Simson v. Moon , 137 Ga. App. 82 ( 1975 )

Marshall, Judge.

This appeal involves a dispute as to the ownership of a wrecker truck which was sold twice by the same seller; first to the appellee, Moon, on June 22, 1973, and then to appellant, Simson, on November 13, 1973. The facts, according to the depositions and affidavits of the parties show that Moon bought the wrecker truck from Hollowell, a wrecker truck dealer, on June 22, 1973, paying $8,840 cash and receiving in exchange an invoice and a signed manufacturer’s certificate of origin. Moon did not see the wrecker truck or know where it was but understood from Hollowell that the truck was to have the wrecker equipment mounted in Chattanooga, Tennessee, and that delivery would be made to Moon thereafter.

On November 13,1973, Hollowell induced Simson to buy the same truck. Without knowledge of the prior sale to Moon, Simson secured financing and paid $8,700 to Hollowell for the truck. Again the truck was unseen by the purchaser, but Simson was told by Hollowell that it was in Chattanooga having wrecker equipment installed. On November 16, an agent of Simson’s went to Chattanooga and accepted delivery of the truck. In early December, Hollowell sent to Simson a form MV-2 (Georgia application for tag and title) which was signed on the back by Hollowell indicating transfer of the vehicle from Hollowell to Simson and warranting the title of same.

On January 25, 1974, Moon discovered that Simson had possession of the wrecker truck, at which time Moon applied for and obtained a Georgia Certificate of Title. Hollowell apparently has absconded with the proceeds from both sales and was not named as a party to this lawsuit.

Moon brought suit to recover the vehicle from Simson, who admitted possession but denied Moon’s claim of ownership. Both parties filed motions for summary judgment with supporting affidavits and depositions, and the trial court granted Moon’s motion, denied Simson’s, set supersedeas bond of $9,000, and certified this judgment for immediate review. Held:

The issue is whether or not there was an "entrusting” of the truck under UCC § 2-403 (2) and (3) (Code Ann. § 109A-2 — 403 (2) and (3)), so as to allow Hollowell to pass good title to Simson.

The rule in Georgia under its former Sales Act (Code Ann. § 96-111) had been, "The seller can convey no greater title than he has himself. There is no 'market overt’ in Georgia.” Arnold v. Conner, 100 Ga. App. 503 (1) (111 SE2d 638); 77 CJS 1099, Sales, § 291. While the spirit of this rule has been carried forward in Article 2 of the Uniform Commercial Code (UCC § 2-403 (1)), a prominent exception to it is found in the "entrusting” provision of that Code section, UCC § 2-403 (2) and (3) (Code Ann. § 109A-2 — 403 (2) and (3)). It provides:

"(2) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.

"(3) 'Entrusting’ includes any delivery or any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor’s disposition of the goods have been such as to be larcenous under the criminal law.”

The classic situation to which this Code section applies is found in Rockwin Corp. v. Kincaid, 124 Ga. App. 570 (184 SE2d 509). There the manufacturer of a mobile home (plaintiff) delivered a new mobile home to a dealer with an invoice and instructions that the dealer was not to use the invoice to transfer title, but that the title could be transferred only through the manufacturer’s certificate of origin, which it did not send. The dealer sold the mobile home to the defendant for cash without the certificate of origin. Apparently the dealer absconded with the cash or for some other reason could not pay the manufacturer. The manufacturer sued the defendant purchaser contending that the purchaser did not have a Georgia certificate of title as required under Code Ann. § 68-415, and therefore acquired no "right, title or interest in and to” the mobile home.

This court held that because the title requirements applied only to the purchase of a vehicle which had been previously titled in Georgia, the absence of a certificate of title did not affect the purchaser’s claim of ownership. Since the mobile home had been entrusted to the dealer and the dealer was "a merchant who deals in goods of that kind,” the dealer could convey good title to the purchaser under UCC § 2-403 (2) and (3). The defendant purchaser was found to be a "buyer in ordinary course of business” and his claim of ownership was good against the original owner, manufacturer.

Appellant, Simson, contends that the Rockwin case controls the case sub judice. We agree. The obvious differences in the two cases we believe are differences without distinctions. Unlike the manufacturer in Rockwin, Moon did not deliver the truck to the dealer with instructions limiting latter’s authority to sell, but instead left it either with the dealer or the dealer’s apparent agent after paying for it without taking possession. His conduct, in effect, amounted to "any acquiescence in retention of possession” under the Code provision. Moon’s acquiescence in leaving the truck with the dealer amounts to an estoppel, which is the underlying principle of section 2-403 (2) and (3). Cf. DePaulo v. Williams Chevrolet-Cadillac, Inc. (Pa.), 3 UCC Rptg. Serv. 600. Even though the dealer here did not have actual possession of the truck at the time of the sale to Simson, as did the dealer in the Rockwin case, the dealer nevertheless manifested his ability to control and dispose of the truck as if it were in his inventory. Simson did not have actual knowledge of the prior sale and was not put on notice of any unusual circumstances such as would deny him of the status of a "buyer in ordinary course of business.”¹ Simson did all he could to protect himself by taking possession of the truck within three days after purchasing it and by extracting from the dealer a transfer of registration and warranty of title. Moon has not shown such diligence.

The general thrust of the cases involving "entrusting” of goods to a dealer is aimed at the protection of the purchaser, where the latter acts in "good faith” and the owner takes the risk by placing or leaving his chattel with a merchant of his own choosing who could convert or otherwise misdeal it. See Godfrey v. Gilsdorf, 86 Nev. 714 (476 P2d 3); Palmer v. Booth & Cowley, (N. Y.) 7 UCC Rptg. Serv. 182; Linwood Harvestore v. Cannon, 427 Pa. 434 (235 A2d 377); Couch v. Cockroft, (Tenn.) 490 SW2d 713; Humphrey Cadillac & Oldsmobile Co. v. Sinard, 85 Ill. App. 2d 64 (229 NE2d 365); Sherrock v. Commercial Credit Corp., (Del.) 290 A2d 648; Apeco Co. v. Bishop Mobile Homes, (Tex.) 506 SW2d 711, 3A Bender’s UCC Service, Sales and Bulk Transfers § 10.06 [2]. The Georgia courts have similarly protected the good faith purchaser in the "entrusting” situations, both under the UCC (Code Ann. § 109A-2 — 403 (2) and (3)) (see Rockwin Corp. v. Kincaid, supra; Christopher v. McGehee, 124 Ga. App. 310 (183 SE2d 624); Charles S. Martin Dist. Co. v. Banks, 111 Ga. App. 538 (142 SE2d 309)) and under the old sales law (see Peoples Loan &c. Corp. v. McBurnette, 100 Ga. App. 4 (2, 3) (110 SE2d 32); Dealers Discount Corp. v. Trammell, 98 Ga. App. 748 (106 SE2d 850); Wolfe v. Smith, 80 Ga. App. 136 (55 SE2d 675); Capital Auto. Co. v. Ward, 54 Ga. App. 873 (189 SE 713); Pilcher v. Enterprise Mfg. Co., 36 Ga. App. 760 (138 SE 272). These latter pre-UCC cases reach the same result based in varying degrees on "estoppel” or "apparent authority” or both. The protection afforded the purchaser "is merely a special application of the broad equitable principle that where one of two innocent persons must suffer loss by reasons of the fraud or deceit of another, the loss should rightly fall upon him by whose act or omission the wrongdoer has been enabled to commit the fraud.” DePaulo v. Williams Chevrolet-Cadillac, Inc., supra, p. 603. See also, Blount v. Bainbridge, 79 Ga. App. 99, 103 (53 SE2d 122); Morris v. Courts, 59 Ga. App. 666, 672 (1 SE2d 687).

Argued June 2, 1975 Decided November 26, 1975 Rehearing denied December 16, 1975

Summary judgment entered for appellee, Moon, is reversed with direction to enter judgment in favor of appellant, Simson.

Judgment reversed with direction.

Pannell, P. J., Quillian, Clark, Stolz and Webb, JJ., concur. Bell, C. J., Deen, P. J., and Evans, J., dissent. Hansell, Post, Brandon & Dorsey, Jefferson D. Kirby, III, Paul Oliver, for appellant. Gaines C. Granade, for appellee.

1 A "buyer in ordinary course of business” is defined by UCC § 1-201 (9) (Code Ann. § 109A-1 — 201 (9)) as "a person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind.” See Medico Leasing Co. v Smith (Okla.), 457 P2d 548; Couch v. Cockroft (Tenn.), 490 SW2d 713.