Industrial Finance Corporation v. Turner

• Decision Date: 04 November 1926
• Docket Number: 6 Div. 396
• Citation: 110 So. 904,215 Ala. 460
• Parties: INDUSTRIAL FINANCE CORPORATION v. TURNER.
• Court: Alabama Supreme Court

110 So. 904

215 Ala. 460

INDUSTRIAL FINANCE CORPORATION v. TURNER.

6 Div. 396

Supreme Court of Alabama

November 4, 1926

Rehearing Denied Jan. 20, 1927

Appeal from Circuit Court, Jefferson County; John Denson, Judge.

Action by the Industrial Finance Corporation against J.B. Turner. Judgment for defendant, and plaintiff appeals. Reversed and remanded.

Rudulph & Smith and Cabaniss, Johnston, Cocke & Cabaniss, all of Birmingham, for appellant.

Percy Benners & Burr, of Birmingham, for appellee.

SOMERVILLE J.

On the trial in the court below the burden was on the plaintiff to show that at the time the suit was instituted it owned either a general or a special interest in the property sued for coupled with an unqualified right to its immediate possession. Minge v. Clark, 193 Ala. 447, 452, 69 So. 421, and cases cited therein; Boulden v. Estey Organ Co., 92 Ala. 182, 9 So. 283; Henderson v. Felts Admr., 58 Ala. 590, 593. Proof of a general legal title, of course, implies a right to possession; but proof of an equitable title, without supplemental proof of an accompanying right to possession, would not support a recovery in detinue.

The authorities are clear to the proposition that, when the owner of goods ships them on a bill of lading consigned to his own order, the legal intendment is that the legal title to the goods is retained in the owner until the bill of lading is delivered to the purchaser. Howell v. Home National Bank, 195 Ala. 73, 70 So. 686; McCormick v. Joseph, 77 Ala. 236. And when the bill of lading thus drawn is indorsed in blank by the owner, and delivered to another, the legal intendment, prima facie, is that the legal title passes to such transferee. Cosmos Cotton Co. v. First Nat. Bank of Birmingham, 171 Ala. 392, 395, 54 So. 621, 32 L.R.A. (N.S.) 1173, Ann.Cas.1913B, 42; Am. Nat. Bank v. Henderson, 123 Ala. 612, 26 So. 498, 82 Am.St.Rep. 147. This presumption acquires conclusive force where such transferee has paid, or undertaken to pay, on behalf of a third person, the purchase price, or a part of it, due to the owner-shipper, and the intention is to protect the transferee as to such payment by giving to him, intermediately, the control of the goods. Tishomingo Sav. Inst. v. Johnson, 146 Ala. 691, 40 So. 503 (Mem.).

On these principles it is clear that the delivery of the bills of lading, indorsed by the Studebaker Corporation as seller consignee, to the Industrial Finance Corporation at Birmingham, vested in the latter the legal title to the motor cars represented by the several bills of lading, with the incidental right of possession, and also the jus disponendi, qualified, of course, by the right of the dealer, Holcomb Motor Company, to acquire a special title and possession, qualified and restricted by its contract with the Industrial Finance Corporation, through whose financial aid the cars were secured and handled.

Without such restrictive contract, the delivery of the bills of lading by the Finance Corporation to the dealer, under the circumstances shown, would have passed the title, possession, and jus disponendi to the dealer. And, in order to rebut that conclusion, plaintiff, the Finance Corporation, offered in evidence the acceptances signed by Holcomb Motor Company, along with the "trust receipts" contemporaneously executed by that company; the two constituting, with the cash payment of 20 per cent. of the invoice price, and the delivery of the bills of lading, a single transaction.

The trial court excluded the acceptances and trust receipts on the ground that they did not tend to show legal title in the plaintiff, and this ruling presents for review the question of decisive importance in the case.

The real question is, not whether the trust receipts created and vested a legal title in plaintiff, but whether they show that, notwithstanding the delivery of the bills of lading, and of the cars themselves, to Holcomb Motor Company, plaintiff nevertheless retained its previously acquired title to the several cars as security for the amount of the purchase money advanced by it upon each.

It should be noted here that, if the detinue issue were between plaintiff and Holcomb Motor Company, it would be immaterial whether the title of plaintiff, or of defendant, were legal or equitable merely, because the right of possession, as between the parties, is fixed by the contractual stipulation of the trust receipt, viz. that plaintiff is entitled to possession upon demand made upon Holcomb Motor Company before the sale of the car or cars demanded. Obviously there could be no unlawful detention until such a demand had been made and refused. So also detinue could not be maintained against a purchaser in due course of trade from Holcomb Motor Company, unless the purchase were made after such demand and with notice thereof.

Conceding, of course without pretending to decide, that a court of equity would, upon a comprehensive view of the entire transaction in all of its phases, treat Holcomb Motor Company as the owner of the cars, and the Finance Corporation as a lienholder for security and reimbursement merely, we must, in a court of law, define and enforce the rights of the parties according to the terms of their agreement.

We have given very careful consideration to the terms of the trust receipts in the light of the circumstances under which they were given, and we are convinced that the intention of the parties, deducible from the language employed, was to preserve in the Finance Corporation the legal title previously acquired by it as transferee of the bills of lading, with an unqualified right to repossession of each car, on demand, until the acceptance applicable to that car was fully paid, with an equity in Holcomb Motor Company to pay the amount of the acceptance at any time and acquire a perfect title to the car, and the further right to sell each car in due course of trade, before such payment, for not less than...