SUNTRUST BANK v. ATLANTA CLASSIC CARS

• Decision Date: 29 May 2001
• Docket Number: No. A01A0111.,A01A0111.
• Citation: 249 Ga. App. 726,549 S.E.2d 523
• Parties: SUNTRUST BANK, ATLANTA v. ATLANTA CLASSIC CARS, INC.
• Court: Georgia Court of Appeals

549 S.E.2d 523

249 Ga. App. 726

SUNTRUST BANK, ATLANTA v. ATLANTA CLASSIC CARS, INC.

No. A01A0111.

Court of Appeals of Georgia.

May 29, 2001.

Fleming & Ray, James M. Sherman, Ashley H. Draughon, Atlanta, for appellant.

Freisem, Macon, Swann & Malone, John A. Swann, Atlanta, for appellee.

POPE, Presiding Judge.

SunTrust Bank, Atlanta funded a car loan by issuing a check to Atlanta Classic Cars, Inc. ("ACCI"), so that its customer could purchase a car. The check included a conditional endorsement whereby ACCI warranted that it would list SunTrust as the first lien holder on the application for a certificate of title. ACCI cashed the check but did not comply with the endorsement. The issue in this case is whether SunTrust is entitled to recover the full amount of the loan from ACCI under the theory of money had and received even though breach of the endorsement did not cause SunTrust's loss. We hold that the bank may not recover under that theory, because, as applied to this scenario, the theory implicitly includes a requirement of causation.

Construed in favor of ACCI, the facts show that in 1997, Elizabeth Bassett purchased a Porsche from ACCI financed by SunTrust, with the loan secured by the car. On April 18, 1997, SunTrust wrote ACCI, instructing it to list SunTrust as the first lien-holder on the car when it applied for a title. Three days later, SunTrust issued a cashier's check payable to ACCI with the conditional endorsement. It is undisputed that ACCI initially failed to satisfy the endorsement. Bassett, a Florida resident, took the car there, where it was stolen and totaled by her estranged husband. Bassett then defaulted on the loan.

Starting about one year after SunTrust's check was cashed, ACCI attempted to obtain a replacement title showing SunTrust as the first lienholder. Although ACCI was apparently successful, SunTrust argues that the replacement title is not valid.

In its suit against ACCI, SunTrust moved for partial summary judgment claiming that ACCI was liable for the amount of the cashier's check as a matter of law under the theory of money had and received because ACCI did not comply with the terms of the conditional endorsement on the check. The court denied Sun Trust's motion because no third party claimed a superior interest in the car and, therefore, ACCI's failure to comply with the conditional endorsement did not cause Sun Trust any harm. We granted Sun Trust's application for interlocutory review and, having reviewed the record more closely, affirm the trial court's denial of the motion for partial summary judgment.

"An action for money had and received is founded upon the equitable principle that no one ought unjustly to enrich himself at the expense of another, and is maintainable in all cases where one had received money under such circumstances that in equity and good conscience he ought not to retain it...." Jasper School Dist. v. Gormley, 184 Ga. 756, 758, 193 S.E. 248 (1937).

As explained by the trial court, "[SunTrust] essentially alleges that [ACCI's] actions resulted in a loss of a perfected security interest." SunTrust contends that case law provides that when a car dealer fails to cause the bank to be shown as the first lien-holder on the title as required by a conditional endorsement, the bank is automatically entitled to recover the full amount of the loan from the dealer. However, in each of the cases upon which SunTrust relies, the lender was damaged as a direct result of the loss of its security interest.

In DeKalb County Employees Fed. Credit Union v. D. L. Claborn Buick, 162 Ga.App. 631, 292 S.E.2d 507 (1982), a car dealer breached a conditional endorsement on the check by failing to record the lender's security interest in the car and mailing the certificate of title to the purchaser rather than the lender. The buyer later used the clear title to trade the car and buy a new car from a different dealer and then disappeared. Id. The court held that because the dealer caused the lender to lose a perfected security interest, the dealer was liable for the full amount of the loan. Id. at 632, 292 S.E.2d 507.

In Larry's Mobile Homes v. Robins Fed. Credit Union, 161 Ga.App. 822, 288 S.E.2d 800 (1982), the dealer breached the conditional endorsement by not perfecting the lender's lien. The purchaser arranged additional financing with a second creditor, and the title showed the second creditor as the only lienholder. Id.

In Atlanta Motorcycle Sales v. Fulton Nat. Bank, 147 Ga.App. 297, 248 S.E.2d 558 (1978), the seller did not comply with the bank's conditional endorsement on its loan check. The buyer later filed for bankruptcy without ever making any payments to the bank. Id. at 298, 248 S.E.2d 558. Because the bank did not have a perfected security interest in the car as a result of the dealer's actions, it could not recover in bankruptcy. Id. The court applied the theory of money had and received to award the bank the full amount of the loan. Id.

In Fed. Employees Credit Union v. Capital Auto. Co., 124 Ga.App. 144, 183 S.E.2d 39 (1971), a bank issued a check for its customer to buy a car. The dealer cashed the check with the conditional endorsement but gave the money to the customer rather than...