Southern Finance Company v. Mercentile Discount Corporation

• Decision Date: 26 October 1923
• Docket Number: 11,702
• Citation: 141 N.E. 250,80 Ind.App. 436
• Parties: SOUTHERN FINANCE COMPANY v. MERCENTILE DISCOUNT CORPORATION
• Court: Indiana Appellate Court

141 N.E. 250

80 Ind.App. 436

SOUTHERN FINANCE COMPANY v. MERCENTILE DISCOUNT CORPORATION

No. 11,702

Court of Appeals of Indiana

October 26, 1923

From Vanderburgh Superior Court; Edgar Durre, Judge.

Action by the Mercantile Discount Corporation against the Southern Finance Company. From a judgment for plaintiff, the defendant appeals.

Reversed.

William L. Mitchell and Ollie C. Reeves, for appellant.

James E. Bingham and George F. Bingham, for appellee.

OPINION

BATMAN, J.

This is an action by appellee against appellant to recover damages by reason of an alleged conversion of an automobile. After issues were joined, the cause was submitted to the court for trial, resulting in a judgment in favor of appellee for $ 757.80. Appellant filed a motion for a new trial, which was overruled, and this action of the court is made the basis of this appeal.

The only reasons for a new trial which we find it necessary to consider are, that the decision of the court is not sustained by the evidence, and is contrary to law. The material facts as shown by the undisputed evidence, and the disputed evidence most favorable to appellee, are substantially as follows: Appellee is a corporation, engaged in buying and selling automobiles and commercial paper, with its principal office at Indianapolis, Indiana. Appellant is a finance corporation located at Evansville, Indiana. On March 18 1920, one Peter H. Overbay was the owner of a Liberty automobile of the value of $ 1,800, which he had purchased a few days before of the Dunbar Motor Car Company. On that date he parked the same in the street in front of appellee's place of business in Indianapolis, and while it was so located, he executed a bill of sale therefor to appellee which recited a consideration of $ 1,259, and also executed to it a promissory note for $ 1,259, containing a conditional sale contract for the same automobile, which provided, among other things, that it should remain the property of appellee until the note was fully paid. Both of said instruments were executed at substantially the same time, pursuant to an agreement then existing between the parties, that appellee would resell the automobile to said Overbay in the manner described. Appellee at the time gave said Overbay its check for $ 1,200, but did not take physical possession of the automobile at any time. After the transaction stated, Overbay drove the car away. On the date mentioned, Overbay was engaged in the automobile business in Vincennes, Ind., and had previously arranged with appellee to advance his firm 80% of the wholesale price of cars on their floor. The execution of said instruments was not acknowledged before any officer, and were not recorded. On June 30, 1921, said Overbay executed his promissory note to the firm of Overbay and Overbay for the sum of $ 1,282.55, and, to secure the same, executed to said firm a chattel mortgage on said automobile. The execution of said mortgage was properly acknowledged, and the same was duly recorded within ten days thereafter. On the same day said note and mortgage were duly assigned to appellant. In addition to the foregoing facts we may assume, that appellant has converted the automobile to its own use, as charged in the complaint, since it has not challenged the court's finding in that regard.

From a consideration of the facts stated it is obvious, that unless the instrument, executed by Peter H. Overbay to appellee, on March 18, 1920, purporting to be a conditional sale contract covering the automobile in question, is valid as such, the judgment in this action cannot be sustained. We recognize the law to be, that where the owner of personal property sells and delivers it to a purchaser, not for the purpose of consumption or resale, at an agreed price payable at a future day, upon the express condition that the title to such property shall remain in the vendor thereof, until the purchase price is fully paid, that a conditional contract of sale exists which prevents the vendee of such property, prior to such payment, from selling or encumbering the property in such manner as to defeat the title of the original owner and vendor. Winchester Wagon Works, etc., Co. v. Carman (1887), 109 Ind. 31, 9 N.E. 707, 58 Am. Rep. 382; Cable Co. v. McElhoe (1915), 58 Ind.App. 637, 108 N.E. 790. But, before there can be a valid conditional sale contract, the one assuming to occupy the relation of owner and vendor must be such in fact, and the one assuming to occupy the relation of vendee of the owner must in truth acquire his title through the latter. Paper transfers of titles are of no consequence, where corresponding facts do not exist, nor will apparent momentary ownership, for the purpose of an instantaneous resale, suffice. Mere forms will not be allowed to overshadow the substance, and hence constructive sales and resales will be disregarded if, in fact, only the relation of debtor and creditor exists. 11 C. J. 410 et seq.; 24 R. C. L. 446; Babcock Co. v. Williams (1898), 75 Minn. 147, 77 N.W. 791; Williams v. Chadwick (1901), 74 Conn. 252, 50 A. 720; Robinson v. Farrelly (1849), 16 Ala. 472; Desloge & Rozier, Exr., v. Ranger (1842), 7 Mo. 327; Studebaker Bros. Co. v. Mau (1905), 13 Wyo. 358, 80 P. 151, 110 Am. St. 1001; Palmer v. Howard (1887), 72 Cal. 293, 1 Am. St. 60, 13 P. 858; Schneider v. Daniel (1921), 191 Ind. 59, 131 N.E. 816, 17 A. L. R. 1410; Payne v. Parker (1909), 95 Miss. 375, 48 So. 835. As said by the court in the case last cited, involving facts very similar to the instant case, wherein the appellee there occupied the same position as the appellee here: "We have no disposition to depart from the rule, now thoroughly established in this state, that personal property may be sold with verbal retention of title, and that the claim of the vendor to the purchase money will prevail over the claim of subsequent grantees. But we cannot hold as a matter of law that Payne ever actually owned the mules here in controversy. The whole transaction must be examined. The mules were not purchased from Payne in the first instance. They were bought from one Lawson. The sole purpose of the alleged sale to Payne was that title might momentarily vest in him for the purpose of an instantaneous resale, in order that the relation of vendor and conditional purchaser might exist. The whole transaction might well be considered as nothing more than a verbal mortgage--an effort to substitute for a trust...