General Motors Acceptance Corp. v. Anacone

• Decision Date: 12 February 1964
• Citation: 197 A.2d 506,160 Me. 53
• Parties: GENERAL MOTORS ACCEPTANCE CORPORATION v. Louis ANACONE.
• Court: Maine Supreme Court

Page 506

197 A.2d 506

160 Me. 53

GENERAL MOTORS ACCEPTANCE CORPORATION v. Louis ANACONE.

Supreme Judicial Court of Maine.

Feb. 12, 1964.

Frank W. Linnell and G. Curtis Webber, Auburn, for plaintiff.

Milton G. Wheeler and William E. McKinley, Portland, for defendant.

Before WILLIAMSON, C. J., and TAPLEY, SIDDALL and MARDEN, JJ.

MARDEN, Justice.

Complaint in trover for conversion, and here on appeal from the denial of defendant's motion for a directed verdict, from denial of defendant's motion for entry of judgment notwithstanding the verdict, from denial of motion for new trial and from final judgment entered on verdict for plaintiff.

On the motion for judgment notwithstanding the verdict based upon seven points (which points will be identified in the opinion as N.O.V. 1 through 7), defendant challenged the sufficiency of the evidence in general and specifically its sufficiency as bearing upon certain legal issues which will be later discussed.

In the motion for a new trial based also upon seven points, (which will be identified in the opinion as N.T. 1 through 7), errors in the admission of evidence, in ruling one plaintiff's witness as hostile and allowing cross-examination by plaintiff's counsel, error of the trial court in declining defendant's request for certain charges of law, error in court instruction to the jury, and excessive damages were argued. Points N.T. 3 and 7 (cross-examination of plaintiff's witness as hostile and excessive damages) were abandoned on appeal and the remaining twelve points (N.O.V. and N.T.) are embodied in the nine points of appeal. Discussion of the issues now briefed will appear as the points are reached in the opinion.

The controversy stems from the contractual relationship existing among General Motors Corporation, hereinafter termed GMC; General Motors Acceptance Corporation, plaintiff, hereinafter termed GMAC; Twin Town Chevrolet, Inc., a General Motors automobile dealer, hereinafter termed Twin Town; and the factual and legal relationship between GMAC and the defendant, Louis Anacone.

The contractual relations above referred to are based upon documents having to do with the sale of automobiles by GMC through Twin Town to the open market, which documents broadly stated involve so-called 'Trust Receipts', as defined and controlled by the Uniform Trust Receipts Act (Chapter 189, R.S.1954, as amended), hereinafter termed the Act. ^*

The operation which these documents reflect was as follows:

When Twin Town ordered motor vehicles from GMC, a list of such cars identified by their serial numbers and other code letters and numbers identifying model, color and accessories, were, by machine records operation, recorded upon a document which embodied not only the invoice covering the order, but a bill of sale ¹ of those cars from GMC to GMAC, a trust receipt ², a promissory note payable on demand in the amount of the invoice, with the terms and conditions of the trust receipt ³ appearing either on the face of the document or its reverse side.

The cars were shipped by GMC to Twin Town. GMC executed the bill of sale transferring title to the cars to GMAC. By previous arrangement with Twin Town, GMAC paid GMC the invoiced charges, contemplating, again part of a prior arrangement, that Twin Town would execute the trust receipt and the promissory note payable to GMAC.

To expedite this merchandising these documents were never delivered to Twin Town for execution by Twin Town of the trust receipt and promissory note. Twin Town had previously given written powers of attorney ⁴ to named employees of GMAC, in the GMAC offices through which these documents were processed, to execute the trust receipts and the promissory notes on behalf of Twin Town.

In some instances, conventional procedure was adopted by the trust receipts and promissory notes being physically executed by Twin Town.

This merchandising practice represents the 'conventional', 'orthodox' or 'true' tri-partite trust receipt transaction 53 Am.Jur., Trust Receipts § 2, both at common law and under the Act. Keating v. Universal Underwriters Insurance Co., 133 Mont. 89, 320 P.2d 351, 354[1-3] (Mont.1958).

In the terms of the trade such practice is known as 'floor planning' or 'flooring' motor vehicles.

Under these documents GMAC became an 'Entruster' and Twin Town became a 'Trustee' within the terms of the Act.

The sufficiency of the execution of these trust receipts on behalf of Twin Town by its attorneys in fact is attacked by defendant (N.O.V. 5).

Upon occasions when Twin Town, as trustee, did not have the model of, or equipment on, a car which a potential purchaser desired, Twin Town would procure the desired car from other sources and by executing No.) (Hereinafter which GMAC released its security interest in the original car and accepted security interest in the car acquired by Twin Town from other sources, would purportedly substitute the 'security' of the second car for that of the original car. As to the 'substituted' cars involved in the present controversy, defendant urges (N.O.V. 7) that by such substitution, GMAC acquired no security interest, under the Act.

During the period that Twin Town was in operation beginning in May 1955 and ending on or about August 5, 1960 Twin Town through its Manager, Mr. Kilgore, and in 1960, through Mr. Kilgore as President, Treasurer and Manager, had done business with the defendant as a contemporary motor vehicle dealer in new and used cars. The acquaintance of the men antedated the creation of Twin Town, and both had had substantial experience in the automotive sales field.

In 1960, terminating about August 6, the periodic inspections by GMAC of Twin Town's operation to confirm presence on the floor of the vehicles which GMAC had 'entrusted', found Twin Town 'out of trust' viz., 'short' as to numbers of cars ranging from nine in February to thirty-nine on July 25th. In each of these instances Twin Town had raised the money necessary to satisfy GMAC's security claims. Upon the next audit, August 6, 1960, Twin Town was found to be sixty-one cars short, was unable to pay GMAC off, whereupon GMAC took possession of all entrusted cars and 'trade-ins' on entrusted cars then to be found. Bankruptcy proceedings on Twin Town followed.

During the latter portion of Twin Town's operations, July 25 to August 6, 1960, during which period Twin Town was admittedly in bad financial condition, Twin Town and defendant engaged in a substantial number of transactions with each other involving the alleged sales and deliveries of cars by Twin Town to Anacone for 'cash' (checks), transfers by Twin Town to Anacone of multiple units on a wholesale basis and implied delivery of cars by Twin Town to Anacone to be applied on or in satisfaction of pre-existing debts, fictitious sales in that Anacone would pay for Twin Town cars, but leave them in Twin Town's possession for sale, receiving a 'bonus' for this service, and pledges of cars to Anacone.

As to fifteen motor vehicles which Twin Town allegedly transferred to Anacone between July 25 and August 6, 1960 plaintiff complains (of eighteen cars listed in the complaint, three were withdrawn by stipulation during trial) that the transfers by Twin Town to Anacone were in violation of the trust receipts and under circumstances which made Anacone a converter. Anacone admits receiving thirteen of these cars, but under circumstances which did not constitute a conversion, and denies receiving the remaining two.

Execution of Trust Receipts by Attorneys-in-fact

The first attack on plaintiff's position with which we shall deal is point N.O.V. 5, in which is questioned the validity of the trust receipts which were executed on behalf of Twin Town by attorneys in fact. Separate powers of attorney over the period March 27, 1958 to July 28, 1960 had been given Geraldine E. Kavanaugh of Framingham, Massachusetts, E. C. Downie of North Tarrytown, New York, and J. A. Grenzicki of Detroit, Michigan. These attorneys in fact were employees of GMAC in the respective offices in which sales of motor vehicles from GMC to Twin Town were processed and each attorney in fact held powers from many dealers,--Grenzicki for approximately 3,000 dealers, Mrs. Kavanaugh for 'some 300' dealers in parts of the Atlantic coast region, and E. C. Downie, now Mrs. Edith Byrne, from 750 to 900 dealers along the Atlantic coast. In the offices of Mr. Grenzicki and Mrs. Kavanaugh their facsimile signature was affixed from a plate and as part of a machine process; in Mrs. Byrne's office, her signature was affixed by the use of a rubber stamp facsimile in the possession of a fellow employee. From 1,000 to 2,500 transactions each day were processed in the offices involved. In no case did the attorney in fact personally apply the plate or stamp bearing the facsimile signature. The affixation was an automatic administrative act.

As to this point, our Act requires only that the writing designating the goods concerned be signed by the trustee (Act, § 2, subsec. I, par. C, subd. 1), 'but these subsections do not prescribe any particular form of signature. The trust receipts * * * but constitute private agreements between the entruster and the trustee. There is nothing in these subsections or in the act as a whole to reveal an intent to change the common law of contracts as to what may be a binding form of signature on the part of a corporation.' Dictum in General Motors Acceptance Corp. v. Haley, 329 Mass. 559, 109 N.E.2d 143, 147[4-6] (Massachusetts Act, 1952).

It has long been held under the negotiable instruments law that affixing a signature to such an instrument by a rubber stamp is sufficient to fulfill the requirement of a written endorsement, if the stamp is affixed with the intent of using it as an endorsement, and with authority. American Union Trust Co. v. Never Break Range Co., 196 Mo.App. 206, 190 S.W. 1045, 1047, 1049 (Mo.1916).

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