Boatmen's Bank of Cape Girardeau v. Adams, s. 4-89-0009

• Citation: 138 Ill.Dec. 575,191 Ill.App.3d 176,547 N.E.2d 742
• Decision Date: 30 November 1989
• Docket Number: Nos. 4-89-0009,4-89-0036,s. 4-89-0009
• Parties: , 138 Ill.Dec. 575, 11 UCC Rep.Serv.2d 258 BOATMEN'S BANK OF CAPE GIRARDEAU, Plaintiff-Appellant, v. Stanley N. ADAMS, Jr., Defendant-Appellee. BOATMEN'S BANK OF CAPE GIRARDEAU, a Missouri Banking Corporation, Plaintiff, v. Stanley N. ADAMS, Jr., Defendant-Third Party Plaintiff-Appellant (Sieben, Inc., a corporation d/b/a Plaza Motor Company, and Roger D. Davault, Third Party Defendants-Appellees).
• Court: United States Appellate Court of Illinois

Page 742

547 N.E.2d 742

191 Ill.App.3d 176, 138 Ill.Dec. 575,

11 UCC Rep.Serv.2d 258

BOATMEN'S BANK OF CAPE GIRARDEAU, Plaintiff-Appellant, v. Stanley N. ADAMS, Jr., Defendant-Appellee.

BOATMEN'S BANK OF CAPE GIRARDEAU, a Missouri Banking

Corporation, Plaintiff, v. Stanley N. ADAMS, Jr., Defendant-Third Party

Plaintiff-Appellant (Sieben, Inc., a corporation

d/b/a Plaza Motor Company, and Roger D.

Davault, Third Party

Defendants-Appellees).

Nos. 4-89-0009, 4-89-0036.

Appellate Court of Illinois Fourth District.

Nov. 30, 1989.

Jeffrey P. Hine, Oliver, Oliver, Waltz & Cook, P.C., Cape Girardeau, Mo., for plaintiff-appellant.

James M. Drake, Holley, Keith & Huntley, Springfield, Ill., for defendant-appellee.

Alex M. Kanter, Herzog, Ahlquist, Kanter & Hoffert, St. Louis, Mo., for Sieben, Inc.

Justice KNECHT delivered the opinion of the court:

Plaintiff, a Missouri bank, filed a replevin action in Sangamon County to recover a car to which it has title and a perfected security interest. Plaintiff loaned money to Roger Davault (Davault) to purchase the car. Six months later he returned the car to the dealer (Sieben, Inc., d/b/a Plaza Motors) for repair and resale. Michael Sheahan (Sheahan), a salesman for Plaza Motors, purchased the car. The check he gave Davault, payable to plaintiff and Davault, was not honored. In the interim, Sheahan sold the car to Springfield, Illinois, resident John Taylor (Taylor), who then sold it to defendant Stanley Adams (Adams). Title to the car remained with the bank. Adams filed a third-party complaint against Sieben, Inc., and Davault. The circuit court dismissed the third-party defendants and denied plaintiff's replevin complaint. Plaintiff appealed the denial of its replevin complaint (appeal No. 4-89-0009) and Adams appealed the dismissal of the third-party complaint (appeal No. 4-89-0036). The cases were consolidated on appeal and both are presented here. We reverse the decision of the circuit court denying plaintiff's replevin complaint and affirm the decision dismissing the third-party complaint.

Plaintiff is a Missouri banking corporation with its principal place of business in Cape Girardeau, Missouri. Plaintiff loaned $29,711.22 to Davault to purchase a 1981 Porsche automobile. Davault, a resident of Bollinger County, Missouri, signed an installment note and security agreement. He purchased the car on January 12, 1985, from Plaza Motor Company in Creve Coeur, Missouri. Plaintiff acquired a first lien on the car as collateral for the loan, pursuant to the security agreement executed by Davault. Plaintiff perfected its lien by sending the title application and various other documents to the Missouri Department of Revenue, the State agency responsible for licensing and lien perfection. The Department of Revenue issued a certificate of title in Roger D. Davault's name with plaintiff as lienholder.

In September 1985, Davault took the car to Plaza Motors for repair and resale. Sheahan, a resident of St. Louis County, Missouri, stated Davault inquired about trading the car to Plaza Motors for another car. Sheahan could not locate the car Davault wanted and Plaza Motors was not interested in purchasing the Porsche. Sheahan offered to arrange a sale of the car to Taylor. Sheahan claims he told Davault the sale would be through him and not through Plaza Motors. Davault consented and Sheahan wrote a personal check for $22,000 payable to Davault and plaintiff. He advised Davault not to cash the check until he (Sheahan) received money from Taylor. Davault offered the title to Sheahan who refused to accept it. Davault denied, in his deposition, ever having title to the car.

Davault took the check from Sheahan to plaintiff to pay his loan. Plaintiff sent the check, drawn on First Missouri Bank, to that bank for collection. Plaintiff attached the car's title to the check and signed the release section on the certificate of title.

First Missouri Bank refused to pay the check because Sheahan's account contained insufficient funds. First Missouri Bank returned the check and title to plaintiff. Plaintiff never received $22,000 from Sheahan and Davault defaulted on the loan. Although given opportunities to cure the default, Davault never did so and plaintiff accelerated the loan. The amount due is now $13,147.54.

Sheahan contacted Taylor, a resident of Springfield, Illinois, and offered to sell him the car. Taylor testified Sheahan told him he was purchasing the car from an individual in Missouri. Sheahan claims he specifically told Taylor he was acting in his individual capacity in buying and selling the Porsche and not as an agent of Plaza Motors. Taylor paid Sheahan $23,000 for the car. Sheahan delivered the car to him in Springfield and Taylor drove it for approximately one week. On cross-examination, Taylor admitted the car had Missouri license plates when delivered to him. He also admitted he knew at the time that obtaining title to a car is essential to ownership, and he never received title. He claimed he and Sheahan were waiting on the title to "catch up" to the car. While cleaning the car, he found documents in the glove compartment bearing Davault's name, but assumed Davault was a previous owner. He never had any contact with plaintiff or Davault.

One week after receiving the car, Taylor sold it to defendant, a resident of Springfield, Illinois, for $23,000. Defendant purchased the car with the Missouri license plates on it and never received title from Taylor. Taylor testified he told defendant he (Taylor) did not have title to the car at the time of the sale and defendant corroborated Taylor's testimony. Defendant testified Taylor showed him the papers bearing Davault's name found in the car's glove compartment. Defendant is now in possession of the car and maintains insurance on it. The car still has Missouri license plates, never transferred to defendant's name.

In an affidavit dated August 11, 1987, almost one year before the above deposition testimony was taken, defendant stated he believed the car was being sold by Plaza Motors. He believed Sheahan acted as an agent of Plaza Motors in selling the car and that Plaza Motors had given him authority to sell it.

Plaintiff filed a replevin action against defendant on August 4, 1986, in Sangamon County circuit court. Plaintiff sought possession of the car or its value, $26,000, damages of $1,500, and costs of the lawsuit. On May 1, 1987, defendant moved to dismiss plaintiff's complaint and filed a third-party complaint against Sieben, Inc., d/b/a Plaza Motors, and Davault. Defendant sought relief in the event he was held liable to plaintiff. Defendant sought $23,000, the value of the car, damages of $5,000 and costs of the lawsuit from Sieben, Inc., and from Roger Davault. Davault entered a special appearance on June 11, 1987, and moved to dismiss the third-party complaint for lack of jurisdiction and to quash service of process under the entry of special appearance. Sieben, Inc., entered a special appearance on July 6, 1987, challenging the court's jurisdiction.

The third party defendants were dismissed on August 27, 1987. The court denied defendant's motion to dismiss plaintiff's complaint. On June 7, 1988, plaintiff moved to amend its complaint by interlineation, claiming damages of $10,000.

The circuit court conducted a hearing on the matter on July 1, 1988. After another hearing on September 15, the court ordered a docket entry denying plaintiff's complaint for replevin on the ground plaintiff failed to establish a prima facie case. Plaintiff moved for modification of the judgment or for a new trial but the court denied the motion. Plaintiff appeals.

We consider first the issues raised in the replevin action, appeal No. 4-89-0009. Initially, we must decide whether Illinois or Missouri law applies.

Missouri and Illinois have adopted the Restatement (Second) of Conflict of Laws (1969) (Restatement). (Kennedy v. Dixon (Mo.1969), 439 S.W.2d 173; Ingersoll v. Klein (1970), 46 Ill.2d 42, 262 N.E.2d 593.) The Restatement, section 6, directs the forum State to apply its laws to resolve choice of law issues. The applicable Illinois statute in this case is section 9-103(2) of the Uniform Commercial Code (Ill.Rev.Stat.1987, ch. 26, par. 9-103(2)), which reads in pertinent part:

"(a) This subsection applies to goods covered by a certificate of title issued under a statute of this State or of another jurisdiction under the law of which indication of a security interest on the certificate is required as a condition of perfection.

(b) Except as otherwise provided in this subsection, perfection and the effect of perfection or non-perfection of the security interest are governed by the law (including the conflict of laws rules) of the jurisdiction issuing the certificate until 4 months after the goods are removed from that jurisdiction and thereafter until the goods are registered in another jurisdiction, but in any event not beyond surrender of the certificate. After the expiration of that period, the goods are not covered by the certificate of title within the meaning of this Section."

The statute is applicable because plaintiff perfected its security interest in the car according to Missouri law, which provides the interest is perfected when recorded on the certificate of title.

"A lien or encumbrance on a motor vehicle or trailer is perfected by the delivery to the director of revenue of the existing certificate of ownership, if any, an application for a certificate of ownership containing the name and address of the lien-holder and the date of his security agreement, and the required certificate of ownership fee. It is perfected as of the time of its creation if the delivery of the aforesaid to the director of revenue is completed within thirty days thereafter, otherwise as of the time of the delivery." Mo.Ann.Stat. § 301.600(2), at 204 (Vernon 1972).

The Illinois statute orders application of the whole...