Court Opinion

ID: 3739755
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:04:07.671348+00
Date Added: 2024-06-11T18:03:04.694916
License: Public Domain

The plaintiff owned a 1937 model Hudson automobile. He entered into a written agreement with an automobile dealer to exchange it and pay $410.93 in addition for a 1938 model Hudson automobile. He executed and delivered a bill of sale to the dealer for the 1937 Hudson. He asked the dealer whether he would take his check in payment of the $410.93, which he had agreed to pay. The dealer agreed and he thereupon executed and delivered to the dealer his personal check for that amount payable on demand. In accordance with the agreement, the dealer took the heater from the 1937 automobile, installed it in the 1938 automobile and charged four dollars for making the transfer. The dealer executed bills of sale for the 1938 automobile. The purchaser signed these bills of sale in the proper place provided for the buyer's signature and left them with the dealer to file with the clerk of courts. It was also arranged that the dealer should secure a transfer of the license plates from the old to the new automobile. The dealer also gave the plaintiff a so-called owner's service policy at the same time. After all this had been done, the plaintiff left his 1937 Hudson with the dealer and drove away in his 1938 automobile.
A day or so later, some defect developed in the 1938 Hudson and the plaintiff returned it to the dealer for correction. The plaintiff took possession again after the correction was made, but some defect again developed and the 1938 Hudson was returned to the dealer a second time. There is a dispute as to whether it was returned for the purpose of rescinding the contract or merely for repairs. At any rate, the plaintiff obtained his 1937 Hudson, which he retained for more than a month, when it was taken from him under a writ of replevin in an action by The Cincinnati Finance Company, under a mortgage executed by the dealer while he had possession of it.
The plaintiff instituted a search for the 1938 Hudson *Page 489 
and having located it in the possession of the defendant, Eastbourne Garage, Inc., brought this action in replevin to recover possession of it.
All these transactions with the dealer occurred prior to the effective date of the certificate of title law relating to transfers of automobiles.
Now both plaintiff and defendant finance company base their claims on title derived from the fraudulent dealer. Both are innocent. The question, therefore, is as to which of two equally innocent persons must bear the loss inflicted by the fraudulent acts of a third person.
As between the plaintiff and the fraudulent dealer there was an intention that the title should pass to the plaintiff concurrently with the transfer of the 1937 Hudson and the payment of the difference in cash to the dealer. Restatement of Law of Contracts, Section 267. It is conceded that the title to the 1937 Hudson was transferred and it is also conceded that no cash was paid, but it is contended that the subsequent delivery of the plaintiff's check was payment because the dealer agreed to accept it as payment, notwithstanding the plaintiff later directed the drawee bank to dishonor it. In reading this record on the subject of the check, all we find is that when the time came for the plaintiff to pay the balance he asked the dealer "whether he would accept my check in payment for the car" and the dealer said, "yes."
Now the presumption is against the conclusion that a debtor's check is accepted in payment, so as to extinguish the original obligation. 31 Ohio Jurisprudence, 184, Section 85. I am of the opinion that much stronger language than that used in this instance is necessary to overcome that presumption, and cast upon the receiver of a check the risk of the failure of the bank upon which it is drawn, which would be the effect if the check was accepted as payment. However that may be, certainly such language would not impose *Page 490 
upon the receiver of the check the risk of loss resulting from the drawer's direction to the drawee bank not to honor it. That would impart to the dealer an intent to substitute an illusory thing for a thing of substance. To make a check payment the order upon the bank must be continuing, and there is implied in such a contract, as in every other contract, that the contracting party will not interfere with the other in reaping the fruits of his contract. Expressed in other words, he cannot derogate from his own grant. If this check was accepted as payment, what was thus accepted in lieu of cash was the continuing order of the plaintiff to the bank to pay and when the plaintiff withdrew that order there was a complete failure of consideration through the plaintiff's act, which would give the dealer the right to rescind the agreement to accept the check as and in lieu of cash. Under such circumstances the rights of the dealer were restored under the original contract providing for cash, and the possession of the automobile having been restored to the dealer, he had a right to hold it and to refuse to transfer title until payment of the balance was made in cash. Having this right, he could certainly transfer such right even to one with knowledge of the facts and more certainly to an innocent purchaser for value. Such a transferee would be in rightful possession of the automobile.
I am also of the opinion that the mortgagee is protected by the terms of Section 8405, General Code, against any claim by the plaintiff. That section provides:
"When a person having sold goods continues in possession of the goods, or of negotiable documents of title to the goods, the delivery or transfer by that person, or by an agent acting for him, of the goods or documents of title under any sale, pledge, or other disposition thereof, to any person receiving and paying value therefor in good faith and without notice of the *Page 491 
previous sale, shall have the same effect as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make it."
Now the seller was in possession of the automobile by and with the consent of the plaintiff. The seller had all the indicia of ownership. The fact that the seller did not file the bill of sale with the clerk of courts so as to give notice is chargeable against the plaintiff whose agent he was for that purpose. The plaintiff put it in the dealer's power to perpetrate this fraud by relying upon him to file the bill of sale. The statute is no more than the application to a specified situation of the principle that where one of two innocent persons must suffer, the one that puts it in the power of the wrongdoer to work the fraud must bear the loss.
It is urged that the chattel mortgage is defective in form in certain respects, but as the mortgagee acquired lawful possession before any rights attached, after the mortgage was executed and while the automobile remained in the possession of the mortgagor, I do not deem the defects in the written mortgage of any consequence. 7 Ohio Jurisprudence, 351; Francisco v. Ryan,54 Ohio St. 307, 43 N.E. 1045.
The defendant claimed that there had been an express rescission or repudiation of the sale by the plaintiff and offered to prove by certain witnesses statements made by the plaintiff at the time he returned the automobile tending to prove his intention in that respect. The court excluded this evidence, which I think was error. It was competent as an admission by the plaintiff. However, as in my opinion, final judgment should be rendered for the defendants for the other reasons set forth, it is not necessary to discuss this question, which would only be important in the event of a reversal and a remand for a new trial.
In the majority opinion it is said that the retention of the check by the payee and its delivery to his attorney *Page 492 
in some way limited his rights. No authority is cited for that statement. The drawer of the check had already withdrawn the order on the bank by directing it not to pay and all that was left in the payee's possession was a piece of paper evidencing the fact that the drawer had at one time given such an order. It was of no value except as evidence.
The majority opinion seems to say that the fact that the dealer mortgaged the 1937 Hudson and could not return it in some way affects the defendants' right. If it had been necessary for the dealer to rescind to reinvest himself with the title to the 1938 Hudson, there would be some validity to that contention, but such is not the fact in this case. The title to the 1938 Hudson never vested in the plaintiff. He agreed that the title should remain in the dealer until it was paid for. He, thereby, allowed the actual title and all the indicia of ownership to remain in the dealer, and the dealer was, thereby, empowered to perpetrate a fraud upon the defendant, which certainly was as innocent and as careful as plaintiff was.
For these reasons, I am of the opinion that the judgment should be reversed and final judgment rendered for the defendants.