Court Opinion

ID: 1059573
Source: CourtListenerOpinion
Date Created: 2013-10-09 18:38:08.272227+00
Date Added: 2024-06-11T13:07:05.368709
License: Public Domain

Present:   All the Justices

MID-EAST SERVICES, INC.

v.   Record No. 992543   OPINION BY JUSTICE DONALD W. LEMONS
                                    September 15, 2000
ENTERPRISE FORD TRACTOR, INC.

              FROM THE CIRCUIT COURT OF YORK COUNTY
                     Thomas B. Hoover, Judge

      In this appeal, we consider whether the trial court erred

in finding that Enterprise Ford Tractor, Inc. (“Enterprise”)

was not a seller or an agent for a seller in a transaction

involving the sale of lawn servicing equipment to Mid-East

Services, Inc. (“Mid-East”).

                                   I

      On June 4, 1997, Mid-East, by its agent, Robert L.

Phillips, executed a bill of sale and tendered a check in the

amount of $47,000 to purchase certain lawn servicing equipment 1

from William T. Hall, the owner and operator of York River

Services, Inc. (“York River”). 2       The equipment was located in a

compound at Fort Bragg, North Carolina, where York River had

been performing a maintenance contract at the military base.

Apparently, for reasons undisclosed in the record, York River

      1
       The equipment consisted of three Ford Tractors, five
Alamo Flail Mowers, one swing trim, one 500-gallon fuel tank,
one bush hog, two 20-foot storage vans, one 40-foot storage
van, one base radio station, and nine hand-held radios.
     2
       Although the bill of sale listed William T. Hall,
individually, as “seller,” testimony revealed that the
was not able to complete its contract and Mid-East had been

requested to perform the services.   During the period

pertinent to this dispute, Enterprise never took possession of

the equipment.

     On the day after the check was issued, Mid-East stopped

payment on the check ostensibly because of concerns that “Mr.

Hall was not legitimate.”   Also on the same day, Phillips

contacted Enterprise and spoke with its representative, Bruce

E. Strack, about the equipment itemized on the bill of sale

from Hall.   Strack informed Phillips of an existing lien held

by Ford New Holland Credit (“New Holland”) on the equipment,

for which Enterprise was a guarantor.   Strack told Phillips

that he would contact New Holland to determine the pay-off

amounts.   With Strack acting as intermediary, a facsimile

transmission was sent from Strack to Phillips indicating that

a “check in the amount of ($47,000.00) will pay for” certain

equipment listed.   Mid-East had been willing to pay $47,000

for the equipment listed on the bill of sale with Hall.

However, not all of the equipment listed on the bill of sale

was specified on the facsimile from Strack.   Consequently, the

price was negotiated to $38,500 and Mid-East tendered its

check in that amount.   Enterprise sent New Holland a check for

equipment had been previously sold by Enterprise to York
River, not to William T. Hall.

                                2
$30,000 and applied the balance of $8,500 toward Hall’s past-

due account of $20,000 with Enterprise.      The parties agreed

that, at the time of this transaction, Enterprise did not have

knowledge of a lien on the equipment held by United Leasing

Corporation.   At least for this transaction, Mid-East alleges

that Strack told Phillips that Enterprise owned the equipment.

Strack denies ever making such a statement.

     Approximately three weeks later, Phillips contacted

Strack again regarding the purchase of an additional tractor

subject to New Holland’s liens.       Strack confirmed the

conversation with a facsimile stating, “Per our conversation,

you have a signed retail sales agreement with Bill Hall of

York River Services for a 3930 s/n BD75226 in the amount of

$9,000.   If you send us the money we will forward it to New

Holland to release the [lien].”       According to Strack, this

second facsimile was more specific because United Leasing had

since called to inform him of its lien on the equipment.

Strack also testified that he had informed Phillips about the

United Leasing lien.   Nonetheless, Mid-East tendered its check

for $9,000 to Strack, who forwarded it to New Holland.

     Toward the end of June 1997, a representative of United

Leasing and a deputy sheriff went to the compound at Fort

Bragg with legal documents authorizing the repossession of the

subject equipment.   Mid-East needed the equipment to perform

                                  3
its contract at Fort Bragg and, on July 1, 1997, Mid-East and

United Leasing entered into a lease agreement for the use of

some of the equipment in question for two months at a cost of

$2,500 per month.   At the end of August, United Leasing took

possession of the equipment.

     On January 9, 1998, Mid-East filed a motion for judgment

contending that Enterprise “induce[d]” Mid-East to enter into

the two contracts for the subject equipment by stating that

“it had full ownership and authority to sell the equipment

free of liens.”   Mid-East alleged that Enterprise breached an

express contract, perpetrated fraud, and violated various

provisions of the Uniform Commercial Code as adopted in

Virginia, 3 as well as Code § 18.2-217(a). 4   Mid-East sought to

recover actual damages of $52,500 and $50,000 in punitive

damages, plus interest and costs.

     On July 15, 1999, the circuit court heard evidence and

dismissed the case, stating in its order, “the [c]ourt is of

the opinion that the Plaintiff, MID-EAST SERVICES, INC. has

     3
       Specifically, Mid-East alleges violations of Code §§ 8.2-
206, 8.2-301, 8.2-312, 8.2-313, and 8.2-721.
     4
       Code § 18.2-217(a) states, in pertinent part:
           Any person, firm, corporation or association
           who in any manner advertises or offers for sale
           to the public any merchandise, goods,
           commodity, service or thing with intent not to
           sell, or with intent not to sell at the price
           or upon the terms advertised or offered, shall
           be guilty of a Class 1 misdemeanor.

                                 4
not proven its case on any count and, therefore, the Defendant

should prevail.”   Specifically, the trial court found that

Enterprise acted “only as lienholder or agent for the

lienholder.   They’re not the seller, they’re not the dealer,

they’re not an agent for the seller.”

                                II

     In this appeal, Mid-East alleges that the trial court

erred as a matter of law when it: (1) failed to enforce the

statutory warranty of good title created by Code § 8.2-312;

(2) failed to find that the goods were entrusted to Enterprise

pursuant to Code § 8.2-403(2); (3) ruled that a formal bill of

sale was required to transfer ownership of the goods to Mid-

East; (4) “disregarded the complete failure of consideration

where the parties intended to transfer the goods with good

title and Mid-East paid Enterprise but received goods with

defective title and Enterprise refused to return Mid-East’s

consideration”; and (5) found Enterprise was acting as a

lienholder when no action pertaining to secured transactions

under Title 8.9 took place. 5

     Enterprise argues it was not a “seller” under Title 8.2

of the Code and that, even if Code § 8.2-312 applied in this

case, the warranty of good title was excluded under subsection

     5
       The allegations of fraud and violation of Code § 18.2-
217(a) are not the subject of assignments of error.

                                5
(2) because the circumstances gave Phillips reason to know

that Enterprise did not claim title to the equipment.

Additionally, Enterprise maintains that the evidence is

sufficient to support the trial court’s conclusion that

Enterprise acted as a “lienholder or agent of a lienholder” in

this transaction.   Further, Enterprise argues that it did not

act as a merchant under an entrustment within the meaning of

Code § 8.2-403(2) and, finally, that because it did not act as

a seller or agent for the seller, it could not be accountable

for any failure of consideration.

                               III

     A review of the record reveals that Mid-East never

alleged that Enterprise acted as a merchant entrusted with

goods pursuant to Code § 8.2-403(2).   Because the matter was

not presented to the trial court, we will not consider the

argument on appeal.   See Rule 5:25; Pulliam v. Coastal

Emergency Servs., 257 Va. 1, 16, 509 S.E.2d 307, 316 (1999).

                               IV

     The remaining assignments of error are resolved by the

trial court’s factual finding that Enterprise was not the

seller or an agent for the seller in this transaction.

     On appeal, we review the facts in the light most

favorable to the prevailing party at trial.   Nationwide Mut.

Ins. Co. v. St. John, 259 Va. 71, 76, 524 S.E.2d 649, 651

                                6
(2000).   A trial court’s judgment is presumed to be correct

and, on appeal, we will not set it aside unless the judgment

is plainly wrong or not supported by the evidence.    Ravenwood

Towers, Inc. v. Woodyard, 244 Va. 51, 57, 419 S.E.2d 627, 630

(1992).

     The trial court found that the only bill of sale in this

transaction was from Hall as seller to Mid-East as buyer.    All

of the items referred to in the facsimile dated June 5, 1997

are identified in the bill of sale dated June 4, 1997.   A

fourth tractor referred to in the facsimile dated June 17,

1997 was not listed in the bill of sale; however, Strack, on

behalf of Enterprise, clearly indicated in the facsimile that

a retail sales agreement existed between Mid-East and “Bill

Hall of York River Services” for the purchase of this

additional tractor.    In both transactions Strack, on behalf of

Enterprise, identified his role as “negotiations middleman”

and the trial court found that he was acting for Enterprise

and for New Holland.   The trial court specifically found that

Strack, acting on behalf of Enterprise, was not an agent for

Hall or York River.

                                A.

     Mid-East asserts that Title 8.2 of the Uniform Commercial

Code as adopted in Virginia applies to these transactions.

Most assuredly it does.   However, Mid-East mischaracterizes

                                 7
the parties to these transactions.   As the trial court found,

the seller was Hall and the buyer was Mid-East.   Enterprise

acted on its own behalf and on behalf of New Holland, a

lienholder.   Enterprise was not a seller or an agent for a

seller under Title 8.2.

     Mid-East’s arguments are dependent upon characterizing

Enterprise as a “seller” under Title 8.2 of the Code.     See

Code § 8.2-103(d) (“seller” defined as “a person who sells or

contracts to sell goods”).   If Enterprise is a “seller” under

Title 8.2, then Code § 8.2-312(1) provides, subject to

exclusion or modification under subsection (2), a warranty

from the seller that:

          (a)  the title conveyed shall be good,
               and its transfer rightful; and
          (b) the goods shall be delivered free
               from any security interest or
               other lien or encumbrance of which
               the buyer at the time of
               contracting has no knowledge.
     Because Hall, not Enterprise, was the seller in

these transactions, Mid-East may not look to Enterprise

for a warranty under Code § 8.2-312(1).   See, e.g., Moore

v. Allied Chem. Corp., 480 F. Supp. 364, 375 (E.D. Va.

1979)(breach of warranty within the meaning of Commercial

Code of Virginia requires a sale which “must involve the

passing of title of goods from the seller to the buyer

for a price”).

                                8
                              B.

     Mid-East maintains that the trial court was plainly

wrong in its finding that Enterprise was an agent for the

lienholder because Enterprise never utilized any of the

provisions of Title 8.9 of the Uniform Commercial Code

pertaining to secured transactions.      Again Mid-East

misunderstands the nature of the transactions that took

place.     Enterprise, acting for itself or as an agent for

New Holland, was not seeking to create, perfect, or

enforce a security interest.       As the trial court found,

Enterprise was the “negotiations middleman” for the

purpose of the pay-off of New Holland’s lien and

Enterprise’s overdue account with York River.

                                   C.

     Mid-East states as an assignment of error that “[t]he

trial court erred in ruling that a formal bill of sale was

required to transfer ownership of the goods to Mid-East.”

Nowhere in the record was such a ruling made by the trial

court.   Presumably, Mid-East’s quarrel is that the trial court

rejected the characterization of the two facsimiles as bills

of sale.    What the trial court did find is that there was a

bill of sale, dated June 4, 1997, between Hall and Mid-East.

The evidence further supports the trial court’s conclusion

                                   9
that the transfer of the fourth tractor was the subject of a

“signed retail sales agreement” between Hall and Mid-East.

                               D.

     Finally, Mid-East complains that “[t]he trial court erred

when it disregarded the complete failure of consideration

where the parties intended to transfer the goods with good

title and Mid-East paid Enterprise but received goods with

defective title and Enterprise refused to return Mid-East’s

consideration.”   There may have been a failure of

consideration in this transaction, but once again Mid-East

mistakes the roles played by the various parties.

     The trial court did not make a finding concerning failure

of consideration.   With ample support in the record, the trial

court found that Enterprise was neither the seller nor an

agent for the seller.   The consideration paid was to Hall in

the form of direct payment of Hall’s or York River’s

indebtedness.   If a failure of consideration occurred, it was

between Mid-East and Hall rather than between Mid-East and

Enterprise.

                                V

     For the reasons stated, we conclude that the trial court

was not plainly wrong or without evidence to support its

dismissal of the motion for judgment.   See Wright & Hunt v.

                               10
Wright, 205 Va. 454, 460, 137 S.E.2d 902, 907 (1964).

Accordingly, we will affirm the judgment of the trial court.

                                                        Affirmed.

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