Pacific Finance Corporation of California v. Burkhart, Civil 4206

• Decision Date: 16 December 1940
• Docket Number: Civil 4206
• Citation: 108 P.2d 380,56 Ariz. 383
• Parties: PACIFIC FINANCE CORPORATION OF CALIFORNIA, a Corporation, Appellant, v. H. E. BURKHART, Doing Business Under the Trade Name and Style of BURKHART MOTOR COMPANY, Appellee
• Court: Arizona Supreme Court

108 P.2d 380

56 Ariz. 383

PACIFIC FINANCE CORPORATION OF CALIFORNIA, a Corporation, Appellant, v. H. E. BURKHART, Doing Business Under the Trade Name and Style of BURKHART MOTOR COMPANY, Appellee

Civil No. 4206

Supreme Court of Arizona

December 16, 1940

APPEAL from a judgment of the Superior Court of the County of Yuma. Henry C. Kelley, Judge. Judgment affirmed in part and reversed in part with instructions.

Mr Allan K. Perry and Mr. William H. Westover, for Appellant.

Mr. Ray C. Bennett, for Appellee.

OPINION

LOCKWOOD, J.

Pacific Finance Corporation of California, a corporation, hereinafter called plaintiff, brought suit against H. E Burkhart, doing business under the trade name and style of Burkhart Motor Company, hereinafter called defendant, on fifteen causes of action. Defendant demurred to the complaint and to each separate cause of action on the ground that none of them stated a cause of action against defendant, and answered and cross-complained alleging that plaintiff was indebted to him in the sum of $1,166.59. The trial court sustained the demurrer to causes of action one to thirteen inclusive, and overruled the demurrer to the fourteenth and fifteenth causes of action, and plaintiff electing to stand upon each cause as pleaded, the first thirteen were dismissed.

The case went on to trial on the fourteenth and fifteenth causes of action, and defendant's cross-complaint. The court found in favor of plaintiff on the fourteenth cause of action in the sum of $345.12, and in favor of defendant on his cross-complaint in the sum of $1,166.59, and that plaintiff was not entitled to attorney's fees as asked in its fifteenth cause of action, whereupon judgment was entered in favor of defendant in the sum of $1,166.59, less $345.12, being the amount established by plaintiff under its fourteenth cause of action, and plaintiff appealed from the judgment, with the exception of that portion in favor of it on its fourteenth cause of action.

There are but two assignments of error, the second of which is dependent upon whether the court was correct in its ruling sustaining the demurrers to the first thirteen causes of action, with the exception of the eighth, which plaintiff apparently admits were correctly determined. It is, therefore, necessary that we consider the allegations of the complaint.

We will summarize in a factual manner the allegations of the first cause of action only, as all of those to which demurrers were sustained are identical, with certain exceptions which we shall point out as necessary. Plaintiff is a California corporation, while defendant was a resident of Yuma and engaged in business as a dealer in motor vehicles. On September 14, 1936, he sold to one W. L. Hubbell a Dodge automobile under a contract of conditional sale, to be paid for in installments. This conditional sale agreement was in the usual form, and we shall refer to any particular provision thereof as may be necessary without setting forth the instrument in full. On the same day defendant assigned the contract of sale and all rights thereunder to plaintiff by a written instrument which reads, so far as material to this case, as follows:

"For value received, I hereby sell, transfer and assign to Pacific Finance Corporation of California (hereinafter called the assignee) all my right, title and interest in and to the within contract, and in and to all moneys due and to become due and payable thereunder, and I do hereby sell, transfer and assign to the assignee all my right, title and interest in and to the property in said contract mentioned; and I guarantee, warrant and agree to defend the title of said property hereby conveyed against all lawful claims and demands whatsoever, except as against the rights of the purchaser in said contract; and I agree that, if the assignee shall take possession of said property for failure of the purchaser to perform any of the conditions or requirements of said contract, I will pay to the assignee the balance then unpaid under said contract within thirty (30) days after delivery of said property at my place of business, provided that such delivery be made within ninety (90) days after due date of the then unpaid installment longest overdue (the said ninety (90) days shall not include any period of time during which the assignee may be required by law to hold such property for redemption by the purchaser or for any other reason, or during which time the property may be held by any court or government agency), but no such delivery shall be required to be made to me if at the time of such taking of possession I am no longer in the automobile business or am deemed by the assignee to be an unsafe risk, in either of which events the assignee shall have full right to make sale of said property as in said contract provided and I will upon demand pay to the assignee any and all sums provided in said contract to be paid by purchaser after sale; but if at the time the assignee makes demand on the purchaser or takes legal steps for the possession of said property, any installment then due shall be more than forty-five (45) days delinquent or if said property is alleged by the assignee to have been stolen, embezzled, confiscated, or burned and notice of loss is not filed with the insurer thereof within forty-five (45) days after the assignee is upon notice that such loss of the property is alleged to have occurred, then I shall stand relieved of all liability hereunder;... In the event that suit is brought by said assignee to enforce any of my obligations under this assignment, then I agree to pay to such assignee a reasonable attorney's fee in such suit....

"BURKHART MOTORS

"BY H. E. BURKHART, Owner."

The purchaser made several payments on his contract, but eventually defaulted thereon, and plaintiff repossessed the motor vehicle described in the conditional sales contract, and delivered it to defendant, but defendant did not pay to plaintiff the balance due from the purchaser under the conditional sales contract, nor did he repurchase said vehicle from plaintiff. He did, however, send it the following:

"6/24/37

"I hereby request Pacific Finance Corporation of California, Phoenix, Arizona, to take possession of and assist in disposing of the following cars, in either the retail or wholesale market. (Here follows list of eight cars with description)

"I understand and agree that this in no way releases me from my guarantee on these contracts covering the above listed automobiles, and agree to pay any and all deficiencies arising from the sale of these cars, as they are sold, either singly or in a group.

"(Signed) H. E. BURKHART."

In pursuance of that letter, plaintiff received the automobile from defendant and sold it at public auction to the highest bidder for cash, and applied the receipts from the sale on what was still due on the conditional contract. After such application there was a balance left of $128.85, for which plaintiff brought suit.

It will be seen that this is a case of an ordinary conditional sale by an automobile dealer and an assignment of the contract of sale to a third party by a written agreement. It is necessary that we examine the agreement to see just exactly what liability defendant assumed when he assigned the contract of sale, for it is upon this agreement and its construction that the question of whether the demurrers were properly sustained turns. The first part of the agreement is an ordinary assignment of the money due from the purchaser to the seller and of the seller's reserved title in the instrument together with a warranty of the title against all persons except the purchaser in the contract. Then follows what the defendant agrees to do in case the purchaser does not complete the payments in accordance with the contract. This agreement may be summarized as follows: (a) If the plaintiff takes possession of the automobile for...