Bull Motor Co. v. Murphy

• Decision Date: 19 December 2007
• Docket Number: No. CA 07-183.,CA 07-183.
• Citation: 270 S.W.3d 350,101 Ark. App. 33
• Parties: BULL MOTOR COMPANY, Appellant, v. Jason MURPHY, Appellee.
• Court: Arkansas Court of Appeals

270 S.W.3d 350

101 Ark. App. 33

BULL MOTOR COMPANY, Appellant, v. Jason MURPHY, Appellee.

No. CA 07-183.

Court of Appeals of Arkansas.

December 19, 2007.

Rehearing Denied January 23, 2008.

Easley & Houseal, by: B. Michael Easley and John I. Houseal, Forest City, for appellant.

Jesse B. Daggett, P.A., by: Jesse B. Daggett, Marianna, for appellee.

JOHN MAUZY PITTMAN, Chief Judge.

An unknown thief took a new truck from the lot of appellant Bull Motor Company (BMC) and drove it for a short period of time before the truck was recovered and returned to BMC. BMC subsequently sold the truck as "new" to appellee Jason Murphy without disclosing this history. Upon discovering the true history, Murphy filed suit. A jury awarded Murphy $7,000 in damages. In this appeal from that verdict, BMC raises four points for reversal. We affirm.

Background

On December 8, 2004, a thief stole a 2005 truck from BMC. The truck was recovered by the police ninety minutes later and had been driven forty miles. The truck was returned to BMC's lot. On January 4, 2005, Murphy purchased the truck as a "new" truck for $33,495. The salesman, Bo Henderson, was unaware that the truck had been stolen at the time of the sale and did not disclose the information to Murphy.

On March 10, 2005, Murphy filed suit, alleging that BMC breached the sales contract by not disclosing the prior theft of the truck. The complaint also asserted that the vehicle was worth $8,495 less because it had been stolen and driven by the thief. BMC denied the material allegations of the complaint and asserted that Murphy had not suffered any damages. BMC later moved for summary judgment, contending that Murphy suffered no damages in that he received a "new" vehicle because Ark.Code Ann. § 23-112-103(22) (Repl.2004) defines a "new" vehicle as one whose title has not been transferred to an ultimate purchaser. The circuit court denied the motion, and the case proceeded to trial.

The Evidence

At trial, Murphy testified that he wanted a "new" vehicle—one that had not been stolen or wrecked. This was important to him, he said, because he was looking for dependable transportation to work and one would not know how the thief drove the vehicle. He opined that the vehicle he purchased was "used," not "new," because it had been stolen and driven by the thief. Murphy stated that, when he learned that the truck had been stolen, he called BMC and asked for another "new" vehicle but that they refused the request. At that time, he had driven the truck approximately 1,000 miles. Over BMC's objection, he testified that the rear end had to be replaced at 18,000 miles. He acknowledged that he did not know whether the thief's actions had any effect on the rear end. Murphy stated that he would not have bought the truck for the same price if he had known it to have been stolen. He said that the price would have had to be reduced some $8,000 to $10,000 before he bought the stolen truck. He also said that it did not matter how long the thief had the truck or how far it was driven because it was still a "used" truck. On cross-examination, he acknowledged that there was nothing wrong with the truck's interior or exterior or how it drove when he purchased it. He also said that the knowledge that the truck had been stolen had weighed on his mind.

Tony Bull, owner of BMC, testified that, after the truck was recovered, it was thoroughly inspected and tested with no damage found. He also said that he was sure that Bo Henderson did not know that the truck had been stolen and explained that it was simply a mistake that it was not disclosed to Murphy. He said that there was no effort to deceive Murphy and that he tried to rectify the situation by offering to extend the truck's warranty. He opined that, if the thief did any damage to the truck, it would have manifested itself within the first 2,000 miles. He did not know how the thief drove the vehicle but further opined that the truck's value was not affected by being driven for forty miles by the thief. Bull stated that the truck's being driven by the thief does not characterize it as a "used" vehicle because a "new" vehicle is one that has never been registered or titled. On cross-examination, Bull was unable to state how much the vehicle's value would be reduced if Murphy had taken the vehicle and driven it for one day before returning it.

Bo Henderson testified that he was unaware of the truck's having been stolen at the time he sold it to Murphy and asserted that he would have disclosed that fact to Murphy had he known it. According to Henderson, there was nothing in the truck's record to indicate that it had been stolen because it had not been damaged. He also said that the average customer would select the truck that had not been stolen and that it would probably have been necessary to reduce the price in order to sell the stolen truck. According to Henderson, an appropriate reduction would be $1,000 to $1,500.

Dean Sides, a car dealer in Newport, testified that a "new" vehicle is one that has not been sold or titled. He opined that the theft would not reduce the value of the truck. He described the thief's action as "not much more than a test drive." He also allowed that a dealer may have to discount the price because of the vehicle's tarnished reputation. He said that it would be something difficult to value.

James Smith, BMC's service manager, testified that he tested Murphy's truck and did not find any problems. He asserted that any damage to the rear end of the truck would have immediately been discovered. He acknowledged that the computer did not check the rear differential and that there could be damage that went undiscovered.

Over BMC's objection, the circuit court gave AMI 2412 concerning ambiguity in the meaning of the term "new vehicle" and that it was the jury's job to determine what the parties meant by that term. The jury was also instructed on the statutory definitions of the term "new vehicle" and "used vehicle." The jury returned a verdict signed by ten jurors finding in favor of Murphy and awarding him $7,000 in damages. BMC filed a motion for new trial or judgment notwithstanding the verdict, asserting that there was no substantial evidence to support the award of damages or that BMC did not sell Murphy a "new motor vehicle." The motion for new trial was based on asserted error in allowing Murphy to testify that the truck needed axle repairs at 18,000 miles; that the testimony that the truck decreased in value by $8,495 was speculative; and that the damages award of $7,000 was against the preponderance of the evidence. The circuit court denied the motion. Judgment was entered on the jury verdict, and the circuit court awarded Murphy attorney's fees of $4,164. This appeal followed.

Arguments on Appeal

In its first point, BMC argues that the circuit court erred in denying its motion for summary judgment, its motion for a directed verdict, and its motion for judgment notwithstanding the verdict because the truck was, as a matter of law, "new."

We cannot address the summary-judgment issue. The denial of a motion for summary judgment is not an appealable order; even after there has been a trial on the merits, the denial order is not subject to review on appeal. Bharodia v. Pledger, 340 Ark. 547, 11 S.W.3d 540 (2000); Elliott v. Hurst, 307 Ark. 134, 817 S.W.2d 877 (1991).

BMC's argument is that the meaning of the phrase "new vehicle" is determined, as a matter of law, by the statutory definition contained in section 23-112-103(22). We disagree. It is axiomatic that the laws in force when and where a contract is made and to be performed enter into and form part of the contract. This rule is limited, however, to laws that are applicable to the contract. Union Indem. Co. v. Forgey & Hanson, 174 Ark. 1110, 298 S.W. 1032 (1927); see Wing v. Forest Lawn Cemetery Ass'n, 15 Cal.2d 472, 101 P.2d 1099 (1940); WILLISTON ON CONTRACTS § 3019 (2007). Arkansas Code Annotated section 23-112-103(22) is not applicable to an agreement of sale between an automobile dealer and a consumer. That statute is part of the Arkansas Motor Vehicle Commission Act, which was expressly intended to create an administrative agency to license persons and entities involved in the manufacture, distribution, and sale of motor vehicles so as to "[p]revent frauds, unfair practices, discrimination, impositions, and other abuses upon the citizens of Arkansas." Ark.Code Ann. § 23-112-102(b)(1).¹

The purpose of the rule incorporating applicable law into every contract is to comply with the federal constitutional prohibition against the enactment of laws impairing contractual obligations, not to impose by law a particular meaning to a term used in the agreement. See Ellison v. Tubb, 295 Ark. 312, 749 S.W.2d 650 (1988); Robards v. Brown, 40 Ark. 423 (1883).

Section 201 of the RESTATEMENT (SECOND) OF CONTRACTS makes this plain. It states:

(1) Where the parties have attached the same meaning to a promise or agreement or a term thereof, it is interpreted in accordance with that meaning.

(2) Where the parties have attached different meanings to a promise or agreement or a term thereof, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made

(a) that party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party; or

(b) that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party.

(3) Except as stated in this Section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent.

The Comment to this section deals with the precise situation that is before us in this case:

a. The meaning of words. Words are used as conventional symbols of mental states, with standardized meanings based on habitual or...