Landmark Motors, Inc. v. Chrysler Credit Corp.

• Decision Date: 04 March 1996
• Docket Number: No. 22A01-9505-CV-131,22A01-9505-CV-131
• Citation: 662 N.E.2d 971
• Court: Indiana Appellate Court
• Parties: 31 UCC Rep.Serv.2d 1026 LANDMARK MOTORS, INC., Appellant-Cross-Plaintiff, v. CHRYSLER CREDIT CORPORATION, Appellee-Cross-Defendant.

Page 971

662 N.E.2d 971

31 UCC Rep.Serv.2d 1026

LANDMARK MOTORS, INC., Appellant-Cross-Plaintiff, v. CHRYSLER CREDIT CORPORATION, Appellee-Cross-Defendant.

No. 22A01-9505-CV-131.

Court of Appeals of Indiana.

March 4, 1996.

Appeal from the Floyd Circuit Court, The Honorable Robert L. Bennett, Special Judge; Cause No. 22C01-9109-CP-295.

Geoffrey M. Grodner, Kendra Gowdy Gjerdingen, Mallor, Clendening, Grodner & Bohrer, Bloomington, for Appellant.

Ronald R. Fifer, Douglas B. Bates, Stites & Harbison, Jeffersonville, for Appellee.

OPINION

BAKER, Judge.

Appellant-cross-plaintiff Landmark Motors, Inc. appeals the trial court's judgment in its cross-claim for damages, indemnification, attorneys fees and costs against appellee-cross-defendant Chrysler Credit Corporation. Specifically, Landmark asserts that the trial court erred in concluding that Chrysler did not warrant title to an item purchased by Landmark at an auction.

FACTS

The undisputed facts most favorable to the judgment are that in 1986, Chrysler entered into a financing agreement with Preston Highway Chrysler/Plymouth, Inc., a car dealership located in Louisville, Kentucky. The agreement gave Chrysler a perfected security interest in all of Preston's equipment, furniture, fixtures, machinery, tools and leasehold improvements. In August of 1990, Preston defaulted on the agreement and thereafter, voluntarily surrendered all of its assets to Chrysler on September 11, 1990. One of those assets was a Wash Pac Unit, which is a car wash manufactured by Brite-O-Matic.

Upon receiving the assets from Preston, Lyla C. Gentry, the manager of the Louisville branch of Chrysler, attempted to verify ownership of the assets by determining which had been leased by Preston and which had been purchased. Gentry interviewed Preston employees, checked the assets for identification and ensured that Chrysler representatives were present at the dealership to receive individuals attempting to assert claims to the assets. In regard to the Wash Pac Unit, Gentry found no markings indicating that it belonged to anyone other than Preston and no one asserted any claims to it.

Subsequently, Chrysler decided to hold an auction to liquidate Preston's assets, including the Wash Pac Unit. Chrysler hired an auctioneer to conduct the auction. The auctioneer distributed fliers advertising the auction and listing the specific items that were for sale. The fliers also contained a notation disclaiming all warranties and guarantees regarding the items listed for sale. Landmark, who at that time was leasing a Wash Pac Unit from Brite-O-Matic, received one of the fliers and noted that a Wash Pac Unit was advertised for sale. Because it had already decided that it wanted to purchase a Wash Pac Unit, Landmark contacted Brite-O-Matic and offered to buy the unit that it was currently leasing. However, Brite-O-Matic informed Landmark that the unit was not for sale. In response, Landmark told Brite-O-Matic that it intended to buy the Wash Pac Unit being sold at the auction. Brite-O-Matic stated that although it had no knowledge of any units that were for sale, it would supply Landmark with information and the history of the specific Wash Pac Unit it intended to buy at the auction. Landmark declined Brite-O-Matic's offer.

On February 19, 1991, the auction was held. Landmark attended the auction and purchased the Wash Pac Unit for $1,060.00. However, several days after the auction, Brite-O-Matic contacted Chrysler claiming it had title to the Wash Pac Unit. Specifically, Brite-O-Matic asserted that Preston had leased the Wash Pac Unit and thus, did not own it. In turn, Chrysler informed Landmark of Brite-O-Matic's claim and offered to refund Landmark's purchase price in exchange for the return of the Wash Pac Unit. Landmark refused. As a result, on August 15, 1991, Brite-O-Matic filed an action against Chrysler for damages and against Landmark for the return of the unit as well as damages. Thereafter, on September 11, 1991, Landmark filed a cross-claim against Chrysler seeking damages, attorneys fees and costs, indemnification and reimbursement in the event that Brite-O-Matic prevailed on its claim against Landmark. Subsequently, the court granted Brite-O-Matic's motion for replevin of the Wash Pac Unit.

On June 11, 1992, Landmark filed a motion seeking summary judgment on the issue of which party had title to the Wash Pac Unit. Specifically, Landmark argued that it had superior title because it was a bona fide purchaser for value. After holding a hearing, the trial court denied Landmark's motion and granted summary judgment in favor of Brite-O-Matic on the issue of title. Record at 254. Thus, the only issue remaining for trial was whether Landmark was entitled to damages for Chrysler's alleged breach of warranty of title. On November 14, 1994, a bench trial commenced and on December 30, 1994, the trial court entered findings of fact and conclusions of law pursuant to Landmark's request. Specifically, the trial court concluded that:

1. The substantive law of the State of Kentucky applies to this case.

2. Chrysler did not warrant title of the [Wash Pac] Unit to Landmark as a result of the purchase of the Unit at the liquidation auction conducted on behalf of Chrysler.

3. The buyer (Landmark) knew or should have known that the person selling did not claim title in himself and was selling only such a right as [Preston] may have had.

4. This sale by a foreclosing lienor [Chrysler] is out of the course of ordinary commercial sale and the sales (sic) peculiar character is immediately apparent to a perspective (sic) buyer (Landmark).

5. Landmark had actual notice that title was in question prior to its (Landmark's) purchasing the Unit. Therefore, Landmark is estopped from claiming any damages based on a warranty of title.

R. at 460-65. Based upon these conclusions, the court ordered: 1) Landmark to pay Brite-O-Matic $1,144.50 for the rental payments due on another Wash Pac Unit that Landmark had been leasing from Brite-O-Matic, 2) Chrysler to pay Landmark $1,060.00, for the purchase price of the Wash Pac Unit, plus $690.00 for the cost of transporting the unit, and 3) each party to pay its own costs and attorneys fees. Landmark appeals the trial court's judgment claiming that the trial court erred in: 1) concluding that Chrysler did not warrant title to the Wash Pac Unit and that Landmark had actual notice that title was questionable and 2) failing to enter a specific finding regarding Landmark's right to indemnification from Chrysler.

DISCUSSION AND DECISION

I. Standard of Review

When a court enters special findings of fact and conclusions of law upon a party's motion, we employ a deferential two-tiered standard of review. W & W Equipment Co., Inc. v. Mink, 568 N.E.2d 564, 569 (Ind.Ct.App.1991), trans. denied. We first determine whether the evidence supports the findings, and then determine whether the findings support the judgment. Id. Special findings and the judgment flowing from the findings will be set aside only if they are clearly erroneous. Id. at 569-70. In determining whether the findings and judgment are clearly erroneous, this court will neither reweigh the evidence nor judge the credibility of the witnesses. Id. We consider only the evidence in the record which supports the judgment along with the reasonable inferences to be drawn therefrom. Id. This court will not disturb the trial court's findings unless the record is devoid of facts or inferences to support the findings. Id.

II. Warranty of Title

First, Landmark claims that the trial court's findings do not support its conclusions that Chrysler did not warrant title to the Wash Pac Unit and that Landmark had actual notice, prior to purchasing the unit, that the unit's title was questionable. ¹ We disagree. KY.REV.STAT.ANN. § 355.2-312 ² provides:

(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that

(a) the title conveyed shall be good, and its transfer rightful; and

* * * * * *

(2) A warranty under subsection (1) will be excluded or modified only 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.

Here, the trial court specifically found the following. R. at 460-65. Chrysler retained an auctioneer to advertise and conduct the auction sale of several items. The auctioneer mailed fliers advertising the auction sale which contained a notation, "AUCTIONEER'S NOTE: Although information obtained from sources deemed reliable, Auctioneer makes no warranty or guarantee expressed or implied. Buyers should avail themselves of opportunity to make inspection prior to sale." R. at 627. Landmark received one of these fliers which prompted it to attend the auction. In making its decision to attend the auction, Landmark did not contact Chrysler or attempt to inspect or discover information about the Wash Pac Unit. In fact, Landmark flatly declined Brite-O-Matic's offer for information about the Wash Pac Unit being sold at the auction. Finally, at the auction, the auctioneer made an oral disclaimer, informing the bidders, including Landmark, that no express or implied warranties or guarantees were being made regarding the items to be sold. We hold that the circumstances set forth in the court's findings support its conclusions that Landmark had actual...