Sorensen v. Pagenkopf
| Decision Date | 04 May 1940 |
| Docket Number | 34710. |
| Citation | 101 P.2d 928,151 Kan. 913 |
| Parties | SORENSEN et al. v. PAGENKOPF et al. |
| Court | Kansas Supreme Court |
Syllabus by the Court.
The statutes requiring a bill of sale or certificate of title upon sale of a vehicle are intended not only to make it more difficult for a thief to dispose of a stolen car, but to protect innocent purchasers from fraudulent transactions of regular dealers. Gen. St.Supp.1939, 8-135.
In replevin action, where retailer dealer purported to sell automobile to employee but no certificate of title as required by statute was issued and automobile wins left in stock and employee's note and chattel mortgage sold to and recorded by finance company, subsequent innocent purchaser from dealer was entitled to the automobile as against finance company, on grounds of public policy and because of negligent failure of finance company to inquire as to whether certificate of title was issued and as to whether automobile was to be left with dealer. Gen.St. Supp.1939 8-135.
In an action to replevin an automobile, it appears that a retail automobile dealer entered into a contract with an employee whereby the dealer pretended to sell the employee a new automobile and took the note of the employee, secured by a mortgage on the automobile; the note was then sold to a finance company and by it duly recorded; that the purported mortgagor never did have possession of the automobile and it remained in the stock of the dealer; that the parties did not comply with G.S.1939 Supp. 8-135, commonly known as the certificate of title law; that subsequent to the recording of the mortgage the car was sold by the dealer to an innocent purchaser; that when the dealer became insolvent the finance company which held the mortgage attempted to recover possession of the car from the innocent purchaser: Held, that as between the innocent purchaser and the finance company which had neglected to inquire as to whether the car was to be placed in the general stock of the retail company, the finance company must bear the loss occasioned by the fraud of the retail dealer.
Appeal from District Court, Dickinson County; Cassius M. Clark Judge.
Replevin action by Michael Sorensen and Emil Sorensen, copartners as the Capitol Securities Company, against H. A. Pagenkopf and others to recover an automobile. From judgment for plaintiffs, defendants appeal.
Reversed with directions.
Matt Guilfoyle and Thornton D. Scott, both of Abilene, for appellant H. A. Pagenkopf.
Paul H Royer, of Abilene, for appellees.
This was an action to replevin a Ford automobile. Judgment was for the plaintiffs. Defendant appeals.
The petition alleged that plaintiffs were a co-partnership and engaged in the business of financing the buying of automobiles; that about the 3d day of April, 1939, Alice M. Schaaf made her note in writing to the Lydick Motor Service, a co-partnership composed of Paul Schimming and W. H. Schaaf; that this note was assigned to plaintiffs on April 4, 1939, and that plaintiffs were the holders of it; that to secure payment on the note on April 3, 1939, the maker Alice M. Schaaf gave a chattel mortgage to the Lydick Motor Service covering the 1939 Ford automobile in question; that the mortgage stated that the note and mortgage were given as a part of the purchase price of the automobile; that the mortgage was assigned in writing to the plaintiffs and was duly recorded with the register of deeds on April 6, 1939, and that defendant Pagenkopf claimed to be the owner of the automobile by virtue of a title he acquired after the recording of plaintiffs' mortgage; and that the First National Bank of Herington claimed to have an interest in it by virtue of a mortgage given to them by H. A. Pagenkopf, dated May 27, 1939, and filed June 14, 1939; that any interest either one of these defendants might have was junior to the rights of these plaintiffs; that plaintiffs were entitled to immediate possession of the car and they deemed themselves insecure and had elected to take possession of the automobile which was in the possession of H. A. Pagenkopf, who had refused to deliver possession of it to plaintiffs upon demand; that the value of the automobile was about $550. Judgment was asked for possession of the automobile or judgment in that amount.
Pagenkopf answered that during the times mentioned the Lydick Motor Service operated an automobile garage and sales agency and had the agency for the sale of Ford automobiles in their vicinity and that these facts were well known to the plaintiffs; that about May 24, 1939, he purchased the automobile in question and paid for it by delivering his old automobile of the value of $520 and by paying the balance thereof, partly in cash and partly by execution of a note and chattel mortgage upon the new car; that he received from the automobile agency the title certificate, as required by the laws of the State of Kansas, and this title certificate showed the automobile to be free and clear of any liens. The defendant further alleged that Alice M. Schaaf was not the owner of the car and was not in possession of it at the time the purported chattel mortgage was claimed to have been executed by her to the plaintiffs; that no title was ever made to Alice M. Schaaf and no certificate of title was ever transferred by her to these plaintiffs, as required by the laws of the State of Kansas, and that by reason of the foregoing the purported chattel mortgage claimed to have been executed to these plaintiffs by Alice M. Schaaf was fraudulent and void as to this defendant; that the defendant further alleged that the Lydick Motor Service made some payments to the plaintiffs upon the note sued upon in plaintiffs' petition but that the exact amount of these payments were unknown to defendant. The answer further alleged that defendant was informed and believed that the plaintiffs operating as an automobile finance company had made it a practice to finance new cars for the Lydick Motor Service and left new cars with the Lydick Motor Service for sale; that they knew and understood that the Lydick Motor Service was engaged in business as dealers in automobiles and engaged particularly in the advertising and sale of new and used Ford cars and that plaintiffs knew that the car herein sued upon was being advertised and offered for sale to the general public by the Lydick Motor Service and that by reason thereof said plaintiffs made the Lydick Motor Service their agent for the purpose of selling it and by reason thereof the plaintiffs should now be estopped from claiming any lien on this car as against this defendant. The First National Bank answered setting forth that Pagenkopf on May 27, 1939, executed a mortgage to them on the automobiles in question, which they filed for record on June 14, 1939.
For reply, the plaintiffs alleged that the note and mortgage made by Alice M. Schaaf to the motor company and assigned to them was a retail sales mortgage and that upon the representations made by Alice M. Schaaf and the Lydick Motor Company, as shown in the note and chattel mortgage, they believed and relied on the allegations in the paper and purchased the retail chattel mortgage in good faith; that this chattel mortgage was not a floor plan mortgage and that neither this plaintiff nor its agent ever agreed or knew that the automobile was to be kept on the floor for sale but believing and relying upon the representations made in the note and mortgage to them understood that Alice M. Schaaf was purchasing this car and had given the note and mortgage in controversy as a part of the payment.
A jury was waived and the case was tried by the court. The trial court did not make any findings of fact but found the issues generally for the plaintiffs and gave them judgment for $459.30 and ordered that if this judgment was not paid the plaintiffs would be awarded possession of the automobile. Motion for a new trial was filed and overruled.
There was very little dispute about the facts. For the purpose of the conclusion we have reached it may be stated there was no dispute. The car in question was a new one and plaintiffs knew of this or should have known of it from the purchaser's statement when they made the loan to Mrs Schaaf. Mrs. Schaaf was the wife of one of the partners and an employee of the Lydick Motor Service. The plaintiffs knew this or should have known it from the purchaser's statement. The chattel mortgage upon which plaintiffs are relying in this case was placed on record in Dickinson county on April 6, 1939. This mortgage was on...
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