Universal Credit Co. v. M. C. Gale, Inc.

KNIGHT, J. This is an appeal by an attaching creditor from a judgment entered in favor of a third party claimant, in a proceeding had under the provisions of section 689 of the Code of Civil Procedure to determine title to three new Ford automobiles which had been attached by the Universal Credit Company in an action brought against M. C. Gale, Inc., an authorized Ford dealer, M. G. Gale as an individual, and several fictitious defendants, on a common count for money had and received.

The Fidelity Acceptance Company was the third party claimant, and at the time the automobiles were attached they were on display in the salesroom of the Gale corporation in Oakland. The Acceptance company had financed the purchase thereof from the Ford company at Richmond for M. C. Gale personally, and thereupon sold them to him on conditional sales contracts which were executed prior to the delivery of the cars to Gale, whereunder as seller the Acceptance company retained title until full payment therefor was made; and at the time the attachment was levied the ears stood registered with the state motor vehicle department in the name of the Acceptance company as legal owner. It was principally upon the foregoing facts, which are not disputed, that the trial court awarded judgment in favor of the Acceptance company that at the time of the attachment [798]it was the legal owner of said ears and entitled to the possession thereof.

In effect the ground of appeal is an attack upon the validity of the conditional sales contracts. In this behalf it is contended that at the time of the purchase of the cars from the Ford company, title thereto passed to Gale and not to the respondent Acceptance company, and that in the absence of a valid title “Respondent’s interest in the vehicles involved was purely a chattel mortgage, void as against appellant” for the reason that it covered stock in trade of a merchant (Civ. Code, sec. 2955, subd. 3) and was not acknowledged or recorded (Civ. Code, see. 2957; Vehicle Code, sees. 195-198).

We agree with the trial court’s conclusion that title passed from the Ford company to respondent. Among the facts established by the evidence relating to this issue are the following : The Ford company operated under a business rule of selling cars to its dealers for cash, which it required to be paid prior to or at the time of the delivery of the cars purchased. Neither the Gale corporation nor Gale had the cash or credit standing to obtain the necessary amount to comply with the Ford company’s business rule; whereupon Gale, the president and manager of the Gale corporation, made arrangements with the respondent Acceptance company whereby respondent would purchase the cars from the Ford company and then as owner thereof sell them to Gale personally on conditional sales contracts, retaining title until the amounts due thereunder were fully paid. The reason this arrangement was made by respondent with Gale personally was that some two years prior to this transaction respondent had engaged in certain business dealings with the corporation, at which time the corporation was found, to be in an unsatisfactory financial condition. After having completed the arrangements with respondent, Gale phoned the Ford company at its plant in Richmond, and notified a Mr. Lutz, the executive in charge of this particular department of the company’s business, that respondent was to be the buyer of the cars and was putting up the money to pay for them. Gale’s testimony in this regard was in part as follows: “I told them that the Fidelity Acceptance Corporation was going to buy the cars for me and would send their check out. ... Q. Did you tell them that the Fidelity Company was putting up the money? A. Yes. Q. And buying them