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In Southeast Equipment Company, Inc. v. Office of State Police, Troop B, 437 So.2d 1184 (La.App. 4th Cir. 1983), plaintiff purchased a piece of heavy equipment from a dealer.
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No. CA-0646.
September 13, 1983.
APPEAL FROM CIVIL DISTRICT COURT, PARISH OF ORLEANS, STATE OF LOUISIANA, HONORABLE REVIS O. ORTIGUE, J.
Charles D. Lancaster, Jr., Metairie, for appellant.
Ronald J. Hof, New Orleans, for appellee.
Before REDMANN, C.J., and GULOTTA and LOBRANO, JJ.
In this case involving the sale of a stolen movable, we are confronted with the competing possessory rights of a true owner and an innocent purchaser. From a judgment recognizing the purchaser's superior right to possession, the owner appeals. We affirm.
According to the stipulated facts, Southeast Equipment Co., Inc. (Southeast) purchased, in good faith, a stolen 1979 Caterpillar Loader for $54,000.00 from C. Ogle, through his agent Hattaway International, Inc. (Hattaway). Hattaway is a corporation that customarily sells heavy equipment such as this loader, but Ogle is not. Ogle had consigned the loader to Hattaway for sale.
The stipulation does not state that Southeast was a "good faith" purchaser. The stipulation states: "Southeast did not know that the loader was stolen or that Hattaway could not sell it." See also LSA-C.C. Art. 523 for a definition of good faith. Conner acknowledges in brief, however, that Southeast purchased in "good faith".
About two weeks after the sale, the Louisiana State Police seized the machine from Southeast, pursuant to a search warrant alleging it was stolen. Southeast thereafter filed this mandamus action against the State Police to demand return of the machine. J.W. Conner and Son Construction Co. (Conner), owner of the loader at the time it was stolen, intervened and also sought possession.
The trial court rendered judgment ordering the State to return the machine to Southeast as a "good-faith possessor" until Conner reimbursed Southeast the $54,000.00 purchase price. The trial judge reached his decision based on LSA-C.C. Art. 524, which states in pertinent part:
"The owner of a lost or stolen movable may recover it from a possessor who bought it in good faith at a public auction or from a merchant customarily selling similar things on reimbursing the purchase price."
According to the trial judge, Southeast had a "greater right" to the movable because LSA-C.C. Art. 524 is an "exception" to LSA-C.C. Art. 521, which provides that a person "who has possession of a lost or stolen thing may not transfer its ownership to another."
Citing LSA-C.C. Art. 521 and LSA-C.C. Art. 2987, Conner contends, on appeal, that neither the suspected thief Ogle, nor his agent, Hattaway, could transfer ownership of the stolen movable. Conner argues that LSA-C.C. Art. 524 has no application because Southeast purchased the machine from Ogle, who is not a "merchant customarily selling" heavy equipment. We disagree.
LSA-C.C. Art. 2987 provides: "The object of the mandate must be lawful, and power conferred must be one which the principal himself has a right to exercise."
LSA-C.C. Art. 524 does not expressly require that the "merchant customarily selling similar things. . ." be the apparent owner of the thing sold; it specified that the good faith purchaser buy it "from" the merchant. We interpret this language to encompass not only direct sales of movables from the merchant's own inventory, but also consignment sales, as in our case, where the merchant is acting as an agent on behalf of someone else who purports to be the owner.
Under our interpretation of LSA-C.C. Art. 524, the sine qua non for application of the article is a dealing between the good faith purchaser and a merchant customarily selling similar things. We conclude that if such a merchant conducts the sale, LSA-C.C. Art. 524 applies, whether the merchant is acting as apparent owner or only as an agent for another. This interpretation is consistent with the legislative recognition of the need for balancing the rights of a good faith purchaser and an owner, and comports with the preservation of security of transactions.
LSA-C.C. Art. 524 is a reproduction of former LSA-C.C. Art. 3507 of the Louisiana Civil Code of 1870, as incorporated in the Revised Civil Code by Acts 1979, No. 180, and comes from the Code Napoleon, Art. 2280. For a history of the rules governing the conflict between an owner and a good faith purchaser of a stolen movable, see "Comment, Sales of Another's Movables — History, Comparative Law, and Bona Fide Purchasers", 29 La.L.Rev. 329 (1969).
We are further persuaded to reach this conclusion by the ambiguous wording of the act of sale in our case. Hattaway's printed "BILL OF SALE _ _ _ _ EQUIPMENT" contains the following warranty of title to Southeast, the "Grantee":
Although the bill of sale is signed by Hattaway as "Agent for Owner: C. Ogle. . .", it conveys an impression that Hattaway is the "undersigned" who is selling the machine and warranting the title. Ogle did not sign the bill of sale. A copy of the sales agreement between Hattaway and Ogle, which would have further clarified Hattaway's status as agent, was not incorporated in the sale document. Under these circumstances, Southeast could justifiably have believed that it was dealing with an established heavy equipment seller who had a right to sell the loader. Accordingly, we conclude that Southeast purchased the stolen movable "from a merchant customarily selling similar things", and "in good faith" within the meaning of LSA-C.C. Art. 524.
We are mindful of the competing equities between the true owner and the good faith purchaser who are both innocent victims. Nonetheless, interpreting the language of LSA-C.C. Art. 524, we must give effect to the Legislature's apparent intent to weigh the equities in the purchaser's favor under these circumstances. Conner's recourse may be against Hattaway or any other party responsible for the loss.
See Restatement (Second) of Torts § 233; Restatement (Second) of Agency § 343.
Having so concluded, we affirm the judgment of the trial court.
AFFIRMED.
REDMANN, C.J., dissents and assigns reasons.
The basic posture of this suit is that Southeast Equipment, a Louisiana corporation, demands mandamus against the Louisiana state police to return to Southeast a 1979 Caterpillar 950 loader, serial no. 81J12566, that the police seized under a warrant. The affidavit by Trooper First Class Joseph Mura in support of that warrant's issuance recites that
"On 11-13-81 . . . Sgt. P. Hamburger was contacted by one Det. Perry Young of the Hillsbourgh County S[heriff's] O[ffice], Tampa, Florida. Det. Young advised that he had received information from one J.B. Cole W/M 38, of 501 E. Cooper St., West Memphis, Arkansas, that a 1979 Caterpillar Model 950 front end loader serial # 81J12566 was located in the New Orleans area at [a described location]. Det. Young further advised that said vehicle was reported stolen on 10-28-81 [ the date of Southeast's purchase of it in Florida from Hattaway as, purportedly, agent for Ogle] . . . . At approximately 4:50 p.m. this date [of the seizure] affiant telephonically contacted Mr. Cole. Subject identified himself as the general manager of the Razorback Concrete Co. of 501 E. Cooper West Memphis Arkansas. Mr. Cole stated that on 11-03-81 [ six days after Southeast's purchase and the report of the theft] he had sent one E.J. Hart W/M 49 head mechanic of Razorback Concrete to New Orleans to inspect the above front end loader in order to purchase same. Mr. Hart did go and returned with his report on the vehicle and its serial No. 81J12566. Mr. Cole in the morning hours of 11-13-81 [the date of the affidavit, warrant and seizure] while in the process of purchasing said vehicle, contacted the Rozier Co. of Tampa FL. the original seller of said vehicle. Rozier representatives advised that a vehicle of the description of the above front end loader had been stolen several weeks previously from the J.W. Conner and Son Construction Co. of Tampa FL. Mr. Cole advised that a short time later he was contacted by Det. Perry Young and reconfirmed the serial no. of said equipment."
If Razorback Concrete in Arkansas so easily learned that it was a stolen loader that Southeast was trying to peddle just six days after buying it in Tampa, why did not Southeast learn that it was a stolen loader that Hattaway was trying to sell (apparently the same day it was reported stolen). (As an aside, one wonders why professional seller Hattaway, which proclaims itself "The Company Founded on Integrity," did not know that the loader was stolen.)
The stipulation that Southeast did not know that the loader was stolen is not a stipulation that Southeast was in good faith for purposes of La.C.C. art. 524. Art. 521 declares one in good faith "unless he knows, or should have known, that the transferor was not the owner." (Emphasis added.) There is no stipulation that Southeast should not have known that the loader was stolen. Judging from the quoted affidavit, the least that can be said is that Southeast does not appear to be a good faith purchaser.
Thus, even if Louisiana law governed the effect of the Florida sale of a thing stolen in Florida from a Florida owner, the judgment appealed from should be reversed and there should be judgment for the owner.
The intriguing question of La.C.C. 524's application to one who in good faith bought from a merchant, knowing the merchant to be the agent for a non-merchant owner, need not be decided, because Florida law governs this case (and Southeast is not in good faith for Louisiana law purposes anyway). But one may note the importance of articles 2505 and 3013 in the overall scheme of the Louisiana Code. Art. 2505 entitles a buyer, in case of loss of the thing because of a third person's claim ("eviction"), to recover the price from the seller, "[e]ven in case of no warranty . . . ." On the other hand, art. 3013 provides that an agent has no responsibility "to those with whom he contracts, [except] when he has bound himself personally, or when he has exceeded his authority without having exhibited his powers [of attorney]." Thus the merchant would appear to be liable to return to the buyer the price of a stolen thing if the merchant were the seller, but not if the merchant were but the agent of the seller. The legislature by the 1979 revision of the property articles did not intend to shield professional sellers from responsibility for selling stolen items, for that article is substantially identical to its source, art. 3507 as worded in 1870, and thus presumably not in conflict with article 2505 of the 1870 Code. The professional seller would thus owe the restitution of the price to the good faith buyer under art. 2505 (and thus the owner who pays it to the buyer under art. 524 would be entitled to reimbursement from the seller by legal subrogation to the buyer's right against the seller, C.C. 2161(3)). But if the professional seller who sells as agent can escape liability to the buyer to reimburse the price because of art. 3013's general rule that the agent is not personally liable, the result would be that an owner who was forced to repay the price to the buyer under art. 524 would not get reimbursement by subrogation to the buyer's right against the professional seller. The inconsistency would be that the courts would tell the owner (a) you must repay the buyer from "merchant, agent for X" under art. 524 because the buyer bought not from X but from the merchant, but (b) you cannot recover from the merchant because the buyer did not buy from the merchant but from X. The intriguing question stated deserves a firmer factual foundation before being decided than that present here, where Southeast is not shown to be a good faith purchaser.