Commercial Credit Co. v. McNelly

• Decision Date: 21 February 1934
• Citation: 36 Del. 88,171 A. 446
• Court: Delaware Superior Court
• Parties: COMMERCIAL CREDIT COMPANY v. CHARLES P. MCNELLY

171 A. 446

36 Del. 88

COMMERCIAL CREDIT COMPANY v. CHARLES P. MCNELLY

Superior Court of Delaware, New Castle County

February 21, 1934

Superior Court for New Castle County, Action of Replevin, No 51, May Term, 1932.

Case heard on motion for new trial.

At the trial of the cause the defendant pleaded property in himself and defended under that plea. The jury found a verdict for the defendant and assessed his damages. The plaintiff moved for a new trial alleging a misdirection.

Briefly the facts were these: The plaintiff was the owner of a Buick sedan by repossession from a former purchaser under a conditional sales contract. Pippin, its agent in Wilmington delivered the car to one Hoffman for sale by him at a large used car market conducted by the latter in the city. The defendant desiring to buy a used car for cash went to Hoffman's place, was told by Hoffman that he was the owner of all the cars displayed for sale and arranged to buy the Buick car for $ 450. There was no evidence that the price agreed upon was inadequate, and there was no notice to the defendant that the plaintiff or any one else held any claim to or interest in the Buick car. The defendant arranged with Hoffman to pay down $ 100 and the balance at a stated time when the defendant's father-in-law would be able to withdraw the necessary money from bank. Hoffman agreed to this but said he would have to have some memorandum of the transaction before he could permit the car to be taken away and the defendant signed a form in blank supposing, as he was told, that it was a mere memorandum of sale. Delivery of the car was made to the defendant and Hoffman went with the defendant to Pippin to arrange for the transfer of title but was not told of the claim of the plaintiff to the car. The defendant signed the application form, and thereafter, at or about the appointed time, paid to Hoffman the balance of the purchase price except a small part, and later, upon going to Hoffman's place to pay the remainder, found that he had absconded. The defendant upon attempting to obtain a certificate of title learned that the paper he had signed purported to be a conditional sales agreement for the car wherein one Powell was stated to be the vendor, the purchase price much greater than agreed upon with Hoffman, and the plaintiff named as the holder of a lien in the sum of $ 438.00, purporting to be the balance of unpaid purchase price. The defendant declined to recognize the validity of the contract of conditional sale, refused to surrender possession of the car, ignored the demand of the plaintiff for installments of price as they came due, whereupon, the plaintiff declaring default under the contract replevied the car. The plaintiff introduced in evidence the supposed conditional sales agreement and the certificate of title upon which the defendant had signed his name on the application form therein contained, and relied upon the documentary evidence in support of its claim. The defendant testified that the paper which he signed as a memorandum of the transaction was not filled out at the time he signed it, nor did it appear in evidence when, where, or by whom the paper was completed as a contract of conditional sale. It further appeared that Powell, the vendor named in the contract, knew nothing of it whatever, but his name was inserted as a "courtesy" dealer.

Under the charge of the Court, it was left to the jury to find whether the defendant signed the paper properly filled out, or in blank, but knowing the terms of sale and that they would be later inserted, upon which finding there should be a verdict for the plaintiff. The jury was instructed also that if the defendant knew, or from any fact or circumstance attending the transaction, he, as an ordinarily prudent person, should have known that the car belonged to the plaintiff and that Hoffman was the selling agent only, with no authority to fix terms, the plaintiff would be entitled to recover. Further, the jury was instructed that if Pippin, within the scope of his authority as agent for the plaintiff, delivered the car to Hoffman for sale at an establishment for the general sale of used cars to the public, without notice of any restriction on Hoffman's right to sell and that the defendant bought the car with no notice of any lack of title in Hoffman or restriction upon his right to sell, the property in the car would pass to the defendant and the verdict should be for the defendant. The jury was instructed also that if Hoffman induced the defendant to sign the supposed contract of conditional sale by fraudulent representations, and that if the defendant in the transaction acted as an ordinarily prudent man would act in such circumstances, the jury would be justified in finding that the paper writing was fraudulent and void and not to be availed of by the plaintiff in support of its action of replevin.

The plaintiff offered no prayer for instructions.

The motion for a new trial is denied.

David S. Keil (of Keil and Keil) for plaintiff.

Charles Edward Duffy for defendant.

LAYTON C. J., sitting.

OPINION

LAYTON, C. J.

The contention now is that the certificate of title is conclusive; that the defendant may not show a right of property in himself except as such right is evidenced by a certificate of title under the statutes governing the registration and titling of motor vehicles; that the defendant could not claim title by estoppel, from which it is urged that the jury should have been instructed to find a verdict for the plaintiff.

The statutes in force at the time of the alleged sale are to be found in Chapter 10, Vol. 36, Laws of Delaware, Article 2 (Section 2 et seq.), entitled "Registration," and Article 3 (Section 34 et seq.), entitled "Titling and Anti-Theft." Article 2 has to do generally with the registration of motor vehicles. Each owner of a motor vehicle is required to apply to the Motor Vehicle Department to obtain registration. The application must contain a description of the vehicle and certain other information, upon which a registration card is issued. An owner, upon transferring a registered vehicle, is required to endorse the registration card to the transferee and immediately to forward it to the Department, and the transferee is required before operating the vehicle upon a highway to apply for and obtain registration. A dealer upon transferring a vehicle by sale, lease or otherwise, is required to notify the Department upon a designated form. Article 3 provides that the Department shall not register a motor vehicle unless and until the owner shall make application for and be granted an official certificate of title; that an owner shall not operate a vehicle without first obtaining a certificate of title; that the application for a certificate shall be upon approved forms and shall contain certain information including a statement of liens or encumbrances; that the owner shall not sell or transfer his title or interest in a motor vehicle unless he shall have obtained a certificate of title, and an owner who transfers or sells his title or interest shall endorse an assignment and warranty of title upon the certificate with a statement of liens and encumbrances. The transferee is required to present the endorsement of certificate to the Department and make application for a new certificate. Generally, the Department may refuse to issue a certificate and its decision is final upon the statement of facts stated, unless reversed by a Court of competent jurisdiction. Penalties are provided for non-compliance.

The plaintiff relies upon Security Credit Corporation v. Whiting Motor Co., 98 N. J. Law 45, 118 A. 695, in support of its contention that no title by estoppel can override the express requirements of a statute, and there it was so held under a statute making it unlawful to sell or buy a motor vehicle except as provided therein. Although the Vice Chancellor of New Jersey, in Gaub v. Mosher, 129 A. 253, 3 N. J. Misc. 605, thought, notwithstanding the statute, that a sale made without compliance therewith was not void, but that there was sufficient vitality in the agreement of sale to support specific performance, yet the Court of Errors and Appeals, in Merchants' Securities Corporation v. Lane, 106 N. J. Law 576, 150 A. 559, held that the New Jersey statute established, as a matter of public policy, a method of transfer of property in motor vehicles differing from that prevailing and required as to other chattels, with the result that a purchaser from a dealer without notice of claim of the original owner who had not transferred the bill of sale to the dealer was not entitled to prevail as against the owner.

To the same general effect are Endres v. Mara-Rickenbacker Co., 243 Mich. 5, 219 N.W. 719, and Thomas v. Mullins, 153 Va. 383, 149 S.E. 494.

Likewise in Muzenich v. McCain, 220 Mo. App. 502, 274 S.W. 888, under a statute declaring fraudulent and void a sale of a motor vehicle without compliance with its terms, and in Wallich v. Sandlovich, 111 Neb. 318, 196 N.W. 317, under a statute providing that title shall not pass except in compliance therewith, it was held that a purchaser in contravention of the statute was not one in good faith.

In those jurisdictions where the language of the statutes is express, or where the Courts...