Western Board of Adjusters, Inc. v. Newport Motor Yachts, Inc.

Opinion

JEFFERSON, J. Western Board of Adjusters, Inc. (hereinafter referred to as Western), appeals from an order of the trial court determining that the interest of third party claimant Santiago Commercial Bank (hereinafter [93]referred to as Santiago) in and to one Mercedes Benz automobile is superior to that of Western as a levying judgment creditor.

Western, as judgment creditor of Joseph Stephens, on Monday, December 28, 1970, levied on a 1968 Mercedes Benz automobile (hereinafter referred to as the Mercedes) which was registered prior to October 1970, in the name of Joseph Stephens with Newport National Bank (hereinafter referred to as Newport) as legal owner. Santiago filed a third party claim and requested a hearing. Both sides complied with Code of Civil Procedure section 689. The trial court, after a hearing on the opposing claims, sustained Santiago’s security interest.

Western contends on this appeal that the trial court’s determination was in error since the security interest held by Newport had not, at the time of the levy, been validly assigned to Santiago. This contention lacks merit.

Sometime shortly before October 4, 1970, Joseph Stephens executed a document purporting to transfer his interest in the Mercedes to Joseph Stephens Yachts of Newport, Inc. (hereinafter referred to as Yachts). Stephens did this because the vehicle registration certificate was in the possession of Newport, which held a security interest in the automobile, and Stephens was unable to make the payments on his automobile loan. Although Yachts bore Joseph Stephens’ name, the company was owned by two doctors and Stephens held no stock in the corporation. After the date of the purported transfer of ownership in the automobile, the company made the car payments to Newport. The Mercedes thereafter was mainly used by one of tire principals in the corporation, Dr. Stephen Dorn, and Stephens had access to it only for occasional use. Stephens, a licensed yacht broker, acted as broker in residence for Yachts on a commission basis.

Because the principals in Yachts had a commitment with Santiago to conduct all their financing with the bank, Yachts on December 2, 1970, executed a note and security agreement with respect to the Mercedes in favor of Santiago. Accordingly, Santiago on December 3, 1970, sent to Newport a cashier’s check for tire total balance due on the automobile loan and a payoff authorization signed by Joseph Stephens dated December 2, 1970. Sometime in early December 1970, Joseph Stephens also executed and gave to Santiago a blank power of attorney to be used to facilitate the transfer of the certificate of ownership in the automobile.