Butler v. Buick Motor Co., a Div. of General Motors Corp., s. 86-164

Citation112 S.Ct. 307,813 S.W.2d 454,16 UCCRep.Serv.2d 354
Decision Date06 February 1991
Docket NumberNos. 86-164,01-A-01-9003CH00101,s. 86-164
PartiesGeorge B. BUTLER and wife, Leah B. Butler, Plaintiffs/Appellees, v. BUICK MOTOR COMPANY, a DIVISION OF GENERAL MOTORS CORPORATION, Defendant/Appellant. 813 S.W.2d 454, 16 UCC Rep.Serv.2d 354
CourtCourt of Appeals of Tennessee

Albert F. Moore of Neal & Harwell, Nashville, for defendant/appellant.

Robert L. Huskey, Manchester, for plaintiffs/appellees.

TOMLIN, Presiding Judge (Western Section).

George B. Butler and wife, Leah Butler, (hereafter "Plaintiffs" or "Butler") initiated this suit in the Chancery Court of Coffee County against Buick Motor Company, a division of General Motors Corporation, ("defendant" or "Buick"). Plaintiffs sought to regain possession of a 1985 Buick Electra Park Avenue automobile they had purchased from Gaylen Fann Auto Sales, Inc. ("Fann"), a used car and auto salvage dealer in Manchester, after the vehicle had been confiscated by a department of the state of Tennessee and possession surrendered to Buick. Following a bench trial, the chancellor held that Butler had acquired title to the automobile and was entitled to its possession.

Buick raised three issues on appeal contending that the chancellor erred in: (1) holding that plaintiffs acquired good title to the automobile on the ground that as innocent purchasers for value they bought the car from one holding a voidable title; (2) incorrectly applying an equitable maxim to the facts of this case; and (3) exercising jurisdiction and thereby hearing the case prior to plaintiffs' exhausting their administrative remedies. Our resolution of the first issue disposes of this litigation. We accordingly pretermit the second and third issues and reverse and dismiss.

Many of the material facts are undisputed. We would state parenthetically that inasmuch as we do not address the issue pertaining to the exhaustion of administrative remedies, we will touch on those facts tangentially as we relate the facts material to the primary issue.

The automobile which is the subject of this suit was what the trade would consider a "prototype test vehicle" or "pre-production" model. It was one of approximately 250 test vehicles similarly produced and tested by GM. These vehicles could not be approved for sale to the public because many of the parts on the cars had not been certified for inclusion on a production model automobile by the Department of Transportation. The automobile was built by General Motors in August, 1983 and was originally shipped that same month to its GM Buick Division in Flint, Michigan. There it was used by management-level GM employees for transportation on the public highways of Michigan. The automobile was evaluated and critiqued by the various employees who drove and used it. It was shipped with a certificate of origin from the GM factory and was appropriately titled and licensed for use on the public roads. It was a style and series that was ultimately produced and sold to the public in 1985.

After about a year and one-half of testing, Buick determined that the automobile had undergone an adequate testing process at Flint, and on February 19, 1985, the automobile in question was transported to GM's proving ground in Milford, Michigan ("Milford"). Milford consists of approximately 4,000 acres of GM-owned property, and includes a variety of test facilities such as a test track, wind tunnels, salt baths, robotics, and other testing procedures. Current and future products are regularly tested for safety and durability. The testing at Milford is done in order to obtain federal certification of certain vehicles. None of the vehicles used for testing is sold to the public.

At the time the automobile in question was delivered to Milford, Buick requested that the plate bearing the vehicle identification number ("VIN"), located on the dashboard, be removed. The VIN plate was removed from the subject automobile and returned to the appropriate office in Flint. At the same time the certificate of title that had been issued in the name of Buick engineering in Flint was surrendered to the Secretary of State. The surrender of the title certificate to the Michigan Secretary of State and the removal of the publicly-displayed VIN plate prevented and inhibited the possibility of unlawful transfer of title to this vehicle.

Jack L. Clingingsmith ("Clingingsmith") was employed by GM as a supervisor in charge of driver training and durability testing at Milford. In that capacity he was permitted to use vehicles such as the subject automobile as "yard cars" for transportation on and about the proving ground itself but not on the public roads of Michigan. When the cost of maintaining a "yard car" exceeded its usefulness, it was destroyed in accordance with standing orders. Standard scrapping orders accompanied the subject car when it arrived in Milford. It was not part of Clingingsmith's duties to scrap the car, but it was his responsibility to witness the scrapping and to document its destruction. From the time the subject vehicle was produced and delivered to the Buick Division in Flint, it was GM's intention that it would end up as scrap.

Without GM's knowledge and authority, Clingingsmith disposed of the subject automobile, along with others, by selling it as an operating vehicle to Mr. Ingo Nicolay, an employee of a used-car lot in Michigan. Clingingsmith covered the transfer of the subject automobile and others to Nicolay by a false paper trail. He supplied false documents to Buick at Flint indicating that this automobile had been reduced to scrap. Nicolay transferred the vehicle to Donald Holloway, who operated an automobile salvage yard in Michigan. Neither Nicolay nor Holloway was employed by GM. Both of them were aware that Clingingsmith did not have the authority to sell the subject auto or the other vehicles, but they went ahead and accepted the automobiles without properly endorsed certificates of title or the required VIN plates in violation of state and federal law.

Gene Taylor was a buyer and salesman for Fann. Taylor and Fann formed a joint venture in connection with the buying and selling of these untitled and non-VIN-plated test vehicles. Taylor acquired the subject automobile and others from Holloway, with only a bill of sale to document the transfer. Holloway did not furnish Taylor with a certificate of title or other documents verifying his ownership, but neither did he conceal the fact that the VIN plate had been removed. Taylor testified that he never dealt with Clingingsmith or anyone else at GM in connection with purchasing these automobiles. He dealt only with Holloway. Taylor further testified he understood that the cars were to be used for parts and that he sold them for parts only. He stated that he never made any investigation about the title to the vehicle.

When this and other automobiles arrived in Tennessee, Fann applied to the state of Tennessee for a "permit to dismantle" each vehicle. The permit issued by the Department of Revenue was required in order to disassemble a vehicle so that the component parts could be sold separately.

Taylor testified he had purchased "test cars" from other manufacturers, but he had never before purchased test cars manufactured by GM. Taylor further testified he "could have" told GM investigators that he did not "intend to sell the cars to anyone to be driven around in Tennessee."

At the time Fann sold the subject automobile to the plaintiffs, he endorsed over to them the certificate to dismantle. Plai...

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