Gallas v. Car Biz, Inc.

OPINION

LAGARDE, Justice.

Appellant Mark Gallas appeals from a judgment notwithstanding the verdict (JNOV) in favor of appellee Car Biz, Inc. involving disputed claims of ownership of an automobile. In two points of error, appellant contends that the trial court erred in: (1) granting appellee’s motion for JNOV, and (2) denying appellant’s motion for judgment. We overrule the points and affirm the trial court’s judgment.

FACTUAL BACKGROUND

Randy Darden, vice-president of appellee, a licensed car dealership, testified that in June 1993, he met with Kevan Stamper, d/b/a Heart Attack Autos, and discussed selling Stamper some motor vehicles. Before entering into any transactions with Stamper, ap-pellee verified with the dealer relations division of the state highway department that Stamper was a licensed used car dealer in good standing.

On July 16,1993, through a sealed bid on a sight draft, appellee purchased a used 1992 Ford Explorer from Gillman Companies. Gillman Companies deposited the draft on July 23, 1993.¹ On July 19, 1993, Darden negotiated the purchase price of the vehicle with Stamper, and Stamper gave appellee a three-day sight draft for the vehicle. Believing the draft to be good, Darden considered Stamper the owner of the vehicle and allowed him to take possession of the vehicle. Dar-den did not give Stamper the certificate of title; rather, he began the title process.

Appellant testified that, in the meantime, he saw Stamper’s advertisement in the newspaper to sell a 1992 Ford Explorer. Appellant contacted Stamper and met Stamper in the parking lot of a filling station. On July 22, 1993, Stamper sold appellant the vehicle, after negotiating a purchase price of fourteen thousand dollars, which appellant paid. Stamper gave appellant possession of the vehicle, but not a certificate of title. Instead, appellant filled out an application for title and relied on Stamper’s representation that title was “in transit or in transfer” and that all paper work would be sent to Austin where title would be transferred into appellant’s name. Appellant admitted that he did not try to ascertain the owner named on the title by calling the proper agency or doing a title search. Appellant believed that title was in the name of Heart Attack Autos.

Before the title process was completed, Darden explained that the bank notified ap-pellee that Stamper’s draft was “no good” and, thus, title was never transferred. Ap-pellee reported the vehicle stolen. While appellant was driving the vehicle, he was stopped by the police and arrested for driving a stolen vehicle. Because appellee had signed the reassignment provision on the reverse side of the certificate to Heart Attack Autos, Darden applied with the State for a new title. On October 26, 1993, the State issued an original certificate of title naming appellee as the owner.

Appellant sued appellee seeking a declaration that appellant was the owner of the vehicle and specific performance of title transfer. Appellant also pleaded conversion and estoppel. Appellee answered and counterclaimed seeking a declaration of ownership and specific performance of possession of the vehicle. Appellee also pleaded conversion and sought damages for the loss of the vehicle. The jury returned a verdict in appellant’s favor finding: (1) Stamper purchased the vehicle from appellee; (2) appel-lee delivered the vehicle to Stamper under a purchase transaction; (3) appellee entrusted possession of the vehicle to Stamper; (4) Stamper was a merchant who dealt in the business of used automobiles; (5) appellant was a buyer in the ordinary course of business; and (6) Stamper was not appellee’s agent in selling the vehicle to appellant. Ap-pellee filed a motion for JNOV, which the trial court granted. The trial court’s order declared that appellee was the owner of the vehicle and ordered appellant to deliver the vehicle to appellee.

STANDARD OF REVIEW

A motion for JNOV should be granted when the evidence is conclusive, and one party is entitled to recover as a matter of law. Phar-Mor, Inc. v. Chavira, 853 S.W.2d 710, 713 (Tex.App.— Houston [1st Dist.] 1993, writ denied). For a trial court to disregard a jury’s findings and grant a motion for JNOV on the evidence, it must determine whether the evidence established an issue as a matter of law, and the jury was not free to make contrary findings. John Masek Corp. v. Davis, 848 S.W.2d 170, 173 (Tex.App.—Houston [1st Dist.] 1992, writ denied). When the trial court does not specify its reasons for granting a JNOV, the appellant has the burden to discredit each ground in the appellee’s motion. Friedman v. Houston Sports Ass’n, 731 S.W.2d 572, 573 (Tex.App.—Houston [1st Dist.] 1987, -writ ref'd n.r.e.).

CERTIFICATE OF TITLE ACT

Appellee’s motion for JNOV asserts that the evidence conclusively established that appellant purchased a vehicle from a third party, Stamper, who did not have, and could not pass, “good title” pursuant to the Certificate of Title Act (the Act). See Tex. Rev.Civ.StatAnn. art. 6687-1, §§ 33,² 53³ (Vernon 1977 & Supp.1995). In response, appellant argues that section 2.403(b) of the Texas Business and Commerce Code (the Code) controls the disposition of the case, and that appellee’s entrustment of the vehicle to Stamper gave Stamper the power to transfer all rights in the vehicle to appellant. See Tex.Bus. & ComCode Ann. § 2.403(b) (Tex. UCC) (Vernon 1994).⁴ Appellant argues that this provision prevails over the Act because section 65 of the Act expressly provides that in case of conflict between the Act and the Code, the Code provision controls.⁵ See Tex. Rev.Civ.StatAnn. art. 6687-1, § 65 (Vernon 1977).

This Court addressed similar arguments in Morey v. Page, 802 S.W.2d 779, 783-84 (Tex.App.—Dallas 1990, no writ), and Pfluger v. Colquitt, 620 S.W.2d 739, 741-42 (Tex.Civ.App.—Dallas 1981, writ ref'd n.r.e.). In both of those cases, after harmonizing the respective provisions, this Court held that the Act controls transactions involving the sale of motor vehicles without a proper transfer of the certificate. Morey, 802 S.W.2d at 784; Pfluger, 620 S.W.2d at 741-42. This Court based its decisions on the following reasoning:

As we interpret section 2.403(b) of the Code, the merchant’s power “to transfer all rights of the entruster” is intended to give the merchant the same power to transfer which the owner of the goods can exercise himself.... The power of the owner of a motor vehicle to transfer the title is limited by the Certificate of Title Act, and specifically by section 33, which provides that no motor vehicle shall be disposed of at a subsequent sale and no title shall pass without a transfer of the certificate in the manner prescribed by the Act. Under this provision, if the owner has no power to dispose of the vehicle without a proper transfer of the certificate, then no merchant to whom the vehicle is entrusted has the power to dispose of it without a proper transfer of the certificate ....

If the contrary interpretation were adopted, a dealer to whom an owner has entrusted his vehicle for some other purpose, such as repairs, would have the power to sell the vehicle and pass title to a purchaser without a proper transfer of the certificate, thus defeating the purpose of the Certificate of Title Act, which is to prevent theft of motor vehicles, traffic in stolen vehicles, and sale of encumbered vehicles without disclosure of existing liens.

Pfluger, 620 S.W.2d at 741-42. This interpretation gives meaning to both statutes and obviates any necessity to resort to section 65 of the Act to resolve any apparent conflict. Id. at 742. Because this case involves the sale of a motor vehicle without a proper transfer of the certificate of title, we hold that it is, likewise, governed by the Act.⁶

Section 51 of the Act, in relevant part, provides:

It shall hereafter be unlawful for any person, either by himself or through any agent, to offer for sale or to sell ... any motor vehicle registered or licensed in this State without then and there having in his possession the proper receipt or certificate of title covering the motor vehicle so offered.

Tex.Rev.Civ.StatANN. art. 6687-1, § 51 (Vernon 1977). The failure to comply with this provision renders the sale void and passes no title. Id. § 53; Boswell v. Connell, 556 S.W.2d 624, 625-26 (Tex.Civ.App.—Beaumont 1977, writ ref'd n.r.e.). In Boswell, a dealer, Boswell, sold and gave possession of a vehicle to Jenkins, another dealer, with Boswell retaining the certificate of title. Jenkins paid for the vehicle with a sight draft, which was later returned unpaid. Boswell, 556 S.W.2d at 625. Without possession of the certificate of title, Jenkins sold the vehicle to Connell, a nondealer, but could not give him the certificate of title. Id. Because Jenkins did not have, and therefore could not transfer, the certificate of title to Connell, the court held that the subsequent sale from Jenkins to Connell was void as to Boswell and no title passed. Id. at 625-26.

The facts of Boswell are nearly identical to the facts of this case. Like Boswell, appellee sold and gave possession of the vehicle to another dealer, Stamper, retaining the certificate of title. Stamper gave appellee a sight draft, which was “no good.” Appellant, a nondealer, purchased the vehicle at a subsequent sale from Stamper who did not have, and therefore could not transfer, the certificate of title. Appellant made no attempt to distinguish Boswell in his brief or in his response to appellee’s motion for JNOV. We hold that the sale from Stamper to appellant was void as to appellee and did not pass title pursuant to the Act.

Relying on In re Bailey Pontiac, Inc., 139 B.R. 629, 634 (Bankr.N.D.Tex.1992), appellant argues that the custom and practice among car dealers is to pass title at the time of the delivery of the vehicle. However, the court in Bailey confined that particular custom and practice to the auction industry. See id. at 634. Thus, Bailey is not applicable to these'facts.

Finally, appellant argues that the legislature enacted section 2.403 of the Code to shift the loss to appellee based on equity principles. However, we have already concluded that the Act controls the disposition of this case. Further, appellant is not without a remedy because a sale between the parties is not rendered void by non-compliance with the Act. Cash v. Lebowitz, 734 S.W.2d 396, 398 (Tex.App.— Dallas 1987, writ ref'd n.r.e.); Pfluger, 620 S.W.2d at 742. Because appellant paid Stamper for the vehicle, any cause of action appellant may have is against Stamper. See Drake Ins. Co. v. King, 606 S.W.2d 812, 818 (Tex.1980). Accordingly, we conclude that the trial court properly granted appellee’s motion for JNOV and properly denied appellant’s motion for judgment. We overrule appellant’s first and second points of error.

We affirm the trial court’s judgment.

WRIGHT, J. dissenting.

1 . Because the sight draft was not deposited until July 23, appellant disputes when appellee received the certificate of title. Appellant, however, does not dispute that appellee was assigned and actually received the certificate.

2 . Section 33 provides, in relevant part, that:

No motor vehicle may be disposed of at a subsequent sale unless the owner designated in the certifícate of title transfers the certificate of title, at the time the motor vehicle is transferred, on a form prescribed by the Department. ... No title to any motor vehicle shall pass or vest until the transfer is so executed.

Tex.Rev.Civ.Stat.Ann. art. 6687-1, § 33 (Vernon Supp.1995).

3 . Section 53 provides that:

All sales made in violation of this Act shall be void and no title shall pass until the provisions of this Act have been complied with.

Id. § 53 (Vernon 1977).

4 . Section 2.403(b) of the Code provides that:

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 entrus-ter to a buyer in the ordinary course of business.

TexJBus. & Com.Code Ann. § 2.403(b) (Tex. UCC) (Vernon 1994).

5 .The dissent relies on sections 2.401 and 2.403(a) of the Code to establish that the Code prevails over the Act. See id. §§ 2.401, 2.403(a) (Vernon 1994). Appellant, however, failed to assert these provisions in a point of error and support them by argument and authorities in his brief. An appellate court may not reverse a judgment of a trial court for a reason not raised in a point of error. Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex.1993). Accordingly, these arguments are not properly before this Court, and the dissent is in error in its reliance on them.

6 . Although appellant asks this Court to adopt the reasoning of the concurring opinion in Pfluger, we decline to do so.