John St. Auto Wrecking v. Motors Ins. Corp.

• Court: New York District Court
• Writing for the Court: OSCAR MUROV
• Citation: John St. Auto Wrecking v. Motors Ins. Corp., 56 Misc.2d 232, 288 N.Y.S.2d 281 (N.Y. Dist. Ct. 1968)
• Decision Date: 15 March 1968
• Parties: , 5 UCC Rep.Serv. 112 JOHN ST. AUTO WRECKING, Plaintiff, v. MOTORS INSURANCE CORPORATION, Defendant.

Page 281

288 N.Y.S.2d 281

56 Misc.2d 232, 5 UCC Rep.Serv. 112

JOHN ST. AUTO WRECKING, Plaintiff, v. MOTORS INSURANCE CORPORATION, Defendant.

District Court, Suffolk County, Second District.

March 15, 1968.

Joseph Lite, West Islip, for plaintiff; by Kenneth P. Murtagh, West Islip, of counsel.

Dillon, Haber & Dillon, New York City, for defendant; by Howard A. Kochendorfer, Bellerose, of counsel.

MEMORANDUM

OSCAR MUROV, Judge.

Plaintiff, a dealer in used auto parts, makes a claim for damages for breach of contract against the defendant, an insurance company, writing collision and comprehensive insurance on automobiles. Defendant under its policy with one of its assureds made payment for a 1961 Chevrolet, two-door hardtop, Impala, that was involved in a collision, and received title to the automobile. Defendant then solicited bids for the sale of the damaged vehicle and the plaintiff was the succesful bidder for the sum of $126.00. Payment was made and the defendant delivered a certificate of sale on the MV--50 form of the Department of Motor Vehicles. Plaintiff subsequently sold the vehicle to a third party, Ray Bedell Auto Body, for $300.00 and some used parts consisting of a fender, a hood and door valued at $75.00.

Ray Bedell Auto Body repaired the vehicle and offered it for sale at an auction, when it was seized by the Nassau County Police as being a stolen vehicle. Plaintiff claims that he had to make payment to Ray Bedell Auto Body to the extent of $650.00 and makes claim against the defendant for reimbursement.

It is essential to performance of a contract of sale that the seller deliver the subject of the sale and give the buyer good title thereto. (Encyclopedia New York Law, Automobiles, Sec. 1387)

Under the New York common law, it was held that 'In every case of a sale of personal property there is an implied warranty of title, and this is analogous to a covenant of quiet enjoyment of land * * *. The effect of such a warranty is to guarantee the purchaser against eviction or injury from other parties' (McGiffin v. Baird, 62 N.Y. 329, 331 (1875); McClure v. Central Trust Co., 165 N.Y. 108, 58 N.E. 777, 53 L.R.A. 153 (1900); Burt v. Dewey, 40 N.Y. 283 (1869)).

Section 2--312 of the Uniform Commercial Code provides in effect under subdivision (1) and (2), that in every contract for sale there is an implied warranty of title, namely, that the title conveyed is good and its transfer rightful, subject to exclusion by specific language 'or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.' Subdivision (3), provides that 'unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person * * *.' It would appear that this later subdivision is not applicable in the instant case, as defendant is an insurance company and not a merchant regularly dealing in the sale of automobiles.

The primary question to be determined in the instant case is whether or not the facts and circumstances of the sale were such as would give the plaintiff purchaser reason to know that the defendant seller was purporting to sell only such right or title as he had.

The former Uniform Sales Law, former Personal Property Law Section 94, provided that its provisions on warranty of title did not render liable a sheriff, auctioneer, mortgagee, or other person professing to sell by virtue of authority in fact or law, goods in which a third person had a legal equitable interest. (Comment 5 to UCC 2--312)

'Under provisions of the Personal Property Law (old counterpart of U.C.C.), the seller of goods, in the absence of appearance of an intention to the contrary, impliedly warrants that he has the right to sell the goods, and in application of this statute to motor vehicle it has been held that the seller of such a vehicle impliedly warrants that he has title thereto and that he can convey a good title to the buyer.' (2 Encyclopedia New York Law, Automobiles, Sec. 1401)

'The Code recognizes that sales by sheriffs, executors, foreclosing lienors, and persons similarly situated are so out of the ordinary commercial course that their peculiar character is immediately apparent to the buyer, and therefore no personal obligation is imposed upon the seller who is purporting to sell only an unknown or limited right.' (51 N.Y.Jur. Sales, Sec. 180)

In People v. Jefferson Credit Corp., 21 Misc.2d 300, 193 N.Y.S.2d 383, the defendant financier was convicted of dealing in second hand articles without a license. The Court held that if the financier defendant had re-possessed automobiles and sold them at public auction to the highest bidder, such sale would have been incidential to its business, since it could not retain such repossessed...