Equico Lessors, Inc. v. Maruka Machinery Corp. of America, 87-224
| Citation | 13 Fla. L. Weekly 704,523 So.2d 665 |
| Decision Date | 17 March 1988 |
| Docket Number | No. 87-224,87-224 |
| Parties | 13 Fla. L. Weekly 704, 13 Fla. L. Weekly 999, 5 UCC Rep.Serv.2d 992 EQUICO LESSORS, INC., Appellant, v. MARUKA MACHINERY CORPORATION OF AMERICA, Appellee. |
| Court | Court of Appeal of Florida (US) |
John D. Boykin of Boose, Casey, Ciklin, Lubitz, Martens, McBane & O'Connell, West Palm Beach, for appellant.
Mercer K. Clarke and James C. Polkinghorn of Kelley, Drye & Warren, Miami, for appellee.
The appellant, Equico Lessors, Inc. (Equico), sued Maruka Machinery Corporation of America (Maruka) for conversion and punitive damages. The issue on this appeal is whether the trial court erred in granting Maruka's motion for a directed verdict at the conclusion of the evidence presented at trial.
Given the directed verdict against Equico, we must view the facts adduced at trial in the light most favorable to it, as the jury would have been entitled to do. Dania Jai-Alai Palace, Inc. v. Sykes, 450 So.2d 1114, 1121 (Fla.1984); Riccio v. Allstate Insurance Company, 357 So.2d 420, 422 (Fla. 3d DCA 1978). Those facts were: Maruka owned a Kitamura machining center, Model S-15, serial number 8304, and sold it to Mercury on credit, with delivery to Mercury's premises taking place on March 12, 1980. Maruka did not record any security interest in the machine. Mercury, using Nova Machinery Company, Inc. (Nova), as a conduit of title, 1 sold the machine to Servico Capital Corporation (Servico). Servico leased the machine back to Mercury and simultaneously assigned its lease interest and title to the machine to Equico. Equico verified that the machine was on the lessee's (Mercury's) premises on March 13, 1980, and paid Nova the full purchase price of $120,000 for the machine on the following day, March 14, 1980. Nova, in turn, paid Mercury. Mercury, however, did not pay Maruka, as it was obligated to do.
In April, 1980, Equico recorded a financing statement reflecting that Servico had leased the machine to Mercury and that Servico had assigned its entire interest in the lease and the machine to Equico. Mercury made some lease payments to Equico, but ultimately defaulted. In August, 1980, Maruka repossessed the machine from Mercury (which then held it only as a lessee from Equico) because of nonpayment. When Equico found that Mercury had surrendered the Kitamura machine back to Maruka, it filed the instant action against Maruka.
We agree with the trial court in regard to Equico's punitive damage claim. However, we cannot agree in regard to the conversion count. Under these facts, Maruka could not repossess (via voluntary surrender) from Mercury anything more than Mercury then owned: a leasehold interest in the machine subject to Equico's ownership of the machine and the lease. Even though Mercury never made any payment to Maruka prior to delivery of the machine to Mercury, title to the machine passed to Mercury upon delivery on March 12, 1980, there being nothing to establish a contrary intent. Equico was a good faith purchaser for value of that equipment from Servico, who acquired it from Mercury through Nova. The fact that Equico directly payed Servico's predecessor, Nova, is immaterial. What is material is that Maruka failed to record its security interest in the machine and thus acquire a priority status ahead of Equico. There was nothing of record to apprise Equico of Maruka's claim.
The record indicates that the trial court determined that the transaction between Mercury and Nova, because of their deceptive relationship, was a nullity and, therefore, no title to the machine ever passed to Nova or through Nova, and remained at all times in Mercury. Yet, there was uncontroverted testimony that the intent of the parties was to effectuate transfer of title from Mercury to Nova, that the necessary paperwork to effectuate such a transfer was executed, and that there was no legal barrier, recorded or otherwise, precluding such a transfer. The fact that the transfer papers preceded Mercury's physical possession of the machine by approximately a week does not support the directed verdict, as shown by section 672.501, Florida Statutes (1979), which provided:
(1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are nonconforming and he has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit...
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...man may contract for the sale of a specific thing which is not his own at the time."); see also Equico Lessors, Inc. v. Maruka Machinery Corp. of Am., 523 So.2d 665, 667 (Fla.Dist.Ct.App.1988). At most, such contracts are voidable at the option of the purchaser. See Grassi v. Tatavito Homes......