The appellant contends that the transaction between it and the motor company was a sale, that Bauer gave the motor company possession of the car for the purpose of selling the same, and that it was sold by the motor company to the appellant, which had neither knowledge or notice of the claim of respondent; therefore the provisions of section 5836-25, Rem. 1927 Supp., reading as follows, are applicable: 'Where a person having sold goods continues in possession of the goods, or of negotiable documents of title to the goods, the delivery or transfer by that person, or by an agent acting for him, of the goods or documents of title under any sale, pledge, or other disposition thereof, to any person receiving and paying value for the same in good faith and without notice of the previous sale, shall have the same effect as if the person making the delivery or transfer were expresly authorized by the owner of the goods to make the same.'
There was no sale of the coupé by the respondent to the Dunn Motor Company. The evidence conclusively establishes the fact that the transaction between the appellant and the motor company was not a sale, but a loan by the appellant upon the car.
That the respondent had good title to the coupé at the time he purchased it on October 9, 1929, from the motor company, is conceded by appellant. Respondent paid to the motor company the purchase price of the car and took possession of the same, which possession he retained for more than two months. No conditional sale contract was of record. Respondent's title to the car was clear at that time of all liens and incumbrances.
The motor company was authorized by the respondent, when he placed the automobile with it December 29, 1929, to sell the car for not less than $1075. The appellant is in the business of financing automobile dealers; that is, lending money on cars. It is not in the business of buying and selling automobiles. The automobile in controversy was not purchased by the appellant for its own use. Appellant first learned of the existence of the coupé when Dunn informed it that a coupé was being 'floored' or financed by the Pacific Finance Corporation, and that a balance of $851 was due the Pacific Finance Corporation on the coupé. Dunn then inquired whether appellant would take over the financing. Appellant's manager testified: 'I say he, Mr. Dunn, came into our office on that afternoon, probably some time after lunch, as I recall it, and wanted us to refloor the car for him, and I told him in the course of our business we would first ascertain whether or not the car was paid for with Pacific, and we would also find out whether or not the car was on his floor, because we did not floor cars for any dealer unless we knew that the dealer had possession of the car.'
The Pacific Finance Corporation was paid by Dunn, and the appellant then made a loan to the motor company of $851, the security for the repayment of which was the coupé. The car remained in the possession of the motor company from that time, April 25, 1930, to May 12, 1930, when appellant seized the car, which was surrendered to the sheriff when affidavit and bond were served upon appellant in this action.
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The appellant was apprised that the coupé which the motor company mortgaged to it for the loan of $851 cost $1152. Clearly the appellant was not requested to purchase the car. The appellant made a loan to the Dunn Motor Company after the indebtedness thereon had been paid by the Dunn Motor Company to the Pacific Finance Corporation. The security for that loan was the coupé, the possession of which was retained by the motor company.
Section 5836-25, supra, is not applicable. This is not a case of a vendor continuing in possession of the goods sold and subsequently reselling the same to a third person who purchases in good faith, for value and without notice. Respondent purchased the car from the motor company retaining possession for...
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