Case Name: Joe HEASTON and H. R. Ellis, a partnership, d/b/a Heaston Ellis Motor Company, Respondents, v. Manuel MARTINEZ, Appellant; Jack LAYTON and Marian Layton, a partnership, d/b/a Denver Auto Auction, Respondents, v. Kay CLARK, Appellant
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1955-04-26
Citations: 3 Utah 2d 259
Docket Number: Nos. 8228, 8238
Parties: Joe HEASTON and H. R. Ellis, a partnership, d/b/a Heaston Ellis Motor Company, Respondents, v. Manuel MARTINEZ, Appellant. Jack LAYTON and Marian Layton, a partnership, d/b/a Denver Auto Auction, Respondents, v. Kay CLARK, Appellant.
Judges: WADE and WORTHEN, JJ., concur.
Reporter: Utah Reports, Second Series
Volume: 3
Pages: 259–267

Head Matter:
282 P.2d 833
Joe HEASTON and H. R. Ellis, a partnership, d/b/a Heaston Ellis Motor Company, Respondents, v. Manuel MARTINEZ, Appellant. Jack LAYTON and Marian Layton, a partnership, d/b/a Denver Auto Auction, Respondents, v. Kay CLARK, Appellant.
Nos. 8228, 8238.
Supreme Court of Utah.
April 26, 1955.
No. 8228
Louis H. Callister, Nathan J. Fullmer, Salt Lake City, for appellant.
H. D. Lowry, Salt Lake City, for respondent.
No. 8238
Chris Praggastis, John E. Stone, Salt Lake City, for appellant.
H. D. Lowry, Salt Lake City, for respondent.

Opinion:
COWLEY, District Judge.
Two cases in replevin brought by the respective plaintiffs-respondents, to recover a Pontiac automobile in the one case and a Buick automobile in the other. Plaintiffs recovered judgment in the lower court and defendants-appellants, appeal. The cases were tried separately but were combined for argument on appeal as the facts are similar and the questions of law identical, the sole issue being one of estoppel.
The parties submitted their respective cases to the trial court, sitting without a jury, upon written stipulated facts. Without narrating the stipulated facts we shall point out such material facts as are pertinent to the questions of law and issue involved on this appeal. The respective plaintiffs are wholesale automobile dealers in Alberquerque, New Mexico and Denver, Colorado. On March 3, 1953, the respective plaintiffs sold several automobiles including the Pontiac and Buick in question at their respective places of business to one M. R. Bruce of Salt Lake City, Utah doing business as Ra Don Auto Sales, a licensed used car dealer in said city. Respective plaintiffs transferred possession of the automobiles to Bruce in New Mexico and Colorado knowing that Bruce was a used car dealer and intended to take the automobiles to his place of business in Salt Lake City, Utah for purpose of resale. Upon instructions of Bruce a sight draft was drawn on him in the one case and a three day draft in the other case, payable to the plaintiffs respectively and forwarded to the First National Bank of Murray, Utah. The foreign certificates of title showing respective plaintiffs to be the legal owners were attached to the drafts as security for payment, and Bruce was to receive the certificates of title when he honored and paid the drafts. Bruce orally agreed to pay the draft and thereby obtain the title certificate before he offered the Pontiac for resale in the one case, and in the other case while there was no such oral agreement it is clear from the stipulated facts that the same was intended by the parties. Bruce transported the automobiles to Salt Lake City and placed them on his used car lot.
About a month later Bruce sold the automobiles in question to the respective defendants at his place of business in Salt Lake City and in the usual course of trade for a valuable consideration. Bruce transferred possession of the Pontiac and Buick to the respective defendants and furnished them with stickers which permitted them to drive said cars for a period of 10 days pending issuance of Utah license plates. Defendants made no inquiry of Bruce as to the title certificates, or Bruce's authority to sell, and had no notice or knowledge of the draft arrangement between plaintiffs and Bruce, or of any defect in Bruce's title to said automobiles.
Bruce never paid the drafts and consequently never received the certificates of title. The certificates of title and drafts were returned to the respective plaintiffs by the bank, and subsequently plaintiffs located the cars in Salt Lake and brought these replevin actions, which was the first notice defendants had of plaintiffs claims.
Defendants resisted the actions on the grounds that they were innocent purchasers for value without notice of plaintiffs claims to the respective automobiles and therefore plaintiffs should be estopped to assert their titles as against them.
The trial court, separate judges sitting in each case, ruled that plaintiffs were not so estopped and entered judgment in their favor. Defendants appeal.
From the above facts the sole issue is whether the respective plaintiffs are estopped to assert their titles to the automobiles in question as against the defendants who purchased the cars in good faith for value from a licensed used car dealer in the regular course of business, to whom plaintiffs sold them, reserving title but granting possession, knowing that said car dealer would resell said cars.
Two Utah cases involving "new" automobiles where an estoppel was found, Jones v. Commercial Investment Trust, 1924, 64 Utah 151, 228 P. 896; and Harrison v. Auto Securities Co., 1927, 70 Utah 11, 257 P. 677, 57 A.L.R. 388, are not directly in point and we are called upon for the first time to determine the application of the Utah sales and Motor Vehicle Acts to our fact situation where foreign "used" cars are brought into this state for purpose of resale and have not previously been registered under our Motor Vehicle Act.
It is a general principle of law that no one can transfer better title to personal property than he has, unless some element of estoppel comes into operation against the person claiming under what would otherwise be the better title. 24 R.C.L. 373. This general principle of law and the possibility of estoppel operating against the owner of personal property due to some conduct on his part is recognized by a provision of the Uniform Sales Act, Title 60, Chapter 2, Section 7, Utah Code Annotated 1953.
"60-2-7. Sale by a person not'the owner. —(1) Subject to the provisions of this title, where goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the oztmer of the goods is by his conduct precluded, from denying the seller's authority to sell."
Defendants contend the italicized portion of the above section of the Sales Act should apply to the facts of these cases to work an estoppel against the plaintiffs, and rely primarily upon cases from Illinois, Oklahoma, and Mississippi involving the sale of used cars which have similar factual situations as the two cases at bar, L. B. Motors, Inc., v. Prichard, 1940, 303 Ill.App. 318, 25 N.E.2d 129; Al's Auto Sales v. Moskowitz, 1950, 203 Old. 611, 224 P.2d 588; Garrett v. Hunter, Miss., 1950, 48 So.2d 871. These three cases hold in effect that where first dealer turns automobile over to second dealer for purpose of resale, the first dealer retaining title until price is paid, is estopped to assert his title as against an innocent purchaser for value from the second dealer, without knowledge that first dealer had retained title until purchase price was paid. See also Beck v. New Bedford Acceptance Corp., 1938, 62 R.I. 58, 3 A.2d 55 cited also by defendants.
Plaintiffs in the cases at bar argue that the general rule that one cannot transfer better title to goods than he himself has should apply in these cases for the reason that plaintiffs only transferred to Bruce mere possession of the cars here involved without any accompanying indicia of title, 24 R.C.L. 375. Although plaintiffs gave to Bruce no written indicia of title, nevertheless, where, as here, plaintiffs as experienced wholesale used car distributors, willingly turned the automobiles over to Bruce, knowing that he was a licensed used car retail dealer and would take the automobiles directly to his place of business in Salt Lake City for the purpose of resale, and there place them with other stock, is in our opinion the granting of more than mere possession. Such conduct on the part of the original sellers, plaintiffs, we believe, clothed Bruce with an apparent ownership or authority to sell said cars in the ordinary course of business to the buying public which will preclude the original sellers from reclaiming the automobiles from bona fide purchasers. "Where one of two innocent parties must suffer through the act or negligence of a third person, the loss should fall iipon the one who by his conduct created the circumstances which enabled the third party to perpetrate the wrong or cause the loss", Al's Auto Sales v. Moskowitz [203 Okl. 611, 224 P.2d 591]; Harrison v. Auto Securities Co., above.
We conclude that plaintiffs are estopped to assert their titles to the automobiles in question undér Section 60-2-7 of the Sales Act unless the defendants as innocent purchasers for value without actual notice of plaintiffs retention of title, are nevertheless, charged with notice under the Utah Motor Vehicle Act and therefore are not bona fide purchasers.
Plaintiffs contend that when these defendants purchased said cars, that since they did not see or obtain certificates of title they were put on notice that Bruce may not have been the owner of these cars or had the authority to sell them, and therefore cannot be considered bona fide purchasers.
Plaintiffs rely upon Title 41, Chapter 1, Section 72, U.C.A.1953, which provides as follows:
"41-1-72. Necessary before transfer complete. — Until the department shall have issued such new certificate of registration and certificate of ownership, delivery of any vehicle required to be registered shall be deemed not to have been made and title thereto shall be deemed not to have passed, and said intended transfer shall be deemed to be incomplete and not to be valid or effective for any purpose
The Mississippi case, Garrett v. Hunter, above cited does not discuss or malee applicable a Motor Vehicle Act, however the Illinois case, L. B. Motors v. Prichard, above, and the Oklahoma case, Al's Auto Sales v. Moskowitz, above, both hold that their Motor Vehicle Codes are anti-theft acts only and therefore not applicable in those cases. However, the Utah Supreme Court has gone farther and held that the Utah Motor Vehicle Act is some evidence of title and provide a flag or warning to prospective buyers, much as do the registry acts relative to real estate or chattel mortgages, such as would put prospective buyers on notice and require them to make inquiry, Jackson v. James, 1939, 97 Utah 41, 89 P.2d 235; Swartz v. White, 1932, 80 Utah 150, 13 P.2d 643. This is the position taken by the plaintiffs. Based upon this reasoning and the two Utah cases above cited, plaintiffs contend that defendants were at least required to make inquiry of Bruce as to the ownership and title certificates at time of purchase of their respective automobiles, and because they did not do so, plaintiffs say their failure so to do precludes them from being bona fide purchasers.
In support of this contention plaintiffs cite a Texas case, Deahl v. Thomas, Tex.Civ.App., 1949, 224 S.W.2d 293, which is favorable to their position under the Texas Motor Vehicle Code. In this case the court held that the buyer of an automobile imported into Texas has the duty to investigate and determine whether seller has complied with Texas certificate of title law, which he did not do. The Texas dealer who sold the automobile was required to procure a certificate of title on the imported car under one section of the Texas Motor Vehicle Code as a condition precedent to transfer of title, which was not done, and the sale therefore was void under another section of the Texas Vehicle Code. The original out-of-state seller was not estopped to assert his title against the buyer, who acted at his own peril in purchasing the automobile without ascertaining the true ownership of the said automobile.
Defendants, on the other hand, contend that Section 72 of the Utah Motor Vehicle Act, or any provisions thereof, or the Act itself, is not appliable to a foreign used car brought into this state for purpose of resale and which has never been registered in Utah, and rely upon Section 65 of said Act which provides as far as material as follows:
"41-1-65. Transfers to dealers.— When the transferee of a vehicle is a dealer who holds the same for resale , the transferee shall not be required to obtain transfer of registration of such vehicle or forward the certificates of title and registration to the department, but such transferee upon transferring his title to another person shall execute and acknowledge an assignment and warranty of title upon the certificate of title and deliver the same and the certificate of registration to the person to whom such transfer is made.''
Under Section 65 above quoted the Buick and Pontiac automobiles here involved were not required to be registered in Bruce's name, neither was he required to forward to the "department" the foreign certificates of title and registration. The two foreign cars in question which had never before been registered in Utah, were not required to be registered in this state until after the sales of said automobiles were completed to these defendants by Bruce, and not prior. Therefore, the Utah Motor Vehicle Act was not applicable to the fact situation of these cases at bar, defendants were not put on notice under said Act requiring them to make inquiry, but had the right to assume that Bruce was the owner or had the authority to sell said cars, so defendants are innocent purchasers for value without notice and therefore bona fide. It will be noted that Section 72 does not apply to all vehicles but only those required to he registered. For the same result under the California Motor Vehicle Code involving a foreign used car see Siegel v. Bayless, 1952, 113 Cal.App.2d 661, 248 P.2d 968. The Texas Motor Vehicle Code is dissimilar to ours.
Judgments reversed. Costs to Defendants.
WADE and WORTHEN, JJ., concur.