Royal Store Fixture Co. v. New Jersey Butter Co.

• Decision Date: 31 March 1971
• Citation: 276 A.2d 153,114 N.J.Super. 263
• Parties: , 8 UCC Rep.Serv. 1391 ROYAL STORE FIXTURE CO., a corporation, Plaintiff-Respondent, v. NEW JERSEY BUTTER COMPANY, a corporation, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 263

114 N.J.Super. 263

276 A.2d 153, 8 UCC Rep.Serv. 1391

ROYAL STORE FIXTURE CO., a corporation, Plaintiff-Respondent, v. NEW JERSEY BUTTER COMPANY, a corporation, Defendant-Appellant.

Superior Court of New Jersey,

Appellate Division.

Argued March 23, 1971.

Decided March 31, 1971.

George G. Tartar, Cherry Hill, for appellant.

Neil F. Deighan, Jr., Camden, for respondent (Kisselman, Devine, Deighan & Montano, Camden, Attorneys; Mr. Deighan, on the brief).

Before Judges KILKENNY, HALPERN and LANE.

The opinion of the court was delivered by

LANE, J.A.D.

Defendant appeals from a final judgment in the amount of $7,436.92 together with costs. The matter was submitted to the trial court upon a stipulation of facts and briefs. The trial court found that defendant had converted goods of plaintiff and fixed the value at the amount remaining due on an installment sale contract covering the goods at the time of conversion.

Defendant obtained a judgment against one Laskey, individually and trading as Silver Slicer, in Delaware County, Pennsylvania, in the amount of $5,663.70. Execution was issued to the sheriff of the County of Delaware. Pursuant to a levy by the sheriff, a sale of property in Laskey's store was held. The property was bought in by the defendant for one dollar and thereafter removed by the defendant from Pennsylvania to New Jersey.

Plaintiff had sold the property to Laskey in Pennsylvania under an installment sale contract duly filed in Pennsylvania and held a security interest in the property. At the time of defendant's judgment against Laskey, Laskey was in default under the terms of the installment sale contract. The unpaid balance due on the installment sale contract was $7,436.92. The value of the property levied upon and sold was more than $7,436.92.

On February 6, 1967 plaintiff's Philadelphia counsel wrote to defendant's Delaware County counsel advising that plaintiff was entitled to either the balance due on the installment contract or the goods that had been sold. This letter was answered February 14, 1967 by a mere statement that the goods were 'in possession of New Jersey Butter Company, located at 1482 South Ninth Street, Camden, N.J.' By letter dated March 7, 1967 defendant's Delaware County counsel advised plaintiff's Philadelphia counsel that defendant stood 'ready, willing and able to return the equipment * * *.'

On appeal defendant argues: (1) a debtor's rights in collateral can be involuntarily transferred; (2) there must have been a demand for the return of the property before defendant can be guilty of conversion because the taking was lawful; and (3) defendant was an improper party.

We consider first whether the law of New Jersey, the forum state, or the law of Pennsylvania, the state in which the security agreement was entered into and where the goods were located, should be applied. The New Jersey conflicts rule is applicable. In re Damato, 86 N.J.Super. 107, 116, 206 A.2d 171 (App.Div.1965). Under our conflicts rule the law of the state which has the most significant relationship with the occurrence or transactions of the parties will control as to the substantive matters. Maffatone v. Woodson, 99 N.J.Super. 559, 240 A.2d 693 (App.Div. 1968), certif. den. 51 N.J. 577, 242 A.2d 381 (1968). Since the security agreement was made in Pennsylvania and the property was located in Pennsylvania at that time and also at the time of the levy, the law of Pennsylvania is applicable. Daily v. Somberg, 28 N.J. 372, 146 A.2d 676 (1958); Cooper v. Philadelphia Worsted Co., 68 N.J.Eq. 622, 60 A. 352 (E. & A.1904); Van Dyke v. Bolves, 107 N.J.Super. 338, 258 A.2d 372 (App.Div.1969). However, the question of whether the defendant is the proper party is a matter of procedure to be determined by our law. Marshall v. Geo. M. Brewster & Son, Inc., 37 N.J. 176, 180 A.2d 129 (1962).

The financing statement from Laskey to plaintiff (a Pennsylvania installment sale contract) included all of the necessary requisites required by 12A P.S. § 9--402. The requirements for filing (12A P.S. § 9--401) were complied with. Plaintiff was the holder of a perfected security interest in the property involved. Since there had been proper filing before the levy and sale, defendant was charged with notice of plaintiff's interest in the property.

Under the Uniform Commercial Code, which has been adopted in Pennsylvania, a debtor's rights in collateral may be transferred. 12A P.S. § 9--311. A transfer of the debtor's rights, however, can in no way affect the secured party's rights in the collateral unless authorized in the security agreement. 12A P.S. § 9--306(2).

Under the terms of the agreement between Laskey and plaintiff, plaintiff had become entitled to possession of the property before the levy by reason of Laskey's default. 12A P.S. § 9--501(1). At the time of the levy plaintiff had the right to immediate possession of the property. Such right is a prerequisite to an action for conversion. United States v. Sommerville, 324 F.2d 712 (3 Cir. 1963), cert. den. 376 U.S. 909, 84 S.Ct. 663, 11 L.Ed.2d 608 (1964); 18 Am.Jur.2d, Conversion, § 54, p. 191.

To establish a cause of action for conversion, plaintiff not only must prove that it was entitled to possession of the property but also an act of the defendant wilfully done constituting a deprivation to plaintiff of such right to possession, I.e., an act by defendant of...