Sherman v. Roger Kresge, Inc.
| Decision Date | 03 August 1971 |
| Citation | 67 Misc.2d 178,323 N.Y.S.2d 804 |
| Parties | , 9 UCC Rep.Serv. 858 Joseph M. SHERMAN d/b/a Jack Sherman Toyota, Plaintiff, v. ROGER KRESGE, INC., Defendant. |
| Court | New York County Court |
Plaintiff is a dealer in new and used cars. On or about June 10th, 1971 he was approached by one Robert Miller, a used car dealer, who purchased from the plaintiff a 1965 and 1969 Volkswagon automobile at wholesale for $1,625. Although the plaintiff turned over said vehicles to Miller, he indicated to him that Miller was not to dispose of the vehicles in the meantime and that he would not give him the MV--50 title forms until such time as Miller's check cleared the bank. Plaintiff's fears were justified since there were insufficient funds in Miller's account to pay the check.
Shortly after taking possession of these two vehicles, Miller contrary to his promise sold them to the defendant, also a new and used car dealer in the community, for the sum of $1,525. As a used car dealer Miller completed and furnished the defendant with his own MV--50 title forms.
It was conceded at the argument of this motion that defendant's check to Miller was simply endorsed by Miller and handed back to the defendant who applied it in partial satisfaction of Miller's pre-existing and running account with the defendant.
The plaintiff's action in replevin was commenced on June 16, 1971 and the automobiles in question by order of this Court were seized a few days later by the Sheriff of Broome County. Shortly thereafter the defendant undertook to reclaim the chattels which are still in the possession of the Sheriff.
The parties, by motion and cross-motion, now ask for summary judgment and return of the vehicles.
The issues before the Court are two-fold:
1. Whether the delivery of the two vehicles from the plaintiff to Miller constituted an entrustment within the meaning of UCC, § 2--403(3), and
2. Whether the defendant was a buyer in the ordinary course of business within the meaning of UCC, § 1--201.
There is a dearth of reported cases in this State although other jurisdictions operating with the UCC have considered similar issues.
It is to be noted that when entrustment is the consequence of the buyer's leaving the goods in the possession of the seller, the buyer's interest is subject to the peril of the claims of creditors of the seller, as well as the divestiture of his title in favor of a buyer in ordinary course by virtue of the entrustment provision.
The entrustment provision applies to all kinds of goods. It has been judicially intimated in several other states that the entrustment provision should not apply to used automobiles because the buyer ordinarily knows or possibly should know that a certificate of title is outstanding. Sterling Acceptance Co. v. Grimes, 194 Pa.Super. 503, 168 A.2d 600. The Code, however, makes no express exception in the case of used cars, Commercial Credit Corp. v. Associates Discount Corp., 436 S.W.2d 809 (Ark.); Poland Chevrolet Co. v. Shelly Smith & Sons, 21 Ohio Misc. 30, 254 N.E.2d 728.
When there is an entrustment within the meaning of the Code, it is...
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Farmers Livestock Exchange of Bismarck, Inc. v. Ulmer, 11117
...it has given "new value" and, consequently, does not qualify as a buyer in the ordinary course of business. Sherman v. Roger Kresge, Inc., 67 Misc.2d 178, 323 N.Y.S.2d 804 (1971); aff'd, 40 A.D.2d 766, 336 N.Y.S.2d 1015 (1972). Even without reference to value, we do not believe that an auct......
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...of business as defined in the Uniform Commercial Code, he may yet be a good faith purchaser for value, Sherman v. Roger Kresge, 67 Misc.2d 178, 323 N.Y.S.2d 804 (Cty.Ct.1971) who may enjoy the protection of pre-Code common law estoppel. Toyomenka, Inc. v. Mount Hope Finishing Co., Supra; N.......
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