Auburn Automobile Co. v. Namor Corp. ( 1933 )

My view of this case is that where a manufacturer of automobiles ships cars and sends the bill of lading attached to a sight draft to a bank for collection, and the bank surrenders the bill of lading, and takes in exchange therefor a bill of sale, a trust receipt and a collateral form note, payable to itself, and endorses and delivers the collateral papers to the manufacturer, and the particular cars covered thereby come into the hands of a receiver appointed on a creditor's bill for the affairs of the dealer who executed the note and the collateral papers, that the receiver holds the cars coming into his hands and their proceeds in trust for the purpose of paying the note and sight draft mentioned, because the latter represents the purchase price of the cars the unconditional title to which as between the manufacturer and the dealer was never intended to vest until after full payment of the purchase price. Therefore I think the decree appealed from should be reversed and the cause remanded for appropriate procedure in accord with this view of the transactions involved. The only thing which in my judgment could possibly preclude the manufacturer from enforcing his claim for the purchase price of the cars that have passed into the receiver's hands against the cars themselves or their identified and traced proceeds would be some estoppel pleaded and sustained to bar the claim on the ground of estoppel.

In the case now before us a dealer in automobiles is shown to have obtained possession (not title) of cars purchased from a manufacturer, by executing a bill of sale, trust receipt and collateral note to the bank to which had been sent a bill of lading with sight draft attached for collection before the bill of lading should be surrendered. The bill of lading and that alone entitled the dealer to secure possession of the automobiles from the carrier which had them in charge. The title as distinguished from the right to possession of the cars remained in the manufacturer as long as the bill of lading remained in the bank with sight draft for the purchase price of the cars attached.

The shipment of automobiles by a manufacturer to a dealer through the medium of a bill of lading with sight draft for the purchase price attached, is nothing more than a conditional sale of the automobiles, the condition being that the consignee will pay the draft and thereby take up the bill of lading, secure possession and acquire the title to the cars by so doing. Such being the nature of the shipment with bill of lading subject to payment of a sight draft for the purchase price attached, the bank holding the bill of lading and sight draft was without power as well as without any right to change the nature of the transaction from that of a conditional sale to something else, by surrendering the bill of lading without payment of the sight draft and taking in lieu of payment of the sight draft something else, to-wit: a bill of sale, trust receipt and collateral note.

If, therefore, the automobile dealer in the first instance only acquired possession under a transaction for conditional sale by the means hereinbefore mentioned, was the nature of that transaction changed from that of an outright sale by reason of the mere fact that the manufacturer who held the title under conditional sale, accept from the bank through endorsement to him, the trust receipt, bill of sale and collateral note? My view is that it was not and that the transaction at all times was one of conditional sale and such as should be disposed of on the basis in determining the rights of the parties here involved.

The law is well settled in this State that conditional sales agreements do not have to be recorded to be effective and binding between the parties until the purchase price is paid, and it is also well settled that a conditional sale agreement is binding upon the creditors of the buyer, though the agreement is not recorded. Edwards v. Baldwin Piano Co.,79 Fla. 143, 83 Sou. Rep. 915. The only exception to this rule is that where consent to a resale of the property is given to a dealer who is the conditional vendee, that a bona fide purchaser of the car from the dealer acting under the power of resale given, will thereby acquire a good title as against the conditional seller. Edwards v. Baldwin Piano Co., supra; Commercial Credit Co. v. Neel, 91 Fla. 505; 107 Sou. Rep. 639. It has never been held that a mere creditor of the conditional vendee is a bona fide purchaser under the rule just stated. Thebona fide purchaser must be one who has purchased under the power of resale given by the conditional vendor to his vendee, and this is only because of the rule that one cannot confer a right upon another and then disclaim it to the prejudice of a third party who has acted on the faith of it.

There is no particular magic in the legal efficacy of a "creditor's bill" as against the efficacy of an execution at law levied for the same purpose. A creditor's bill is in aid of and merely enforces the execution issued on a judgment for debt, when the aid in equity is necessary to reach assets that the execution itself cannot reach. It confers no superior right or equity on the complainant and other creditors than they have without such bill, except to reach what cannot otherwise be reached because of the status of the legal title being not in the debtor.

In the case at bar an execution certainly could not have been levied and maintained against the cars while in the dealer's show rooms subject to the transaction I have just related, because the manufacturer's title to the cars evidenced by the antecedent happenings, would preclude that. It seems to me, therefore, that when a receiver appointed under a creditor's bill is in possession of cars the title to which is still in the manufacturer, as a conditional vendor, that the cars should be decreed to be held in trust for the vendor, and that the receiver should be charged as trustee for the vendor with reference to the proceeds of same.

If, as has been suggested, the National City Bank exceeded its authority from the manufacturer, it certainly cannot operate to enlarge the rights of the local dealer and his creditors against the manufacturer's property. The rule is that such an unauthorized act confers no title. Miller v. Chase Co., 88 Fla. 500, 102 So. 2d 553.

No estoppel against the manufacturer has been pleaded or shown and I therefore hold to the view that the manufacturer's claim must prevail against the common creditors of the local dealer who can only assert an interest against the receiver to the extent that they had one against the debtor whom they have by their creditor's bill in equity pursued.