Court Opinion

ID: 7007694
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:55:38.49662+00
Date Added: 2024-06-11T16:10:07.409953
License: Public Domain

BRYANT, J., dissenting. It is true that there is no evidence that plaintiff ever gave .any instruction to defendant in regard to the issuance of the certificate of title, as is said in the majority opinion. It is also true, as is said there, that the assignment does not specifically contain any provision requiring defendant to obtain or furnish a certificate of title to plaintiff. These facts do not appear to me to be controlling, and, indeed, they are scarcely persuasive. It is the conduct of the parties and the realities of the transaction which I believe determine the liability here. Defendant was engaged in the business of selling automobiles. By these transactions it sold one new Ford Mainline automobile. With the exception of $10.-55 all the cash received by defendant for that Mainline automobile was furnished by plaintiff — $1995. Defendant also received an old Plymouth, which was turned in by the purchaser and for which credit was given. That $1995 was furnished by plaintiff to defendant as consideration for the purchase of the automobile. The method of operation, that the conditional sales contract which defendant took from its purchaser was assigned by defendant to plaintiff, does not change the fact that plaintiff’s cash furnished the consideration whereby defendant sold its automobile to its customer. The principal transaction here was the sale of a Ford by defendant, a Ford dealer, to its purchaser. All of the events concerning this transfer of title, the advancing of credit, and the registration of the automobile are auxiliary to and part and parcel of that transaction. Although a day or a few days intervened between the steps, they must be regarded as one simultaneous and integrated transaction. The only security which plaintiff had for the advancing of the $1995 was the- Ford Mainline automobile sold by defendant to its customer. When defendant’s assignment had been made and plaintiff’s check had been delivered, the title to the automobile was vested in plaintiff. Defendant knew that. Defendant knew it had been fully paid. Defendant knew it had no interest whatever in that automobile. Despite that knowledge, at the time of its assignment to plaintiff and of the delivery of the automobile to defendant’s customer, defendant had its customer sign in blank an application for a certificate of title to tbe automobile in question. Thereafter defendant filled out that application for a certificate of title, falsely showing title to be in its purchaser, not in its assignee, as was the fact. More importantly, defendant on that application also listed as the only encumbrance thereon an encumbrance for an entirely different amount, $1536.48 allegedly due defendant. At the time there was nothing owing defendant in regard to that car. No mention of plaintiff’s interest was made, though that interest was well-known to defendant. The reason for defendant handling the application for the certificate of title was that defendant was required to furnish the certificate of origin for this new automobile. Subsequently defendant forwarded this certificate of origin, together with this false application for registration of title, to the Secretary of State, and there was issued a certificate of title in accordance with the application. It showed that the purchaser under the conditional sales contract, which had not been paid up and which defendant knew had not been paid up, but was outstanding and had been assigned to plaintiff, was the owner of the automobile, and that it, defendant, had a lien against the automobile, which it did not have. That certificate of title was returned in accordance with the instructions of defendant to defendant. It thereupon stamped as paid its lien against the automobile. Obviously defendant had no money coming from the automobile. It had been paid in full by plaintiff. It had had no money coming at the time it made the application saying it had a lien. After relieving the automobile from a lien which did not exist by stamping it paid, it delivered the certificate of title to its purchaser. That certificate then showed title in its purchaser, which defendant knew was not true, because the title was in its assignee. It also showed the title free of all liens, which defendant knew was false. It is obvious that plaintiff had no knowledge of defendant’s conduct relating to the certificate of title. All of these transactions up until this time were part and parcel of the sale of the automobile by defendant to the purchaser and its financing through plaintiff. Thus armed, the purchaser went out and sold an automobile for which she did not have title and in which her interest was encumbered, but to which she had a certificate of title showing that the automobile belonged to her and was unencumbered, to a third party who was a bona fide holder for value, and it was sold again. Plaintiff was thereby deprived of its security. It appears to me that we should look beyond the question of where the title to the automobile actually rested after the assignment and the duty of the assignee to protect its interest in regard to the issuance of the certificate of title, the technical requirements of the Registration Act, and the fact that the statute requiring a certificate of title is not a recording act, the certificate being merely to evidence title for the purpose of protection against theft, and recognize the unity of this transaction and admit that certificates of title are the papers held in the hands of automobile owners, usually to evidence the fact that they are the owners of those automobiles. The assignment without recourse signed by defendant contains a warranty in the following language: “That the undersigned has no knowledge of any fact which might impair the validity of said instrument or render it less valuable or valueless.” If this transaction is considered as one simultaneous transaction, certainly defendant did have knowledge of a fact which would come within the warranty. It was a fact which defendant itself created during the course of the transaction. There remains the question of fraud in this entire transaction. Fraud sounds in deceit and the absence of good faith and fair dealing. The general nature of fraud is discussed in 19 I. L. P. Fraud, Section 2, p. 552: “ ‘Fraud,’ in its general sense, comprises all acts, omissions, and concealments involving a breach of legal or equitable duty, trust, or confidence, resulting in damage to another.” And the essential elements of actual fraud are set forth, ibid., in Section 3, p. 555; as: “The misrepresentation or concealment of an existing material fact, coupled with scienter, deception and injury.” With those general principles of fraud in mind, let us consider this transaction. What is the essential and material fact that caused plaintiff’s damage in this transaction? The fact is that the certificate of title did not correctly set forth the interest of plaintiff in the automobile. Defendant created that fact. That the certificate of title did not set forth plaintiff’s interest in the automobile was material to plaintiff and to the entire transaction. Defendant created the falsehood. It can hardly he claimed that it did not have knowledge. Inherently, nobody else had knowledge. Defendant did not disclose the situation to plaintiff. Plaintiff would not have paid $1995 to defendant for the assignment of defendant’s conditional sales contract if it had known that defendant was not going to set forth correctly its claim against the automobile in question. When the certificate of title did not set forth plaintiff’s interest, plaintiff was damaged. His security was at least impaired, if not destroyed. Defendant then compounded the deceit and fraud. It stamped and marked paid its always non-existent lien, which it had falsely said that it held. The certificate then showed the automobile free of all encumbrances. Defendant then delivered this certificate, which it knew to be a fraud, to its purchaser. For all practical purposes plaintiff’s security was destroyed. The fact that the ultimate consummation of plaintiff’s damages rested not with defendant, but with the person to whom defendant had delivered the false certificate of title, should not be used to relieve defendant from the responsibility of its own acts. The relationship between the parties here clearly placed upon defendant the obligation to set forth truthfully the right of plaintiff to the automobile in the application for the certificate of title. The conduct of defendant with plaintiff rests in deceit and lacks any vestige of good faith or fair dealing. This situation comes within the classical descriptions of fraud. It is my opinion that the judgment of the lower court should be affirmed.