Reliance Acceptance Corp. v. Hooper-Holmes Bureau

SCHMIDT, J., pro tem. One H. 0. Cummins had the exclusive Chrysler agency at- Vallejo, California. Commencing in 1925, respondent, a finance company, engaged in the business of purchasing new automobiles from distributors for dealers, and discounting and purchasing conditional sales contracts and other paper from such dealers, financed said Cummins in connection both with his purchase of new automobiles from the distributor and in connection with his conditional sales contracts. In August and September, 1929, respondent purchased from the distributor three new Chrysler sedans, which cars were then shipped and delivered to Cummins at his place of business in Vallejo. As security for Cummins reimbursing respondent for these three cars respondent took from Cummins trade acceptances and trust receipts, in which receipts Cummins acknowledged that said three automobiles were the property of respondent; that they were held by him in trust and that upon a sale of said automobiles or any of them he, said Cummins, would remit to respondent the amount of the trade acceptance, which trade acceptance and trust receipt contained the date of purchase, the amount of indebtedness, and the usual description of an automobile, such as type, motor number and serial number. The due dates of the respective indebtedness were one month after purchase, September 8, September 15 and October 4, 1929. In the ordinary course of his business Cummins sold the aforementioned cars on August 12 th, September 4th and September 19th, respectively, but failed to notify respondent of any of the sales and appropriated, to his own use the proceeds of each sale. Respondent did not at any time inquire of Cummins whether he had disposed of the ears.

On January 23, 1930, respondent furnished appellant, a mercantile agency, with a typewritten list of approximately thirty automobiles which respondent had theretofore financed for Cummins, including the three aforementioned Chrysler [610]sedans. At the bottom of this typewritten list appeared, “Please check these cars at H. 0. Cummins, 515 Marin street, Vallejo. Insurance Company request.” The said list was the only communication, either oral or written, addressed by respondent to appellant in connection with, the checking of that particular list of cars. Bespondent on other occasions had made request of appellant to make checks, these requests usually being made over the telephone. About the time respondent commenced to do business with appellant, which was several years prior to the check herein involved, an officer of respondent discussed with an officer of appellant that in making checks appellant should leave the impression with the dealer that appellant was checking for an insurance company.