In re Wallace Lincoln-Mercury Company, Inc.
Decision Date | 11 December 1972 |
Docket Number | No. 71-2700.,71-2700. |
Parties | In the Matter of WALLACE LINCOLN-MERCURY COMPANY, INC., Bankrupt, Ford Motor Credit Company, Appellant, v. Herschel A. GENTRY, Trustee, et al., Appellees. |
Court | U.S. Court of Appeals — Fifth Circuit |
William F. Pipes, Jr., Monroe, La., George V. Burbach, Dearborn, Mich., Peter A. Feringa, Jr., New Orleans, La., for appellant.
Fred W. Jones, Jr., Kenneth W. Campbell, Ruston, La., for bankrupt.
James A. Hobbs, West Monroe, La., for Trustee.
A. K. Goff, Jr., Ruston, La., for Ruston Bank.
Ragan D. Madden, Dist. Atty., Ruston, La., for Mrs. Heard.
Before GEWIN, AINSWORTH and SIMPSON, Circuit Judges.
In this bankruptcy proceeding, we must determine the rights of creditors, one of whom claims a preference. In a complex series of transactions, Wallace Lincoln-Mercury Company purchased automobiles from Ford Motor Company (Ford) using credit extended by Ford Motor Credit Company (FMCC). When Wallace filed a debtor's petition in bankruptcy, the general creditors challenged FMCC's claim of preference to the 65 automobiles in Wallace's possession. The Referee in Bankruptcy and the District Judge, 326 F.Supp. 1243, agreed with the general creditors and denied FMCC's claim as a preferred creditor. We reverse.
On April 1, 1957, Wallace initiated its dealership relationship with Ford by signing a Mercury Sales Agreement. The pertinent provisions insofar as this case is concerned follow:
Wallace subsequently signed a Lincoln Sales Agreement with Ford on December 6, 1968, and the identical paragraphs above were included.
FMCC is a wholly owned subsidiary created by Ford to handle credit arrangements with dealers. Ford gave FMCC flexibility to acquire a security interest in the automobiles by writing to FMCC on September 27, 1961: "As at present, title to any vehicle shipped by us to any of your dealer accounts will continue to pass (to you or the dealer depending on your arrangements with the dealer) upon delivery to the dealer or the carrier, whichever occurs first." FMCC took charge in working out the financial arrangements with dealers who desired to purchase automobiles from Ford on credit.
Wallace was provided with a brochure by FMCC, explaining the proposed Wholesale Plan (in pertinent part):
On May 20, 1967, Wallace executed two FMCC documents, (1) an Application for Wholesale Financing and (2) a Power of Attorney to Execute Trust Receipts and Notes. The introductory sentence of the Application incorporated by reference the explanation in the FMCC "Wholesale Plan" brochure referred to above. Paragraphs two and three of the Application state:
Paragraph eight of the Application adds the following:
Dealer waives notice of FMCC\'s acceptance thereof and this agreement will be deemed accepted by FMCC at the time it shall first extend credit to Dealer under the Plan and shall be binding on Dealer and FMCC and their respective successors and assigns from the date thereof until terminated by receipt of written notice by either party from the other, but any such termination shall not relieve either party from any obligation incurred prior to the effective date thereof.
In the Power of Attorney executed by it, Wallace appointed R. C. White "and any other officer or employee of Ford Motor Credit Company" to be Wallace's "true and lawful attorneys with full power of substitution" to execute FMCC "promissory notes" and "trust receipts."
Wallace then notified Ford of its financial arrangements with FMCC by filling in the printed form entitled "Delivery Instructions" dated May 20, 1967, the provisions of the "Delivery Instructions" being as follows:
Please be advised that the undersigned Dealer has applied to Ford Motor Credit Company for the wholesale accommodations provided under the FMCC Automotive Wholesale Plan for purchases by the undersigned from you of new cars and trucks . . . . You are hereby requested and authorized to handle all deliveries to the undersigned of such motor vehicles in accordance with the terms of the FMCC Automotive Wholesale Plan until you are notified in writing to the contrary by the undersigned. You also are authorized to rescind the sale of, or divert the shipment of, any of such motor vehicles ordered by the undersigned in accordance with the instructions of Ford Motor Credit Company from time to time.
A field representative visited Wallace's office in Ruston, Louisiana, once a month to take orders. When the car was built at the Ford plant and became ready for shipment to Wallace, a data processing system notified FMCC. FMCC then used one of its printed forms entitled "Daily Transaction Register, Promissory Note and Trust Receipt" covering the involved new vehicle. This printed form is on a single sheet of paper. On one side, the Daily Transaction Register lists the car, date, and invoice amount. On the reverse side is a Promissory Note and a Trust Receipt. The Promissory Note was a promise by Wallace to pay to the order of FMCC the invoice amount. In the Trust Receipt, Wallace agreed to the following:
The Promissory Note and the Trust Receipt were each signed separately for Wallace by the facsimile signature of R. C. White, the agent designated by Wallace in the Power of Attorney heretofore referred to. FMCC paid Ford for the vehicle and sent a copy of the Daily Transaction Register, Promissory Note and Trust Receipt to Wallace.
In addition, Wallace received three documents from Ford, (1) a notice that the car was to be built, (2) a Statement of Origin indicating the car's identification number and the day the car was transferred to Wallace, and (3) an invoice showing total charges due by the dealer. On the front of the invoice was a notation that the car was "Sold to Wallace" and that the "Finance Company" was FMCC, but at the bottom was the statement: "This is for information only and in no way affects the transfer of title." The back of each invoice declared:
As provided in the Sales Agreement between Ford...
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