Pacific Finance Corp. v. Foust

• Decision Date: 08 July 1955
• Citation: 285 P.2d 632,44 Cal.2d 853
• Court: California Supreme Court
• Parties: PACIFIC FINANCE CORPORATION, Plaintiff and Respondent, v. Avis Harrison FOUST, Charles A. Huffman, and Alvis Harrison Foust, Charles A.Huffman and William J. Fulwiler dba Universal Motors, a copartnership, Defendants and Appellants. L. A. 23273.

Page 632

285 P.2d 632

44 Cal.2d 853

PACIFIC FINANCE CORPORATION, Plaintiff and Respondent, v. Avis Harrison FOUST, Charles A. Huffman, and Alvis Harrison Foust, Charles A.Huffman and William J. Fulwiler dba Universal Motors, a copartnership, Defendants and Appellants.

L. A. 23273.

Supreme Court of California, in Bank.

July 8, 1955.

William T. Selby and Glenn C. Garman, Ventura, for appellants.

Hugh M. Foster, Jr., Ivan C. Tagert, Mansfield A. Mills, Los Angeles, William A. Reppy and F. Gile Tiffany, Jr., Oxnard, for respondent.

SPENCE, Justice.

Plaintiff sought to quiet its title to ten used automobiles. The cars had been delivered by defendants to a used car dealer for sale. The basic questions were whether said dealer was a factor in the transaction, and whether an estoppel operated in plaintiff's favor. The trial court found for plaintiff on both issues. From the judgment accordingly entered, defendants appeal, contending in the main that the evidence does not sustain the findings. However, viewing the record in the light most favorable to plaintiff, and indulging every inference in its favor in determining whether there is substantial evidence in support of the challenged findings, 4 Cal.Jur.2d § 606, p. 485; Crawford v. Southern Pacific Co., 3 Cal.2d 427, 429, 45 P.2d 183; Estate of Bristol, 23 Cal.2d 221, 223, 143 P.2d 689, defendants cannot prevail.

Defendant Universal Motors, a copartnership composed of defendants Foust, Huffman, and Fulwiler, delivered the ten used cars to a used car dealer, Lonnie's Used Cars. The cars were to be placed on Lonnie's lot and displayed for sale. It was agreed that when the cars were sold, Lonnie's was to remit to Universal a certain amount for each car, and any sum in excess of that amount was Lonnie's profit. When Lonnie's took delivery of each car, it signed a memorandum identifying the car by number and also providing, in part, as follows: 'It is understood and agreed that the title of ownership does not pass to me (Lonnie's) until the final cash payment is made.' This, however, was not the entire agreement. The trial court found that the agreement, partly oral and partly in writing, also included the understanding that Lonnie's could sell the automobiles consigned to it in the regular course of business on credit pursuant to conditional sales contracts and could assign the contracts. Universal retained the certificates of ownership (the pink slips) on the ten cars.

Lonnie's sold the ten cars but did not pay Universal for them, and finally became insolvent. Each car had been sold to an individual buyer on a conditional sales contract, naming Lonnie's as seller. Lonnie's then assigned the contracts to plaintiff, Pacific Finance Company, and the latter paid to Lonnie's that part of the purchase price which the buyer had borrowed, less a time-price differential. At the same time, Lonnie's executed a document called 'In Lieu of Pink,' whereby Lonnie's agreed to furnish the pink slip for each car, showing ownership in plaintiff, when issued by the Department of Motor Vehicles. It appears that this was customary practice in the used car business because it usually took three or three and one-half months to get pink slips through the Department. Neither the individual buyers nor plaintiff, the finance company, then knew of Universal's interest in the cars.

When Pacific Finance learned that Universal claimed ownership of the cars, it brought this action to quiet title. At the trial it was stipulated that this action was not intended to affect the interests of the individual buyers of the cars; and that the controversy was between Universal and Pacific Finance only. The trial court found, among other things, that it was the intention of the agreement between Universal and Lonnie's to create a consignment or factorage with respect to the cars in question that Universal gave to Lonnie's authority to sell the cars on conditional sales contracts and to assign those contracts to financing agencies like Pacific; and that in addition to these ten cars, Universal and Lonnie's for a number of months had followed the same method of selling and financing other cars through conditional sales contracts assigned to Pacific. It was further found that prior to making its arrangements with Lonnie's, Pacific Finance had investigated Lonnie's financial status and inspected the cars then at Lonnie's lot for sale, and from time to time Pacific received and checked supplementary inventories of the cars to be sold by Lonnie's; that having established a 'line of business' with Lonnie's, Pacific was entitled to rely on the customs of the trade whereby the used car dealer attended to re-issuance of the certificates of ownership showing the conditional buyer as the registered owner and the financing agency as the legal owner of the car; that Universal made no check on the disposition of the cars given to Lonnie's to sell, nor did Universal instruct Lonnie's to disclose Universal's interest in the cars; that Pacific used reasonable care in its dealings with Lonnie's, but Universal was negligent in its arrangements with Lonnie's insofar as making possible any loss suffered with respect to the cars. Judgment therefore was entered for plaintiff, Pacific Finance, and defendants were directed to deliver to plaintiff the certificates of ownership on the cars in question for re-issuance by the Department of Motor Vehicles so as to show Pacific Finance as legal owner.

There can be no doubt as to the sufficiency of the evidence to support the findings on the factorship issue. It was stipulated at the trial that Lonnie's sold the cars in question in its regular course of business. Defendant Foust, one of Universal's partners, testified as to the business arrangements between Universal and Lonnie's: that Lonnie's was free to sell the cars in its own name as desired for cash or credit, or finance credit sales; that Universal was not interested in how the cars were sold so long as Universal received the agreed amount from Lonnie's; that Universal would retain the pink slip until Lonnie's paid the stipulated...