Commercial Credit Co. v. Barney Motor Co.

SHENK, J.

The plaintiff sued Bernard Negra, doing business under the name of Barney Motor Company, and one Oscar Tonolla for possession of a Plymouth sedan automobile or its value, and for damages for the alleged wrongful detention thereof. American Trust Company filed a third party claim. The court made its findings of fact from which it concluded that title resided in the third party claimant, and rendered judgment accordingly. The plaintiff appealed.

On April 29, 1935, the plaintiff obtained title to the automobile from James W. McAllister Company, Inc., Chrysler distributor. Negra was a retail dealer of Chrysler and Plymouth automobiles at Los Banos. The Plymouth automobile in question was delivered to Negra under a trust receipt executed by him to the plaintiff, pursuant to which the latter retained title to the car. Negra agreed to hold the automobile in trust for the plaintiff and not to lend, mortgage, pledge, encumber, operate, demonstrate or use it. He was, however, authorized upon consent of the plaintiff to sell the automobile for cash and deliver the proceeds to the plaintiff.

Oscar Tonolla was a brother-in-law of Negra and worked for him as a salesman. On May 7, 1935, Negra and Tonolla appeared at the office of the American Trust Company in Los Banos and applied for a loan on the sale of the car from Negra to Tonolla. A conditional sale contract was executed by Negra as seller and Tonolla as buyer, and was assigned by Negra to the bank. The bank advanced to Negra the purchase price of the car, and possession of the car was delivered to Tonolla. Negra, however, did not deliver the proceeds to the plaintiff. Registration of the automobile was effected with the division of motor vehicles showing Tonolla as the registered owner and the bank as legal owner thereof.

[720]

The bank’s representative made no inquiries of Negra as to whether the automobile sold to Tonolla was “floored”, that is, financed under a trust receipt or similar title retention document. There was testimony that the bank’s officer was aware of the custom of “flooring” cars for retail dealers, but that he had no actual knowledge that this particular car was financed and in fact owned by the plaintiff. It was also in evidence that Tonolla had no knowledge that Negra had taken the Plymouth automobile under a trust receipt or that Negra received any financial assistance with respect to the automobiles on his sales floor.