Ford Motor Co. v. Nat'l Bond & Inv. Co.

• Citation: 294 Ill.App. 585,14 N.E.2d 306
• Decision Date: 11 April 1938
• Docket Number: Gen. No. 39833.
• Parties: FORD MOTOR CO. v. NATIONAL BOND & INVESTMENT CO.
• Court: United States Appellate Court of Illinois

294 Ill.App. 585

14 N.E.2d 306

FORD MOTOR CO.

v.NATIONAL BOND & INVESTMENT CO.

Gen. No. 39833.

Appellate Court of Illinois, First District, First Division.

April 11, 1938.

Appeal from Circuit Court, Cook County; Ray D. Henson, Judge.

Action for conversion by the Ford Motor Company against the National Bond & Investment Company. Judgment for plaintiff, and defendant appeals.

Affirmed. John W. Creekmur, Nolan H. Tepper, Milton Silberg, and Leonard M. Cohen, all of Chicago, for appellant.

Shannon, Morrill & Johnson and Carl M. Johnson, all of Chicago, for appellee.

MATCHETT, Justice.

In an action by Ford against the investment company for the conversion of nine automobiles and upon trial by the court there was a finding for plaintiff with judgment. There is practically no dispute as to the facts. The automobiles were delivered to Cooper Motor Sales, Inc., a dealer in Chicago with its principal place of business at 5230 Milwaukee avenue, under the terms of a sales agreement in writing made between Ford and Cooper on January 18, 1935. Pursuant to this agreement, plaintiff, on January 6, 7, and 8, 1936, through a transport company of Chicago, delivered these automobiles to Cooper. Cooper gave to the transport company checks to the amount of the purchase price, and the transport company delivered these checks to the plaintiff's cashier. The checks were drawn on the National Security Bank of Chicago and were payable to plaintiff; were deposited by plaintiff in the Drovers National Bank at Chicago for collection and returned by that bank “N.S.F.” On January 11, 1936, before the checks were returned, the defendant investment company, claiming under trust receipts issued to it by Cooper, took these automobiles from the possession of Cooper Motor Sales, Inc. Plaintiff has not been paid for the automobiles. Plaintiff demanded possession from defendant and upon its refusal brought this suit and obtained judgment for the value of the automobiles, $4,660.68.

The question for decision is whether under the terms of the contract of January 18, 1935, between Ford and Cooper, plaintiff has title and right to possession of the automobiles or whether the investment company, by virtue of the trust receipts issued to it as “entruster” by Cooper “trustee” pursuant to the Uniform Trust Receipt Act, Ill. State Bar Stats.1937, c. 121 1/2, §§ 166-187, pp. 2840-2844, Smith-Hurd Ill.Ann.Stats. c. 121 1/2, §§ 166-187, and by taking possession thereunder has the title and right to possession. The contract of January 18, 1935, between Ford and Cooper is a quite lengthy printed document consisting of eleven paragraphs in 133 lines. The agreement recites it was made at Dearborn in the state of Michigan between Ford Motor Company, a Delaware corporation with its principal place of business at Dearborn, Mich., and Cooper Motor Sales, Inc., a corporation of the state of Illinois, therein described as the “dealer.” The Ford Motor Company is described as the “company.” Paragraph 1 provides: “Company agrees to sell and Dealer agrees to purchase, for resale for use within the boundaries of the United States of America, Ford automobiles, trucks, * * upon the terms, conditions and provisions hereinafter specifically set forth and subject to the right reserved by Company to sell to other Dealers and direct to retail purchasers in any part of the United States without obligation for any commission to Dealer on any such sale.”

Paragraph 2 provides: “Company will sell its products to Dealer f.o.b. Detroit, Michigan, at such net list price, or at such discounts from published list prices as are from time to time fixed by the Company. Payment by Dealer is to be in cash before delivery, or by paying sight draft attached to bill of lading, including exchange. Receipt from Dealer or Dealer's bank of any check, draft or other paper shall not be held to constitute payment, and if Company is unable to obtain U. S. currency on any such check, draft or other paper for any reason whatever within 30 days after receipt of same, Dealer shall reimburse Company, upon request, in full including any expenses sustained by Company in endeavoring to realize on such paper.”

Paragraph 6 provides: “Title to all Company products until actually paid for by Dealer shall be and remain in Company; but regardless of title remaining in Company or having passed to Dealer all shipments shall be at Dealer's risk from the time of delivery to carrier at place of shipment.”

The trust receipts under which defendant claims were issued by the dealer Cooper under an arrangement whereby defendant financed or “floor-planned” Cooper's purchases.The evidence shows that plaintiff knew that defendant was financing these purchases. The evidence also shows that defendant knew or might easily have known of the terms of the contract between plaintiff and the dealer Cooper with reference to the title remaining in plaintiff until actual payment was made. The trust receipts under which defendant claims were made pursuant to a statement of trust receipt financing executed by the dealer Cooper as trustee and by the defendant as intruster, and filed with the Secretary of State of Illinois on August 8, 1935, as required by the Uniform Trust Receipts Statute, Ill. State Bar Stats.1937, c. 121 1/2, §§ 166-187, pp. 2840-2844.

It is contended by the defendant in the first place that under the terms of the agreement of January 18, 1935, the sales made by plaintiff to Cooper were sales on credit which vested title in the dealer and not, as plaintiff contends, a conditional sales agreement by which title was retained in plaintiff. Defendant says (as against it) plaintiff therefore had neither title nor right to possession on the date of the alleged conversion. Defendant argues this is true because of the language of the agreement. It points out that the first paragraph of the agreement specifically states that the goods are delivered “for resale.” So, also, it is said the second paragraph provides that if Ford, the vendor, is unable to obtain United States currency on the check, draft, or other paper given by the dealer vendee within 30 days after receipt of same the dealer will reimburse the Ford Company upon request. These provisions, say defendant, are inconsistent with any construction of the contract holding a sale thereunder to be conditional and inconsistent with an intention that the title to the goods sold should remain in the vendor.

We do not so construe the agreement. The provision that the goods are transferred “for resale” fairly construed in the light of other provisions of the agreement we think must be held to refer to a resale which is to be made after and not before the vendee shall have paid for the goods ordered by him. The provision that the vendee should within 30 days reimburse the vendor for any check, etc., on which plaintiff is unable to realize cash does not, fairly construed, mean that plaintiff promises to give the dealer an extension of credit for that period of time, but only that the plaintiff might hold the paper for 30 days if he elects so to do. We do not construe it to be an agreement on the part of the seller to give credit to the dealer in view of the provisions which clearly express the intention of the parties that the dealer vendee is to pay cash or its equivalent on or before delivery, and that payment and delivery are to be concurrent.

Defendant argues that the conduct of the parties in this particular transaction was such as to indicate that an absolute sale was intended. It is said this must be inferred from the fact that Cooper was permitted to pay by check instead of cash or by draft drawn as specifically provided in the agreement. It is further urged that this must be inferred from the fact that plaintiff, as defendant says, permitted the automobiles to be placed in Cooper's showrooms for the purpose of selling them. We think these inferences are not justified. The checks were mere credit instruments used for the purpose of transferring cash from the dealer to the seller. There is no evidence tending to show that plaintiff affirmatively assented to the placing of these automobiles in the showroom of the dealer prior to the payment therefor. Defendant also points out that plaintiff, by its agreement, did not reserve to the plaintiff the right to repossess itself of the automobiles in case of nonpayment. Such express reservation was not necessary. The right to repossess at the option of plaintiff followed immediately upon the dishonor of the checks.

The defendant, for the purpose of showing acts of the plaintiff inconsistent with the reservation of the title, introduced in evidence the books of account of the plaintiff. These show that when a car ordered by a dealer was ready for delivery an invoice was made and posted to a summary sheet termed the “Draft Register.” This sheet showed the name of the dealer, the amount of the invoice, a date stamp opposite each invoice number, and a distribution of the invoice price to various accounts. When a dealer's check in payment for a car was received by plaintiff from the transport company the date was stamped on the sheet opposite the dealer's name and invoice number. This stamping was called “dead-checking,” and the “dead-checking” indicated that plaintiff had received some form of payment for the automobile. The books of plaintiff also showed that plaintiff kept a ledger account in the name of the dealer, which account showed sales of automobile parts on credit and debits for “N.S.F.” checks given by the dealer in payment for automobiles. These books showed that when informed by its bank that Cooper's checks had been returned marked “N.S.F.” the plaintiff debited the amount of these checks against Cooper's account. In making entries on account, a balance was struck after each debit and credit entry, etc. The defendant contends that the fact that these books of account were kept in this way shows clearly that...