Opinion ID: 536603
Heading Depth: 2
Heading Rank: 2

Heading: Transfer of Title

Text: 33 Appellants argue that the district court erred in concluding that title to the Patriot passed to McMillian on October 30, 1986 when the parties met to complete the sale and financing transaction for the Patriot. Chase must prove McMillian's ownership of the Patriot as part of its burden of establishing a valid preferred ship mortgage. See C.I.T. Corp., 424 F.2d at 768; ITT Indus. Credit Co., 617 F.Supp. at 765. State law defines what constitutes legal title because contracts for the sale of a ship are not maritime and thus admiralty jurisdiction does not apply. See S.C. Loveland, Inc. v. East West Towing, Inc., 608 F.2d 160, 164 (5th Cir.1979), cert. denied, 446 U.S. 918, 100 S.Ct. 1852, 64 L.Ed.2d 272 (1980); see also St. Paul Fire & Marine Ins. Co. v. Vest Transp. Co., 666 F.2d 932, 938 (5th Cir.1982) (per curiam) (adopting district court opinion); ITT Indus. Credit Co., 617 F.Supp. at 765; see generally Gilmore at 26 & n. 90 (contracts for the sale of vessels are not within admiralty jurisdiction). We thus look to the law of Oklahoma to determine when title transferred. 34 Chase's evidence of McMillian's title consisted of those documents presented at the sale and financing meeting on October 30, 1986: (1) the builder's certificate; (2) the manufacturer's statement of origin; and (3) the sales agreement. The record indicates that Bickers, a sales agent and the secretary/treasurer of OHM, signed the sales agreement form in blank at the closing. The parties did, however, complete the manufacturer's statement of origin at the closing, and Bickers signed it in his capacity as the secretary/treasurer of OHM. 35 As appellants correctly point out, the builder's certificate is prima facie, but not conclusive, evidence of title because it is part of the paperwork required by the Coast Guard for the certificate of documentation process. See 46 U.S.C. Sec. 12104(3) (certificate of documentation is not conclusive evidence of ownership where ownership is in issue); St. Paul Fire & Marine Ins. Co., 666 F.2d at 938 (ship's documentation of title is prima facie but not conclusive evidence of ownership). However, we find that the manufacturer's statement of origin and the sales agreement together constitute a valid contract and establish that under Oklahoma law title to the Patriot passed to McMillian at the sale and financing meeting on October 30, 1986. 36 Section 2-401 of title 12A of the Oklahoma statutes governs when the seller of a good conveys title to the buyer. Section 2-401 provides in relevant part: 37 (1) Title to goods cannot pass under a contract for sale prior to their identification to the contract (Section 2-501), and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this Act.... Subject to these provisions and to the provisions of the Article on Secured Transactions (Article 9), title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties. 38 .... 39 (3) Unless otherwise explicitly agreed where delivery is to be made without moving the goods,(a) if the seller is to deliver a document of title, title passes at the time when and the place where he delivers such documents; or 40 (b) if the goods are at the time of contracting already identified and no documents are to be delivered, title passes at the time and place of contracting. 41 Okla.Stat.Ann. tit. 12A, Sec. 2-401 (1963). Section 2-501 governing the identification of goods states in relevant part: 42 (1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers ... Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs ... 43 (b) if the contract is for the sale of future goods ... when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers.... 44 Id. Sec. 2-501. 45 Appellants focus their argument on section 2-401(3)(a) and contend that under Oklahoma law the manufacturer's statement of origin does not constitute a document of title because Bickers failed to complete the endorsement form stating all liens or encumbrances on the Patriot. Section 804.4B of title 63 of the Oklahoma statutes requires for a valid certificate of title that: 46 B. In the event of the sale or transfer of the ownership of any vessel, boat, motorboat, or motor therefor, the holder of such certificate of title and registration issued under provisions of this section shall endorse on the form provided on the back of said title a complete assignment thereof with a statement of all liens or encumbrances on such vessel, motorboat or motor and such signature of the transferor shall be made under the penalties of perjury. 47 Okla.Stat.Ann. tit. 63, Sec. 804.4B (1984). Assuming arguendo that the unendorsed manufacturer's statement of origin was not a document of title for purposes of section 2-401(3)(a), we turn to section 2-401(3)(b). 48 Bickers signed both the completed manufacturer's statement of origin and the incomplete sales agreement at the mortgage closing. Chase issued a check for $50,000, the balance of the purchase price for the Patriot after McMillian's down payment, jointly to McMillian and OHM. McMillian immediately endorsed the check over to OHM at the October 30, 1986 meeting, and Bickers accepted it. The appellants do not dispute the purchase price of the Patriot or any other terms of the sale. Rather they contend that the sales agreement signed by Bickers at the October 30th meeting could not convey title under section 2-401(3)(b) because it did not specifically identify the Patriot. Although the sales agreement itself did not specifically identify the Patriot as the good being sold, OHM's manufacturer's statement of origin, signed by Bickers at the closing in his capacity as the secretary/treasurer of OHM, clearly did: 49 The undersigned MANUFACTURER hereby certifies that the new boat or motor described below, the property of said MANUFACTURER, has been transferred this 30th day of Oct., 1986 on Invoice No. 1001 to David J. McMillian whose address is Rt. 2 Box 256, Wagoner, Okla. 74467. 50 YEAR 1986 MODEL Houseboat 14 X 62 ft. TRADE NAME Patriot SERIAL NO. OKHOKHo1F6 51 We hold that the manufacturer's statement of origin and the sales agreement taken together satisfy the requirements of section 2-501, and conclude that under section 2-401(3)(b) title to the Patriot passed to McMillian on October 30, 1986. We therefore hold that Chase has satisfied all the statutory requirements of SMA section 922 and holds a valid preferred ship mortgage on the Patriot.