Summary
In Automobile Financing, Inc. v. Downing Motors, 95 Ga. App. 711 (98 S.E.2d 643), it was held that such sale need not be at retail but that a sale made at wholesale in the ordinary course of dealings divested the finance company of title as to the purchaser.
Summary of this case from Moreland v. General Finance Corp.Opinion
36691.
DECIDED MAY 16, 1957.
Trover for automobile. Before Judge Etheridge. Fulton Civil Court. March 6, 1957.
Tindall Tindall, for plaintiff in error.
Ben T. Beasley, Jr., contra.
"Where one lends money to an automobile dealer and to secure the debt takes a bill of sale to an automobile which the lender expressly or by clear implication authorizes the dealer to sell in the regular course of business, the lender constitutes the dealer his agent to collect the proceeds of the sale and to account to him for the amount of the debt; and where the dealer sells the automobile to one who deals with him as a dealer, and in the due course of his business, and to one who is not guilty of participation in the fraudulent disposition of the proceeds of the sale, the lender's title is extinguished, and he cannot assert it against such purchaser, though the bill of sale to secure debt be duly recorded." Gernazian v. Harrison, 66 Ga. App. 689 ( 19 S.E.2d 165).
DECIDED MAY 16, 1957.
Automobile Financing, Inc., filed a trover action against Downing Motors, Inc., in the Civil Court of Fulton County, alleging that the defendant was in possession of a 1952 Nash rambler hardtop, to which it claimed title. The defendant answered admitting possession of the automobile, but denied that the plaintiff had title or any valuable interest therein.
The following facts were stipulated by the parties: that Automobile Financing, Inc., plaintiff in this matter, is a Georgia corporation, engaged in the business of financing automobiles; that as a part of the business, the plaintiff lends money on bills of sales to secure debt to various new and used car dealers throughout the State, on what is commonly known as a floor plan; that this is merely the financing of the inventory of new and used cars of the particular dealer; that during the month of December, 1955, Mr. J. L. Strickland, vice-president of Automobile Financing, Inc., telephoned Downing Motors, Inc., and talked with a Mr. Jim Downing; that Mr. Jim Downing and his brother, Tom Downing, are the principal stockholders of Downing Motors, Inc.; that the purpose of the telephone call was to check the credit reference of Mr. Jim Branch, a used car dealer, who applied to Automobile Financing, Inc., for credit on his stock of used cars; that Mr. Downing advised Mr. Strickland that Mr. Branch was a former employee of their company, and that they had found him to be reliable, and would recommend him as a good credit risk; that after further investigation, and subsequent to this conversation with Mr. Downing, Automobile Financing, Inc., did enter into an agreement, whereby it did floor plan the stock of used cars of Mr. Jim Branch, and Mr. Branch was operating at all times, pertinent to this case, as Jim Branch Used Cars; that on or about April 26, 1956, Mr. Branch floor planned eleven used cars with Automobile Financing, Inc.; that on this date, Automobile Financing, Inc., received of Mr. Jim Branch, a bill of sale covering said eleven cars, including the automobile sued for in this case, a trust receipt and a promissory note, covering the amount of floor plan on said automobiles; that these instruments were introduced into evidence as plaintiff's exhibit #1, said instruments being recorded in the clerk's office of the Superior Court of Fulton County on April 30, 1956, said instruments having been filed for record on April 27, 1956; that on or about May 2, 1956, Mr. Jim Branch drove a 1952 Nash rambler, the subject matter of this suit, to the used car lot of the defendant, Downing Motors, Inc., and Downing Motors, Inc., purchased from Mr. Branch said automobile for the sum of $375; the said $375 was paid by the defendant to Mr. Branch; the value of this automobile is stipulated as being $375; on or about May 8, 1956, Mr. Strickland went to Mr. Downing's place of business and made demand upon Mr. Tom Downing, president of Downing Motors, Inc., for possession of said automobile; Mr. Downing refused to deliver possession of the car to Mr. Strickland, and during the discussion, Mr. Downing stated that he did not think that Automobile Financing, Inc., would floor plan a car of this age; also, during this conversation, Mr. Downing stated that when purchasing an automobile from another automobile dealer, it was not their custom to check the courthouse records or check with the automobile financing company to determine whether or not that particular automobile or automobiles were floor planned; Mr. Strickland told Mr. Tom Downing that the 1953 Nash rambler had been floor planned to provide his company with additional security, after they had discovered that Mr. Branch had sold several automobiles that were floor planned and had not paid Automobile Financing, Inc., the amount of loans thereon; that it is customary for many new and used car dealers to floor plan their inventory of automobiles, and this fact was well known to each of the Downings, for they had been in the automobile business for many years; Downing Motors, Inc., purchased the 1952 Nash rambler from Mr. Branch for the purpose of reselling it and said car was purchased at a wholesale price; Mr. Jim Branch was in the business of dealing and selling to the general public, and the purpose of the floor planning was to enable Mr. Branch to sell automobiles to the public, including the automobiles floor planned within this bill of sale to the general public; Automobile Financing, Inc., knew that the automobile would be sold to some member of the public, that possession of the automobile was left with the borrower, namely, Mr. Branch, for the purpose of display and sale; Automobile Financing, Inc., allowed Mr. Branch to retain possession of the automobile, including the keys, for the specific purpose of having Mr. Branch sell said automobile and to deliver title to a member of the general public; prior to the purchase of the automobile under consideration, the defendant, Downing Motors, Inc., had purchased numerous automobiles from Mr. Branch; that the purchase price of $375 was paid by the defendant in this action, to Mr. Branch, in Downing Motors, Inc.'s ordinary course of dealings; that in the past, Mr. Branch had been employed by Downing Motors, Inc., and had been found to be reliable; that one of the purposes of this financing arrangement, known as floor planning, is for the dealer to sell automobiles and to deliver title to the general public, in order to acquire money to pay off the floor plans.
Witnesses testified that: in the used automobile business it is a common practice for automobile dealers to buy and sell automobiles among themselves, and the purchasing dealer does not investigate, or inquire in any manner as to title of the automobile or whether said automobile is floor planned with some bank or finance company; when an individual, not a dealer, offers an automobile for sale to the dealer, the dealer checks the title to the automobile before purchasing the automobile.
J. L. Strickland, witness for plaintiff testified in part: that the plaintiff did not floor plan automobiles for dealers who sell exclusively wholesale; that he knew the dealers sold automobiles wholesale to each other.
At the conclusion of the evidence the court rendered a judgment for the defendant. The plaintiff filed a motion for new trial which was denied and it excepts.
"Where one lends money to an automobile dealer and to secure the debt takes a bill of sale to an automobile which the lender expressly or by clear implication authorizes the dealer to sell in the regular course of business, the lender constitutes the dealer his agent to collect the proceeds of the sale and to account to him for the amount of the debt; and where the dealer sells the automobile to one who deals with him as a dealer, and in the due course of his business, and to one who is not guilty of participation in the fraudulent disposition of the proceeds of the sale, the lender's title is extinguished, and he cannot assert it against such purchaser, though the bill of sale to secure debt be duly recorded." Gernazian v. Harrison, 66 Ga. App. 689 ( 19 S.E.2d 165); Commercial Credit Corp. v. Citizens Southern National Bank, 68 Ga. App. 393 (2) ( 23 S.E.2d 198); East Atlanta Bank v. Nicholson, 83 Ga. App. 557 ( 63 S.E.2d 699); National City Bank of Rome v. Adams, 30 Ga. App. 219 ( 117 S.E. 285).
In the present case the facts stipulated the sale was made in the "ordinary course of dealings," and it was established that it was a common practice for one automobile dealer to purchase automobiles from another at wholesale. There was no evidence that the defendant was guilty of any fraudulent disposition of the proceeds of the sale. We see no reason why the rule quoted above should not apply to sales made by one dealer to another. There was sufficient evidence to support the verdict and the general grounds are without merit.
Judgment affirmed. Felton, C. J., and Nichols, J., concur.