Case Name: BRUCKNER TRUCK SALES, INC., Appellant, v. FARM CREDIT LEASING SERVICES CORPORATION and Estelline Coop Gin, Inc., Appellees
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1995-08-16
Citations: 909 S.W.2d 75
Docket Number: No. 07-94-0338-CV
Parties: BRUCKNER TRUCK SALES, INC., Appellant, v. FARM CREDIT LEASING SERVICES CORPORATION and Estelline Coop Gin, Inc., Appellees.
Judges: Before REYNOLDS, C.J., and DODSON and BOYD, JJ.
Reporter: South Western Reporter Second Series
Volume: 909
Pages: 75–85

Head Matter:
BRUCKNER TRUCK SALES, INC., Appellant, v. FARM CREDIT LEASING SERVICES CORPORATION and Estelline Coop Gin, Inc., Appellees.
No. 07-94-0338-CV.
Court of Appeals of Texas, Amarillo.
Aug. 16, 1995.
Rehearing Overruled Sept. 13, 1995.
Order Overruling Motion for Rehearing Oct. 11, 1995.
James L. Wharton, Jones Flygare Galey Brown & Wharton, Lubbock, for appellant.
Jim Hund, McCleskey Harriger Brazill & Graf, L.L.P., Robert L. Jones, Crenshaw Du-pree & Milam, L.L.P., Lubbock, for appel-lees.
Before REYNOLDS, C.J., and DODSON and BOYD, JJ.

Opinion:
REYNOLDS, Chief Justice.
This appeal requires us to determine whether Farm Credit Leasing Services Corporation (Farm Credit) and Estelline Co-op Gin, Inc. (Estelline), each of which purchased a truck from Module Truck Services, Inc. (Module), established as a matter of law the right to the manufacturer's certificates of origin held by Bruckner Truck Sales, Inc., the owner of the trucks, so as to be entitled to the summary judgment rendered by the trial court. Determining that neither did so, we will reverse and remand.
Bruckner, maintaining a sales office in Lubbock, is a dealer for Mack Trucks, Inc., which manufactures various types of trucks, including bare chassis to which specialized equipment may be added. In June of 1992, Bruckner took delivery of two Mack truck chassis, together with the manufacturer's certificate of origin for each truck issued by Mack Trucks, Inc. Retaining the manufacturer's certificates, Bruckner entrusted to Module, at its principal place of business in Lubbock, the two trucks to be outfitted for use in the cotton industry. For each truck, Module's agent signed a receipt, which contained the agreement that the truck was to remain the property of Bruckner and was to be released only upon Bruckner's written order. Neither truck was registered or licensed.
In contravention of its agreements with Bruckner, Module sold and delivered one of the completed trucks to Estelline. The sales price was $122,500 and was paid by Estelline to Module in the form of a trade-in and a $60,000 check.
Module and Swisher Co-op Gin (Swisher) executed a contract dated May 29, 1992 for the sale by Module, and the purchase by Swisher, of the other truck. The sales price was $117,500 and Swisher paid Module $23,-500 as the down payment. The record is silent as to any resolution of the contract or any transfer of the truck by Swisher. The record does reveal that on June 29, 1992, Module and Farm Credit executed a contract for the sale by Module, and the purchase by Farm Credit, of the same vehicle to be delivered to Swisher. The sales price was $117,-500, less a recited down payment of $23,500, with the balance of $94,000 due on delivery. The record also reveals that Farm Credit delivered its check for $23,500 to Swisher, and its check for $101,343.75, which included a tax of $7,343.75, to Module. Swisher has possession of the truck under a lease agreement with Farm Credit.
Module did not pay Bruckner for either truck. On October 8, 1993, Bruckner instituted an action against Module, Swisher and Estelline to recover from Module, among other things, the value of the trucks when they were entrusted to Module, and, alternatively, to recover from Swisher and Estelline possession of the trucks or their values. On October 19, 1993, Module filed for bankrupts cy protection under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 1101-1174. Re-sultantly, Bruckner's action against Module was severed and it remains pending in the trial court.
Estelline answered, denying Bruckner's claim and alleging that it acquired the truck in good faith as a bona fide purchaser for value. Estelline also counterclaimed to secure from Bruckner the completion and delivery of the manufacturer's certificate of origin in order that it may register and license the truck and obtain a certificate of title.
No answer by Swisher appears in the record. Farm Credit filed a plea in intervention, alleging its purchase of the truck in good faith as a bona fide purchaser for value without knowledge that the sale by Module was in violation of any ownership rights of Bruckner. Farm Credit also sought from Bruckner the completion and delivery of the manufacturer's certificate of origin, and any other documents, in order that it may register the truck and obtain a certificate of title or, alternatively, its damages.
On March 7, 1994, Estelline and Farm Credit separately moved, with affidavits and documents, for summary judgment on identical grounds. They advocated the application of pertinent sections of the Texas Uniform Commercial Code Annotated (the Code) (Vernon 1991 & Supp.1995) to the fact situation, because the purchase of each truck was a "first sale" under the Texas Certificate of Title Act (the Act), Texas Revised Civil Statutes Annotated article 6687-1 (Vernon 1977 & Supp.1995), and as a buyer in the ordinary course of business, each acquired title to the respective trucks at the time of purchase from Module.
Bruckner responded to each motion, attaching affidavits, documents and deposition testimony. Bruckner represented that neither Estelline nor Farm Credit established as a matter of law that its purchase of the truck was a "first sale," or that it was a bona fide purchaser for value, and that those unresolved fact issues precluded summary judgment.
On April 15, 1994, the trial court separately granted each motion for summary judgment by Estelline and Farm Credit, and rendered separate judgments ordering Bruckner to deliver to each of them the manufacturer's certificate of origin for the truck each purchased, together with all other documents required for the issuance of a certificate of title. These actions being severed, the rendition of both summary judgments disposed of these parties and issues, and the judgments merged to constitute a final judgment. See H.B. Zachry Co. v. Thibodeaux, 364 S.W.2d 192, 193 (Tex.1963); Mitchell v. Amarillo Hosp. Dist., 855 S.W.2d 857, 863 (Tex.App.—Amarillo 1993, writ denied).
Bruckner attacks the judgment with three points of error, contending that Farm Credit did not conclusively establish that its purchase of the truck from Swisher was a "first sale," and that neither Farm Credit nor Estelline conclusively established that it was a buyer in the ordinary course of business. Because the trial court did not specify the ground or grounds relied upon in rendering either summary judgment, Bruckner, to be successful in its attack, must show that no ground in the motions for summary judgment is meritorious. Cf. Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989); Borg-Warner Acceptance Corp. v. C.I.T. Corp., 679 S.W.2d 140, 142 (Tex.App.—Amarillo 1984, writ ref d n.r.e.) (summary judgment will be affirmed on appeal if any of the theories advanced are meritorious).
To merit the summary judgment, Es-telline and Farm Credit were required to conclusively prove all essential elements of their counterclaims by showing that there were no genuine issues of material fact and that they were entitled to judgment as a matter of law. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986). In determining whether they did so, we accept as true all evidence favorable to Bruckner, grant it every reasonable inference, and resolve any doubts in its favor. Id.
At the threshold of our consideration of the appeal, we are confronted with Estel-line's assertion that Bruckner does not contend the sale of the truck to it was not a "first sale" under the Act and, therefore, Bruckner's sole issue is whether Estelline conclusively established it was a buyer in the ordinary course of business. Estelline has correctly noted that Bruckner's first point, as phrased, is that Farm Credit failed to conclusively establish that its purchase from Swisher was a "first sale" under the Act. However, in argument under its third-point contention that Estelline did not conclusively establish it was a buyer in the ordinary course of business, Bruckner specifically points out that one of the grounds upon which Estelline moved for summary judgment was that the sale by Module to Estelline was a "first sale," and then states, "The analysis that applies to Appellee Farm Credit also applies to Appel-lee Estelline." Given the Rule 74(p), Texas Rules of Appellate Procedure, mandate for the liberal construction of the briefing rules, which obligates us to observe not only the wording of the points of error but the argument under each point to determine the intent of the party, Holley v. Watts, 629 S.W.2d 694, 696 (Tex.1982), we deem the "first sale" question is presented in each transaction and should be addressed.
A resolution of Bruckner's first point of error, in connection with which the parties have joined issue on the question of the applicability of the Act, requires a consideration of the interplay between the Act and the Code. Section 1 of the Act specifies that its defined terms shall control in the enforcement and construction of the Act with respect, as material here, to a motor vehicle, defined in section 2 as "every kind of motor driven or propelled vehicle now or hereafter required to be registered or licensed under the laws of this state...." The registration requirement applies to a motor vehicle "used or to be used upon the public highways of this State." Tex.Rev.Civ.Stat.Ann. art. 6675a-2 (Vernon Supp.1995). Each of the two Mack trucks which are the subject of this litigation qualifies as a motor vehicle.
Pertinent to this litigation are several sections of the Act containing these definitions and provisions:
Sec. 4. The term "Owner" includes any person, firm, association or corporation other than a manufacturer, importer, distributor, or dealer claiming title to, or having a right to operate pursuant to a lien on a motor vehicle after the first sale as herein defined, except [Federal and State governments or agencies thereof] not required by law to register or license motor vehicles owned or used thereby in this State.
Sec. 7. The term "First Sale" means the bargain, sale, transfer, or delivery with intent to pass an interest therein, other than a lien, of a motor vehicle which has not been previously registered or licensed in this State or elsewhere; and such a bargain, sale, transfer or delivery, accompanied by registration or licensing of said vehicle in this State or elsewhere, shall constitute the first sale of said vehicle, irrespective of where such bargain, sale, transfer, or delivery occurred.
See. 8. The term "Subsequent Sale" means the bargain, sale, transfer, or delivery, with intent to pass an interest therein, other than a lien, of a motor vehicle which has been registered or licensed within this State or elsewhere, save and except when such vehicle is not required under law to be registered or licensed in this State; and any such bargain, sale, transfer, or delivery of a motor vehicle after same has been registered or licensed shall constitute a subsequent sale, irrespective of where such bargain, sale, transfer, or delivery occurred.
Sec. 9. The term "New Car" means a motor vehicle which has never been the subject of a first sale either within this State or elsewhere.
Sec. 22. The term "Manufacturer's Certificate" means a certificate on form to be prescribed by the Department [of Highways and Public Transportation] showing original transfer of a new motor vehicle from the manufacturer to the original purchaser, whether importer, distributor, dealer, or owner, and when presented with an application for certificate of title must show thereon, on appropriate forms to be prescribed by the Department, each subsequent transfer between distributor and dealer, dealer and dealer, and dealer to owner.
See. 24. The term "Certificate of Title" means a written instrument which may be issued solely by and under the authority of the department, and which must give the following data....
Sec. 27. Before selling or disposing of any motor vehicle required to be registered or licensed in this State on any highway or public place within this State, except with dealer's metal or cardboard license number thereto attached as now provided by law, the owner shall make application to the designated agent in the county of his domicile or the county in which the vehicle is purchased or encumbered upon form to be prescribed by the Department for a certificate of title for such motor vehicle.
Sec. 33. (a) No motor vehicle may be disposed of at a subsequent sale unless the owner designated in the certificate of title transfers the certificate of title, at the time the motor vehicle is transferred, on a form prescribed by the Department....
Sec. 53. 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.
Sec. 65. In ease of any conflict between this Act and the Business and Commerce Code, Chapters 1 through 9, the provisions of the Business and Commerce Code control.
The Code, and the controlling effect given it by the Act's section 65, expressly governs some transactions in motor vehicles, and the Code's section 2.105 broad definition of "goods" clearly includes motor vehicles. Associates Discount Corp. v. Rattan Chevrolet, Inc., 462 S.W.2d 546, 548-49 (Tex.1970).
In support of their contention that Module's sale to each of them was a first sale under the Act, Estelline and Farm Credit cite Motor Inv. Co. v. Knox City, 141 Tex. 530, 174 S.W.2d 482 (1943), as well as Apeco v. Bishop Mobile Homes, Inc., 506 S.W.2d 711 (Tex.Civ.App.—Corpus Christi 1974, writ refd n.r.e.), which quoted from and relied upon Motor Investment. 506 S.W.2d at 715. At the time of the Motor Investment decision, the Act's section 7 definition of first sale was:
Sec. 7. The term "First Sale" means the bargain, sale, transfer, or delivery within this State with intent to pass an interest therein, other than a lien of a motor vehicle which has not been previously registered or licensed in this State.
Acts of April 11, 1939, 46th Leg., R.S., eh. 4, 1939 Tex.Gen.Laws 602, 603 (amended 1951) (current version at Tex.Rev.Civ.Stat.Ann. art. 6687-1, § 7 (Vernon Supp.1995)). Construing this section together with other sections of the Act, most of which are quoted above in their current language, the Motor Investment court, pointing out "it is only an 'owner' of a motor vehicle that is required to register such vehicle and secure a certificate of title therefor before selling the same," held
that every transfer of a motor vehicle, regardless of the number thereof, from manufacturer to dealer, dealer to dealer, and from dealer to "owner," as defined in the Act, constitutes a "first sale," and that it is not necessary that the vehicle be registered and a certificate of title thereto obtained as a condition precedent to the validity of such "first sale."
Motor Inv. Co. v. Knox City, 174 S.W.2d at 486. Continuing with its construction, the Motor Investment court further held that the transfer of the manufacturer's certificate is not essential to the validity of a first sale. Id.
Eight years after that decision, in 1951, the Legislature amended section 7 in 1951 by deleting the period after the word "State" and adding
or elsewhere; and such a bargain, sale, transfer or delivery, accompanied by registration or licensing of said vehicle in this State or elsewhere, shall constitute the first sale of said vehicle, irrespective of where such bargain, sale, transfer, or delivery occurred.
Acts of May 23, 1951, 52nd Leg., R.S., ch. 301, § 1, 1951 Tex.Gen.Laws 482, 482 (codified as Tex.Rev.Civ.Stat.Ann. art. 6687-1, § 7 (Vernon Supp.1995)). At the same time, the Legislature amended the Act's then existing section 8 definition of a subsequent sale to provide the current definition quoted above. Id.
Although the parties do not discuss, and research has not revealed a decision explaining, what effect, if any, the amended version of section 7 has upon the Motor Investment court's statement of the precise meaning of a first sale, it does not escape notice that facially, the statute seems internally contradictory. The first clause of the statute defines a first sale as the bargain, sale, transfer, or delivery of a motor vehicle "which has not been previously registered or licensed"; the second clause defines a first sale as the bargain, sale, transfer, or delivery of a motor vehicle "accompanied by registration or licensing" of the vehicle.
However, if the second clause is interpreted as requiring the registration or licensing of a new car as a condition precedent for a first sale, then section 7 has the identical meaning of section 8, which provides that a " 'Subsequent Sale' means the bargain, sale, transfer, or delivery . of a motor vehicle which has been registered or licensed...." Considering that at the time section 7 was amended to provide the current version, section 8 was also amended, it is obvious by giving different meanings to the terms "first sale" and "subsequent sale," the Legislature intended a distinction between them. Otherwise, to give the two terms the same meaning would be absurd, and the statute will not be interpreted so as to lead to an absurd result when there is an alternative, reasonable interpretation, McKinney v. Blankenship, 154 Tex. 632, 282 S.W.2d 691, 698 (1955), from the consideration which must be given the entire Act, its nature and object, and the consequences that would follow from each construction. Sharp v. House of Lloyd, Inc., 815 S.W.2d 245, 249 (Tex.1991).
It is at once apparent that by the introduction of the added second clause with the words "and such a bargain, sale, transfer or delivery," the clause was predicated upon the first clause's definition of a first sale as the sale "of a motor vehicle which has not been previously registered or licensed in this State or elsewhere" (emphasis added). Then, logically, the following insertion of the phrase "accompanied by registration or licensing of said vehicle" was in recognition of the situation where the first sale of a new car was to an owner, the one required by the Act to register and license the vehicle, who at that time either registered and licensed the vehicle, or was accommodated by the common practice of dealers, upon the first sale of a new car to an owner, to charge the owner for, and to simultaneously secure, the registration and licensing of the new vehicle. This interpretation harmonizes and leaves intact the definitions of, and the distinction between, a first sale and a subsequent sale.
Thus, it seems clear that the 1951 amendment of section 7 did not alter the meaning of a first sale as articulated by the Motor Investment court. Indeed, nineteen years after the amendment, the Supreme Court, albeit not specifically referring to section 7, still adhered to its Motor Investment decision in stating, "The sale of such a [new, unregistered] vehicle from manufacturer to dealer, from dealer to dealer, and from dealer to 'owner,' as defined in the Act, is a 'first sale,' and the transfer of the manufacturer's certificate is not essential to the validity of the sale." Associates Discount Corp. v. Rattan Chevrolet, Inc., 462 S.W.2d at 550. Other post-amendment decisions considering a first sale are in harmony therewith. See, e.g., Apeco Corporation v. Bishop Mobile Homes, Inc., 506 S.W.2d at 716; Saylor Chevrolet Company v. Ellis, 336 S.W.2d 798, 799-800 (Tex.Civ.App.—Eastland 1960, no writ); Continental Credit Corporation v. Norman, 303 S.W.2d 449, 451 (Tex.Civ.App.—San Antonio 1957, writ ref'd n.r.e.).
Given the meaning of a first sale under section 7 of the Act as established in Motor Investment and Associates Discount, Module, as the outfitter of the Mack truck chassis, was not the owner of them; hence, Module was not required to register and license them, and the parties do not contend otherwise. Being entrusted with the chassis by Bruckner, Module was thereby given, in accordance with section 2.403(b) of the Code, the "power to transfer all rights of the en-trustor to a buyer in ordinary course of business."
Consequently, by its summary judgment evidence, Estelline established that Module, authorized by the Code to transfer all rights of Bruckner to a buyer in the ordinary course of business, made a first sale of the vehicle to Estelline, the owner required by sections 27 and 33 of the Act to register and license the vehicle before disposition could be made of it, even though the manufacturer's certificate was not transferred. To this extent, Bruckner's first point of error is overruled.
However, the summary judgment record reveals a different transaction with respect to the vehicle purchased by Farm Credit. Before that purchase, Module and Swisher had executed a contract for the sale by Module, and the purchase by Swisher, which paid Module $23,500 of the $117,500 purchase price. Since Swisher was not an importer, distributor, or dealer, the record fails to show why Swisher did not become the owner of the vehicle pursuant to section 4 of the Act, and was required, by sections 27 and 33 of the Act, to apply for a certificate of title to the vehicle before a sale or disposition of it could be made. There is no showing of any resolution of the contract of sale and purchase between Module and Swisher or any transfer of the vehicle by Swisher. Instead, the record evinces that on June 29, 1992, Module and Farm Credit executed a contract for the sale by Module, and the purchase by Farm Credit, of the same vehicle for delivery to Swisher. The record also reveals Farm Credit's payment of $23,500 to Swisher and the balance of the purchase price to Module, and the leasing of the vehicle by Farm Credit to Swisher. In this state of the summary judgment record, Farm Credit has not established as a matter of law that its purchase of the vehicle was a first sale. To this extent, Bruckner's first point of error is sustained.
By its second and third points of error, Bruckner contends that the trial court erred in granting summary judgment for Farm Credit and Estelline, respectively, because material issues of fact exist as to whether each knew that its purchase of the truck was in violation of its, Bruckner's, ownership rights. In this regard, the Code's section 1.201(9) defines "Buyer in ordinary course of business" as "a person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind...." The meaning of "good faith," as defined in the Code's section 1.201(19), is "honesty in fact in the conduct or transaction concerned." And the parties accept that Module, having been entrusted with the truck chassis by Bruckner, possessed the power given by section 2.403(b) of the Code to transfer all of Bruckner's rights to a buyer in the ordinary course of business.
Consistent with the principle that all evidence favorable to Bruckner, the non-mov-ant, must be accepted as true, with every reasonable inference and doubt resolved in its favor, Wornick Co. v. Casas, 856 S.W.2d 732, 733 (Tex.1993), Farm Credit did not establish as a matter of law that it was a buyer of the truck in the ordinary course of business. Farm Credit's failure of its summary judgment evidence to establish its purchase of the vehicle was a first sale leaves unresolved the material fact issue whether it was a first sale or a subsequent sale which, under section 53 of the Act, was void for failure to comply with the provisions of the Act. See Apeco Corporation v. Bishop Mobile Homes, Inc., 506 S.W.2d at 715. Bruckner's second point of error is sustained.
To be entitled to the summary judgment, Estelline had the burden to prove it was a buyer in the ordinary course of business. The affidavit of Estelline's manager, Charles Moore, who signed the contract for sale by Module and purchase by Estelline, details the transaction. The only reference in the affidavit concerning the requirement that a buyer in the ordinary course of business be "a person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest therein of a third party," is Moore's conclu-sional statement that "[njeither Estelline nor Affiant had or now has any knowledge that the sale to Estelline by Module Truck Services, Inc. was in violation of any ownership or other rights of Bruckner Truck Sales, Inc." However, the statement is immediately preceded by his statement that "Estelline has made demand upon Bruckner truck Sales, Inc. to complete and deliver to Estel-line the original Manufacturer's Certificate of Origin for a Vehicle and all other documents required by the County Tax Assessor/Colleetor so that the Module Truck can be registered and licensed and an original Certificate of Title issued to Estelline."
Moore does not explain either why or when Estelline made demand upon Bruckner for the manufacturer's certificate if, indeed, neither Estelline nor he "had nor now has any knowledge" that the sale was in violation of Bruckner's ownership or other rights. The lack of explanation is crucial in light of Module's acknowledgment in the Body Builder's Receipt that the vehicle remains the property of Bruckner, the averments in the affidavit of Mike Carlisle, a salesman who approved the contract for Module, and the excerpt from the deposition of James Westbrook, a representative of Module. Carlisle averred that he made no representation, nor implied, that Module had title to the truck, or that Module was a dealer or franchise for Mack trucks, and further averred that the truck had the Mack emblem/label, and that it was obvious the only Mack truck dealer in the area, Bruckner, owned the truck. Westbrook confirmed that he "advised people that they would get the M.S.O.'s when the dealer had been paid (emphasis added)."
With the record in this state, there remains at least the material fact issue whether Estelline was without knowledge that the sale to it by Module was in violation of the ownership rights of Bruckner. As a result, Estelline failed to establish its right to summary judgment. Bruckner's third point of error is sustained.
The summary judgment record is akin to that in Associates Discount, where the Supreme Court said the question whether the sale was in the ordinary course of business is a mixed question of law and fact, and cannot be resolved in a summary judgment proceeding without information concerning all the circumstances of the sale. 462 S.W.2d at 550. Here, too, the lack of all the circumstances of the sales in the summary judgment record does no more than raise doubt as to the facts and, in that situation, summary judgment is not to be granted. In re Price's Estate, 375 S.W.2d 900, 904 (Tex. 1964).
Accordingly, the summary judgment is reversed and the cause is remanded to the trial court.
DODSON, J., concurs.
BOYD, J., dissents.