Levin v. Nielsen

• Decision Date: 27 December 1973
• Citation: 306 N.E.2d 173,37 Ohio App.2d 29
• Parties: , 66 O.O.2d 52 LEVIN, Appellee, v. NIELSEN et al., Appellants.
• Court: Ohio Court of Appeals

Page 29

37 Ohio App.2d 29

306 N.E.2d 173, 66 O.O.2d 52

LEVIN, Appellee, v. NIELSEN et al., Appellants.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Dec. 27, 1973.

Syllabus by the Court

1. A dealer in motor vehicles warrants that he will convey good title free from any security interest or other lien or encumbrance of which the buyer is without knowledge when the contract of sale is made. Absent express contractual language or circumstances under which a person buying a motor vehicle knows or should have known that only a limited warranty is intended (but only to the extent that such a warranty can be limited), an automobile dealer having authority to expose floor-planned cars for sale in the ordinary course of business binds his mortgagee to deliver title to any vehicle so sold, when payment is made to the dealer and whether or not the dealer remits the proceeds to his mortgagee.

2. No court may recongize title to a motor vehicle in anyone save one who holds and proves a duly issued certificate of title, or manufacturer's or importer's certificate of origin, but R.C. 4505.04 does not preclude or nullify a warranty or guaranty of title, nor does it prevent a court of equity from ordering a holder of title to transfer title where the holder has bound himself to do so, directly or through an agent.

3. A buyer may rely upon a dealer's warranty of title, and upon the dealer to deliver title as required by the Certificate of Title Act; he need not look beyond the dealer to demand title from others who by law would be bound to deliver title over, where such persons have actual knowledge or are presumed to share their agent-dealer's knowledge of the sale.

4. A buyer does not fail to meet his obligations under R.C. 4505.03 if he has possession of a motor vehicle with the consent of the dealer and under the reasonable belief that title is to be or is being transferred to him, and if, upon learning the contrary to be true, he relinquishes possession to the dealer, or holding naked possession, in good faith seeks timely relief from a court of equity.

5. A chattel mortgagee-principal can be called to answer in punitive damages where he has wrongfully withheld title to a motor vehicle, where it further appears that his conduct in the affair was fraudulent, or willful, or the result of actual malice, or that he authorized, ratified, or participated in his agent-dealer's misconduct, or failed to exercise reasonable care in entrusting the agent to act on his behalf, or in allowing him to continue doing so, and that the agent's conduct was fraudulent, or willful, or resulted from actual malice, as the mortgagee-principal should reasonably have foreseen it might have been.

Morton Q. Levin, Cleveland, for appellee.

Baker, Hostetler & Patterson and Wallace W. Walker, Jr., Cleveland, of counsel, for appellants.

SILBERT, Judge.

This is an appeal by defendant T. Stenson White from a decision of the Court of Common Pleas which found against him and two co-defendants, Merrill L. Nielsen and Nielsen Sports Cars, Inc. Plaintiff-appellee, by her complaint, sought an order compelling appellant to deliver title to her to an automobile purchased from Nielsen and Nielsen Sports Cars, or in lieu thereof, restitution of the purchase price and other equitable relief as might be appropriate, and exemplary damages. The court found that title was not transferred, and further determined this to be the result of fraud and deceit chargeable to all of the defendants. Finding that Mrs. Levin was entitled to have title transferred but that the car had depreciated substantially in value, the court awarded Mrs. Levin (1) $8,893.73 in compensatory damages, (2) $2,500 as punitive damages, plus $1,000 for attorney's fees, and (3) interests and costs.

Appellant presents but two assignments of error: (1) that the judgment is contrary to law, and (2) that it is against the weight of the evidence. The first of these is supported by nine abstract propositions of law, and numerous lines of argument. While we treat all of what we understand to be the essential points of contention, in the interest of brevity we will specifically rule only on the two assignments of error formally presented. In weighing the evidence, we will not determine the facts de novo; we cannot substitute our view of the testimony for that of the trier of fact which has heard the witnesses and observed their demeanor. The second assignment of error must be overruled unless it appears that the evidence was not sufficient to enable reasonable minds to render the judgment entered. State ex rel. Squire v. Cleveland (1948), 150 Ohio St. 303, 82 N.E.2d 709, approved and followed in Cross v. Ledford (1954), 161 Ohio St. 469, 120 N.E.2d 118; Ohio Const. Art. IV, Sec. 3(B)(3); Ford v. Ford (Cuyahoga Co., 1954), Ohio App., 118 N.E.2d 235, 69 Ohio Law Abst. 97, 98; Preston v. Bricker (Columbiana Co., 1959), Ohio App., 174 N.E.2d 289, 85 Ohio Law Abst. 329, 331.

Appellant suggests that this court weigh the evidence bearing in mind that Mrs. Levin failed to call him as a witness. The suggestion is utterly without merit. It was not Mrs. Levin's obligation to make out White's defense. White failed to present any evidence. His testimony could have shed light on the issues presented, and an inference can be drawn from his failure to testify. It is an inference against himself.

Taking the facts as expressly or necessarily found by the trial court, and supported by the evidence, it appears that appellant 'floor-planned' cars for Nielsen and Nielsen Sports Cars. That is to say, White financed Nielsen's new and used car inventory, extending credit on demand cognovit notes under a security agreement between White and Nielsen Sports Cars, and holding the certificates of title or manufacturer's or importer's certificates of origin for the cars financed. ¹

While we agree that 'under Ohio law, a secured party is not liable for * * * (a) dealer's contracts, nor is he liable for * * * (a) dealer's torts,' without more, he is responsible for his own misconduct, and for the misconduct of his agents or of those he had clothed with apparent authority to act in his behalf. Miller v. Wick Building Co. (1950), 154 Ohio St. 93, 93 N.E.2d 467. A relationship of principal to agent may arise by express agreement, or by implication or estoppel. In the usual case it arises because it is agreed that the agent will act for the principal, or because the principal has led a third party to reasonably believe such a relationship existed. Cf. Logsdon v. ABCO Const. Co. (Montgomery Co., 1956), 103 Ohio App. 233, 141 N.E.2d 216; Columbus Pipe & Equipt. Co. v. Ackerson (Franklin Co., 1953), Ohio App., 135 N.E.2d 75, 72 Ohio Law Abst. 321. But it can arise as well where an agent is shown to have authority because his principal has permitted and approved his prior similar acts, where a third party has relied upon the agent's capacity to do the act, to his detriment, without knowledge of an express limitation restricting the agent's actual authority, or without knowledge of the existence of the agency, which is undisclosed. Cf., Lapham v. Spink (Cuyahoga Co., 1901), 24 Ohio Cir.Ct.R., N.S., 348.

These rules may be limited in certain of their applications, but they are not abrogated by the Certificate of Title Act, R.C. ch. 4505, nor by R.C. 4505.04, in particular. No court may recognize title in anyone save one who holds and proves a duly issued certificate of title, or manufacturer's or importer's certificate of origin. Mielke v. Leeberson (1948), 150 Ohio St. 528, 83 N.E.2d 209. A certificate of title (or certificate of origin), admissions in the pleadings, or stipulations are the only admissible evidence of title. ² In Re Case (1954), 161 Ohio St. 288, 118 N.E.2d 836. But these restrictions do not preclude or nullify the effect of a purported warranty or guaranty of title. Shaw v. Wearley Motor Co. (1962), 173 Ohio St. 185, 180 N.E.2d 823. We are not obliged to conclude, ipso facto, that no one else is entitled to have title transferred to himself, or that the General Assembly meant to require that automobile purchasers rely solely on a dealer's moral commitment to complete his part of the bargain. The Certificate of Title Act was adopted to protect innocent purchasers, and to allow the public to rely on duly issued evidence of title. It was not meant to, and does not prevent a court of equity from ordering that title be transferred if the holder has bound himself to do so, directly or through an agent. Cf. the facts and limitation in Kelley Kar Co. v. Finkler (1951), 155 Ohio St. 541, 99 N.E.2d 665; Commercial Credit Corp. v. Pottmeyer (1964), 176 Ohio St. 1, 197 N.E.2d 343, as overruled in part, Hardware Mut'l Casualty Co. v. Gall (1968), 15 Ohio St.2d 261, 240 N.E.2d 502.

Within the limitation found in R.C. 1302.02 (compare, e. g., R.C. 1302.42), ³ the provisions of the sales of goods chapter of the Uniform Commercial Code (R.C. ch. 1302) are applicable to the sale of a motor vehicle, and a seller warrants that he will convey good title free from any security interest or other lien or encumbrance of which the buyer is without knowledge when the contract of sale is made. R.C. 1302.25(A); cf., again, Shaw v. Wearley Motor Co., supra. Absent express contractual language, or circumstances under which the buyer knows or should have known that only a limited warranty was intended (but only to the extent that such a warranty can be limited see R.C. 4505.03 and R.C. 4505.04), a floor-planner is bound by the warranty given, having clothed the dealer with the apparent capacity to sell the car and warrant title to it. R.C. 1302.25(B).

A dealer having authority to expose floor-planned cars for sale in the ordinary course of business binds his mortgagee to deliver title to any car so sold, when payment is made to the dealer and whether or not the dealer remits the proceeds to his mortgagee, unless the buyer...