Court Opinion

ID: 9605557
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:38:47.125553+00
Date Added: 2024-06-11T18:02:28.794079
License: Public Domain

BAKES, Justice
(concurring specially) :
The majority opinion has reached the right result in this matter, but for the wrong reason, in my opinion. In order to find liability under paragraph 13 of the re*199serve agreement, it was necessary for the majority to find that there was a conversion resulting from Chisholm Bros.’ failure to properly file or record the purchaser’s obligation or obtain a certificate of title showing the lien. The majority concludes that:
“Chisholm’s failure to protect Commercial Credit’s security interest by filing or recording notice of the security interest or lien enabled the customer to make a sale of the car to a bona fide purchaser without the permission of Commercial Credit. Such a sale was a conversion.”
The foregoing statement assumes that Commercial Credit had a security interest in the vehicle because without such a security interest there could be no conversion. However, the uncontroverted facts found by the trial court show otherwise. The trial court found that:
“Prior to December 15, 1967, and while the Reserve Agreement was in force, one Ike Ridenhour, a friend and potential business associate of John F. Chisholm, president of defendant company, desired to purchase an auto — a brand other than those sold by defendant. He found a 1968 Chrysler Imperial in Denver, Colorado at the Mike Stroud Agency, but he needed auto financing. The price was $7,300.00, less $1,527.00 trade-in, plus a time-price differential of $577.-30. The defendant, through its president, undertook to obtain the necessary financing in the following manner:
“Defendant and Ridenhour, on December 15, 1967, entered into a conditional sale contract wherein defendant was denominated ‘seller’ and Ridenhour, ‘purchaser.’ (See Plaintiff’s Exhibit No. 2.) The total price of $6,350.30 was due and payable December 12, 1968.
“Defendant delivered the conditional sale contract to the plaintiff at its Twin Falls branch office, without ever naving marked either box to indicate its election of assignment plan. In return, plaintiff delivered its check for $5,773.-00 to the defendant.
“Defendant then endorsed the check over to Ike Ridenhour and delivered it to him.
“[This is a sequel case to No. 9301, Commercial Credit Corporation vs. John F. Chisholm, decided in this Court on April 13, 1971. In that case we learned that Ridenhour delivered the money to the Colorado auto agency and received possession of the auto and its unencumbered title. Also we learned that the car had been subsequently sold to a bona fide purchaser and that Ridenhour is not within the state of Idaho.]” Memorandum Opinion, Clerk’s Tr., Vol. 2, pp. 13-14.
At the time the conditional sales contract, plaintiff’s exhibit A, was executed by the purchaser Ridenhour, and seller Chisholm Bros., neither one of them owned any interest in the automobile in question. The automobile was owned by a Denver agency. The conditional sales contract could not have created any security interest in the vehicle since neither the purchaser Ridenhour nor the seller Chisholm Bros, owned any interest in the automobile when they signed it. Therefore, there is no basis for the majority’s conclusion that when Ridenhour sold to a third party the car which he purchased from the Denver agency with the proceeds of the loan which Commercial Credit gave to Chisholm Bros., that there was a conversion under paragraph 13 of the reserve agreement.
However, I believe that Chisholm Bros, were liable under the conditional sales contract. It is uncontradicted that Ridenhour as a purported purchaser, and Chisholm Bros., as a purported seller, executed the conditional sales contract1 and sold the *200contract to Commercial Credit having signed the following assignment provision:
“Accepted: and this contract hereby is assigned in accordance with the plan marked below, and under the terms of the assignment on the reverse.
“SELLER Chisholm Bros. Farm Eqpt. Co.
“BY John F. Chisholm TITLE President”
While the trial court was correct that the parties did not mark which of the two plans it was assigned under, i. e., whether the assignment was with or without recourse, and that therefore the court could not supply that provision of the contract, nevertheless the assignment provision provides that the assignment was made “under the terms of the assignment on the reverse.” That assignment provision on the reverse reads as follows:
“FOR VALUE RECEIVED, Dealer hereby sells, assigns and transfers to Commercial Credit Corporation, its successors and assigns, the contract on the reverse side hereof, and all of Dealer’s right, title and interest in and to the vehicle referred to therein, with power to take legal proceedings in the name of Dealer or itself.
“Dealer warrants that: the contract is genuine and constitutes the entire agreement with the Purchaser-, the Purchaser is of legal age and competent; the contract is legally enforceable against the Purchaser named therein; the down payment was made by the Purchaser in cash and not its equivalent, unless otherwise noted in the contract; no part of the down payment was loaned to the Purchaser, directly or indirectly by Dealer or anyone connected with Dealer; unless noted herein, Dealer has no reason to believe that Purchaser ever violated any laws concerning liquor or narcotics or that Purchaser was ever rejected by any finance company, bank or banker; Dealer has complied with all laws with respect to the sale of the Vehicle; by this assignment, Dealer transfers clear title to the Vehicle, subject only to the contract; the lien represented by the contract appears on the Certificate of Title or Bill of Sale, as required by State law covering the Vehicle as a first lien or encumbrance; there is now owing the amount set forth therein; and that all the obligations of Dealer contained in the contract have been fully performed. Dealer makes said warranties for the purpose of inducing Commercial Credit Corporation to purchase the contract, and if any of such warranties should be untrue, Dealer shall buy the contract from Commercial Credit Corporation, upon demand, and will pay therefor, the amount unpaid to Commercial Credit Corporation thereon, plus any and all costs and expenses paid or incurred by Commercial Credit Corporation in respect thereto. Said remedy shall be cumulative and not exclusive and shall not affect any other right or remedy that Commercial Credit Corporation might have at law or in equity. Dealer agrees that Commercial Credit Corporation, by purchasing the contract, shall not be deemed to have assumed any of the obligations of Dealer thereunder which are executory.
“Commercial Credit Corporation is hereby authorized to correct patent errors in said contract and all other papers executed, endorsed or assigned in connection therewith.” Plaintiff’s Exhibit A. (Emphasis added).
The dealer warranty provisions of that “Dealer’s Assignment” were violated in at least two respects by Chisholm Bros.: (1) the contract was of questionable genuineness, since the seller never owned the vehicle which the contract purported to sell; (2) the dealer wasn’t transferring any title, and the lien didn’t appear on the title because the seller never owned or controlled the automobile in question or its title.
Therefore, judgment should have been rendered in favor of the plaintiff against *201the defendant Chisholm Bros, for the breach of warranties contained in the assignment provision of the conditional sales contract, plaintiff’s exhibit A.

. In addition to signing as President of Chisholm Bros. Farm Equip. Co., seller, John F. Chisholm also signed as a “purchaser” below the signature of Ike Ridenhour. Nothing in the record explains why he was not joined individually as a defendant.