Opinion
October 2, 1963 —
October 29, 1963.
APPEAL from an order of the circuit court for Chippewa county: CLARENCE E. RINEHARD, Circuit Judge. Affirmed.
For the appellants there was a brief and oral argument by Robert W. Dernbach of Eau Claire.
For the respondent there was a brief by Ramsdell, King, Carroll Barland of Eau Claire, and oral argument by George Y. King.
Action in replevin was commenced by Ralston Purina Company (Ralston), respondent, against Toycen Motors and General Motors Acceptance Corporation (GMAC), appellants, to recover three custom-made poultry racks, or their value, attached to certain trucks. Appellants answered and moved for summary judgment. This appeal is from the order denying the motion for summary judgment.
The record shows the following facts as undisputed. Siegfried O. Unterschuetz, the president and prior managing officer of the S. Unterschuetz Sons, Inc. (Unterschuetz corporation), in his individual capacity ordered three International Harvester trucks from Toycen Motors. The trucks were to be used by the Unterschuetz corporation, formerly engaged in the poultry business.
The Unterschuetz corporation in its corporate capacity contracted with Scheels Truck Body for the construction of the three poultry racks in dispute to be attached to the three trucks ordered by Siegfried Unterschuetz. The total price of the three racks was $10,000.
When the trucks arrived, Toycen Motors drove them to Scheels Truck Body where the poultry racks were attached.
On October 12, 1960, the trucks and racks were delivered to Siegfried Unterschuetz. On that date he entered into conditional sale contracts with Toycen Motors for the purchase of the trucks. He made a down payment of only $1,000 on each truck whose cash sale delivery price was approximately $14,500. Toycen Motors required that he supply security additional to the trucks on the conditional sale contracts because it feared that the trucks would depreciate faster than they were paid for during the thirty-six months' credit period. Siegfried Unterschuetz permitted the poultry racks attached to the trucks to be listed on the conditional sale contracts:
"CONDITIONAL SALE CONTRACT _________________ Contract Number "Undersigned seller hereby sells, and undersigned buyer or buyers, jointly and severally hereby purchase(s), subject to the terms and conditions set forth below. . .: ". . . Body Type . . ." "If Truck, Give Tonnage" ------------------------ "Cab, Chassis, Tandem Poultry Rack"The Scheels Truck Body and the Unterschuetz corporation, which had contracted for the construction of the poultry racks, were not parties to these conditional sale contracts.
Toycen Motors assigned the conditional sale contracts to GMAC on October 19, 1960. They were duly filed on October 25, 1960, in the office of the register of deeds for Barron county, Wisconsin. Toycen Motors remained liable to GMAC as guarantor.
On January 10, 1961, Siegfried Unterschuetz entered into Transfer of Equity Agreements with the Unterschuetz corporation. GMAC and Toycen Motors gave approval to the transfer. By each agreement, one for each truck, Siegfried Unterschuetz transferred all of his equity in the "above described property to" the Unterschuetz corporation. In each agreement the described property was an "International" truck. There was no mention of the poultry racks.
Each document recites that GMAC "is now vested with legal title to above-described contract and property covered thereby." The Unterschuetz corporation as transferee agreed "to assume all obligations and abide by all covenants embodied in the aforesaid contract." Siegfried Unterschuetz signed as the original purchaser of the trucks.
The transfer agreements were not filed until October 11, 1961, about nine months after their execution.
On January 19, 1961, Ralston became financially interested in the affairs of the Unterschuetz corporation. On that date it took a note from the Unterschuetz corporation in the amount of $325,000 secured by a chattel mortgage on all of the personal property of the corporation, including the trucks and poultry racks listed on the conditional sale contract.
Ralston later granted further credit. On February 27, 1961, a new note was given in the amount of $405,000, secured by a like chattel mortgage, and on July 21, 1961, another chattel mortgage covering all the property of the corporation was given to secure indebtedness exceeding $505,000.
The Unterschuetz corporation paid Scheels Truck Body for the poultry racks in March or April, 1961, apparently with the money borrowed from Ralston.
In December, 1961, the Unterschuetz corporation was in default in its payments under the conditional sale contracts, and entered into voluntary-surrender agreements with GMAC giving the latter possession of the trucks with poultry racks attached with the right to sell and keep all proceeds. The Unterschuetz corporation was released from all liability under the conditional sale contracts.
The trucks with the poultry racks attached were subsequently sold at a public auction as provided by ch. 122, Stats. Ralston was given due notice of the sale.
Ralston then commenced the present action against appellants in replevin to recover the poultry racks attached to the trucks or the total value of them computed to be $7,500.
Appellants answered, moved for summary judgment, and filed affidavits in support of the motion. An affidavit opposing the motion was filed by the attorney for Ralston. The court by order denied appellants' motion. The present appeal is from that order.
Additional facts are given in the opinion.
The issues presented by the appeal are:
(1) Whether substantial issues of fact exist requiring a trial.
(2) Whether respondent has a right to cross-examine witnesses as a basis for defeating the motion for summary judgment.
(1) Substantial Issues of Fact.
The basic question relating to the defense of the present action is whether Toycen Motors, or GMAC, its assignee, acquired title to, or a valid interest in, the poultry racks superior to that of the chattel mortgage executed by the Unterschuetz corporation to Ralston. Consequently, the title to the poultry racks involved in a series of transactions must be traced in order to determine whether any substantial issues of fact remain requiring a trial.
From the record, it shows that the Scheels Truck Body constructed the racks for the Unterschuetz corporation. When the trucks arrived at Toycen Motors, they were brought to Scheels Truck Body where the racks were attached. At this time, the title to the racks could have passed to the trucks under the law of accession, if the proper facts existed. By this doctrine, when goods of two different owners are incorporated together, the title to the resulting product goes to the owner of the principal goods. Brown, Personal Property (2d ed.), p. 54, sec. 25. The general rule is that the doctrine does not apply when the attached article can be separated from the principal property without damage to the latter. This rule, however, is subject to terms of any agreement, specific intention of the parties, and certain specific rules which are recognized in certain factual circumstances. Brown, supra, page 55. The controlling factor is the intention of the parties whenever that can be ascertained. For general discussions of the doctrine and its application, see 7 Blashfield, Cyc. Automobile Law and Practice (perm. ed.), p. 462, sec. 4574; 1 Am. Jur. 2d, Accession and Confusion, pp. 276-278, secs. 6-8; Anno. 43 A.L.R.2d 813. Toycen Motors which had title to the trucks could have obtained title to the poultry racks when they were attached to the trucks. However, the record does not show whether the racks could be severed without injury to the trucks. Nor does it show whether there was any specific intention of the parties. Therefore, reasonable doubts arise as to whether the title of the racks passed to the trucks, or whether the Unterschuetz corporation, which apparently had title to the racks, intended to retain title when they were attached to the trucks.
Later the trucks were sold by Toycen Motors to Siegfried Unterschuetz. The conditional sale contracts listed the poultry racks as part of the property included in the conditional sale. In the absence of a provision expressly covering accessories to motor vehicles, property which can be detached without injury is not considered included in the terms of a conditional sale contract. See Lee, Accessories Attached to Automobiles Sold Under Title-Retaining Instruments, 19 Temple Law Quarterly (1945), 89, 99. Siegfried Unterschuetz by his affidavit in support of the motion for summary judgment attempted to explain the reason for listing the poultry racks:
"That attached to each of the foregoing motor vehicles were poultry racks which had been contracted for from Scheels Truck Body of Hillsdale, Wisconsin, and that said conditional sales contracts so executed by affiant made reference to the poultry racks attached to said motor vehicles.
"That each of said three motor vehicles were purchased by affiant for use in connection with the business affairs and activities of S. Unterschuetz and Sons, Inc. who was then engaged in the business of poultry processing at Chetek, Wisconsin.
"That said motor vehicles and poultry racks thereto attached were units necessary in the operation of the day to day business activities of S. Unterschuetz and Sons, Inc. and Toycen Motors were given the security of the poultry racks even though they were supplied by Scheels Truck Body of Hillsdale, Wisconsin, as said poultry racks were attached to the motor vehicle units."
LaVerne Toycen, partner of Toycen Motors, also attempted to explain in his affidavit the reason for including the poultry racks in the conditional sale contracts:
"3. That although said trucks were purchased for the use of S. Unterschuetz Sons, Inc., for financial reasons the said Siegfried O. Unterschuetz purchased the same in his own name; and that because the down payment made by the said Siegfried O. Unterschuetz was low, affiant requested additional security because the trucks would depreciate in value in a greater proportion than the contracts would be paid.
"4. That in accordance with said request, the said Seigfried O. Unterschuetz agreed to the listing on each contract of conditional sale a poultry rack which had been purchased from Scheels Truck Body of Hillsdale, Wisconsin; and that said poultry racks were immediately attached to said trucks upon the delivery thereof, and said trucks and poultry racks as a unit were used in the business of S. Unterschuetz Sons, Inc."
The affidavits do not show the intention of the parties with respect to what type of security was to be given. It is evident that conflicting inferences from these affidavits can reasonably be drawn. One is that the intention of the parties was that title to the poultry racks was retained by the Unterschuetz corporation and that Siegfried Unterschuetz, acting on behalf of the corporation, agreed to give Toycen Motors a lien, or other interest, albeit unrecorded, to Toycen Motors. The other inference is that the parties intended that the title to the poultry racks was to pass to Toycen Motors under the conditional sale contracts.
The affidavit of the attorney for respondent challenged the authority of Siegfried Unterschuetz to bind the Unterschuetz corporation. Appellants did not submit a counteraffidavit showing that Siegfried Unterschuetz had the requisite authority in this regard.
These doubts and conflicting inferences are not resolved by subsequent transactions. The Transfer of Equity Agreements entered into between Siegfried Unterschuetz and the Unterschuetz corporation did not mention the poultry racks as part of the equity transferred. Conflicting inferences, again, can be drawn: If the poultry racks were part of the trucks there was no necessity to list them; if the Unterschuetz corporation had retained title to them, the Transfer of Equity Agreements did not apply.
The Transfer of Equity Agreements although entered into about a week before Ralston became interested in the financial affairs of the Unterschuetz corporation were not filed until about nine months later. The conditional sale contracts were duly filed and were of public record to subsequent creditors. However, ambiguity exists as to the poultry racks listed on them. By his affidavit, Siegfried Unterschuetz states:
"That at or prior to the execution of the chattel mortgages by S. Unterschuetz and Sons, Inc. in favor of Ralston Purina Company the duly authorized representatives, agents and employees of Ralston Purina Company knew, based upon verbal conversation with affiant, or upon their examination of the books and records of S. Unterschuetz and Sons, Inc., that said motor vehicles and poultry racks were being purchased from Toycen Motors pursuant to a title retention contract which had been assigned by Toycen Motors to General Motors Acceptance Corporation."
Whether the employees or agents of Ralston had knowledge or had reason to know that the poultry racks were previously incumbered either by accession or by a security arrangement bears to their good faith in contending it obtained a superior right to that of Toycen Motors or GMAC. To state that Ralston, through its agent or employees, had such knowledge by verbal conversations or by examination of the books without giving evidentiary facts relating the conversations or examinations under the circumstances are mere conclusions of law.
Appellants have made a strong case for being granted summary judgment. The affidavits in support of the motion set forth certain evidentiary facts surrounding the transactions involving the title to the poultry racks. However, they fail to reveal the necessary evidentiary facts directly relating to the material issues of the detachability of the poultry racks, and the specific intention of the parties in their respective transactions. Home Savings Bank v. Bentley (1958), 5 Wis.2d 19, 23, 92 N.W.2d 377. The doubts and conflicting inferences arising from the record which shroud these material issues are sufficient to defeat the motion. Voysey v. Labisky (1960), 10 Wis.2d 274, 277, 103 N.W.2d 9.
The affidavit that Ralston's employees and agents had knowledge of the superiority of GMAC's interest is based on conclusions. It does not set forth evidentiary facts which are sufficient to establish a defense in the present case for appellants to prevail on summary judgment. Stevenson v. Barwineck (1959), 8 Wis.2d 557, 560, 99 N.W.2d 690.
Therefore, substantial issues of fact still remain in the case, and it was proper for the court to deny the motion for summary judgment.
(2) Right to Cross-Examine.
Respondent contends as another ground for denying the motion for summary judgment that under the circumstances of this case it is entitled to the right of cross-examining certain persons. This contention is rendered immaterial in view of our holding that the motion was properly denied.
By the Court. — Order affirmed.