Lindsey v. Commercial Discount Co.

Plaintiff: and respondent, hereinafter called dealer, in the conduct of a used-car business, had made arrangements with the defendant and appellant for financing in connection with the operation of the said business. These arrangements contemplated the financing of ears which were on dealer’s premises classified as “floorings”, as well as the financing of ears which were sold by dealer on conditional sales contracts, classified as “contract purchasers”. To secure appellant for its loans on floorings, dealer executed to appellant certificate of ownership duly endorsed and a bill of sale, or a conditional sales contract, or a time draft and trust receipt, the legal effect of which, irrespective of which of the said forms of instruments was severally or jointly executed, is conceded to be that of a chattel mortgage. (Pacific Finance Corp. v. Hendley, 103 Cal. App. 335 [ 284 Pac. 736 , 285 Pac. 1048 ]; Bonestell v. Western Automotive Finance Corp., 69 Cal. App. 718 [ 232 Pac. 734 ].) To secure appellant on its contract purchases, dealer assigned to appellant the conditional sales contracts under which the cars were sold, in which assignment dealer guaranteed the terms of the respective conditional sales contracts. In addition to the specific written instruments mentioned, one or more of which accompanied each separate transaction, there was an additional understanding governing generally the relations between dealer and appellant, the nature of which, so far as it is pertinent here, specified the discount at which appellant would purchase the conditional sales contracts, set forth the reserve that appellant might hold from moneys due the dealer, and provided for a “holdout” account which was a

On November 7, 1933, pursuant to its right to possession, appellant entered dealer’s place of business and repossessed eleven cars, eight of which were floorings, and three contract purchases. After taking possession, dealer asserts that appellant converted the eleven cars, and as a consequence i of this alleged conversion (which put dealer out of business) this action was brought in three counts, the first alleging conversion and asking damages, the second alleging usury and asking treble damages, and the third alleging balance du^ to the dealer on the reserve and holdout accounts, and asking for the amount of such balance. The jury before which the ease was tried brought in a verdict for dealer on all three counts. On motion for new trial the judgment entered on this- verdict was reduced, with dealer’s consent, by striking out the amount which constituted the judgment on the second count, and deducting fixed sums from the judgments entered on t(ie first and third counts. During the trial, appellant had moted for nonsuit on the three causes of action and also for directed verdict, and for judgment notwithstanding the verdict, all of said motions being severally denied. This appeal’ is fr|om the judgment as reduced by consent of the respondent and from the order denying appellant’s motion for judgment notwithstanding the verdict. i

On the question of conversion, dealer, to use his own language, “relies upon . . . the offering of the automobiles for sale before anything was due, and also, as to one Buick, the driving of the same upon the streets of Los Angeles”. In fairness to dealer it should be added that while only áugges

There is, however, no evidence sufficient to support the implied finding of the jury that the cars were offered for sale. It is undisputed that the cars were moved to the premises of the wholesaler and that tags were placed on them. What inscription the tags bore is left to the imagination. The record is entirely silent on this phase of the situation. The tags might have indicated that the cars were to be held. The fact that they were in the wholesaler’s lot is no more inconsistent with the desire of appellant to store them, than if they had been kept in a storage garage. There is no pre

Of the eleven cars possessed, eight were floorings, and three were contract purchases, as already stated. Under the arrangement between appellant and dealer, when a ear covered by a conditional sales contract was repossessed, dealerl was to be allowed thirty days in which to resell the same, and, if unsuccessful, such repossessed car at the expiration of the thirty-day period was to be reclassified as a flooring, i When appellant took possession of the eleven ears on November 7th, this thirty-day period as to the three cars in question had not yet expired. Dealer, however, was notified by appellant that he might, if he desired, sell these three cars, or any or all of the eleven, and he actually did sell one of the cars and received the money therefor. It thus affirmatively appears that dealer’s right to sell was not in any way violated as to said three cars by appellant’s action in taking physical possession of the same on November 7th. Furthermore, it affirmatively appears from the record that none of the cars repossessed was sold until more than thirty days, or December 5, 19¡33, on

The whole question of conversion arises by reason of dealer’s claim that an accord and satisfaction had been reached between dealer and appellant on October 19, 1933, by the terms of which their interest accounts were settled to that date and for thirty days in the future. Dealer asserts that as a part of said accord and satisfaction, appellant agreed to give him a thirty-day period of grace as to each of the contracts involved. Whether this thirty-day period of grace applied to the principal due on the several contracts and to all the terms of the several contracts, or to just the principal and not any of the other terms, or to the principal and some of the other terms, does not appear. In fact, the evidence is decidedly meager as to whether or not the extension was ever granted, even as to the principal, and there is no question about the fact that the principal on each of the several contracts covering the eleven cars was in default on the date of November 7th, when possession of the said cars was taken, and for some time prior thereto. There is no question, according to dealer’s own statement, that irrespective of such extension agreement, the mere taking of the cars on November 7th did not constitute conversion, since appellant could take such possession under covenants of its several contracts covering each respective car, other than that which gave the right to possession for default in payment of interest or principal. The effect of this concession on the part of respondent is to admit that there was no thirty-day extension granted as a part of the accord and satisfaction agreement or otherwise as to all ■ of the terms of the several contracts, but that at most, the extension agreement was granted only as to the principal of the several contracts. In short, if it were not for the so-called extension agreement, which the jury impliedly found to have been made in accordance with dealer’s contention, dealer, except as to three of the eleven ears which were “contract purchases” would have no basis whatsoever upon which to base a claim of conversion. As heretofore pointed out, the evidence on the accord and satisfaction and on the extension agreement arising therefrom is not satisfactory. A dispute existed as to who owed whom, which resulted in testimony as follows: “ ... we went over the figures together, and Mr. Trapp doing most of the figuring,

It is also worth noting that in the conversatipn which took place between the agents of appellant and dealer on November 7, 1933, at the time when appellant took possession of the eleven cars to which evidence our attention is specifically directed, nothing was said by dealer calling attention to the extension, which he now claims. In our opinion, the most that can be said for the so-called extension is that appellant agreed that it would not declare a default and exercise its rights because of nonpayment of principal. Indeed, the record shows that the facts actuating appellant in its qourse of action were an alleged misrepresentation by dealer of the amount of a down payment received by dealer on a “contract purchase”, and the unsatisfactory manner in whicji dealer conducted his business, resulting in a failure to comply with other terms of the contracts covering the various cars. There is nothing to warrant a finding that the other terms of the contract were extended. These other terms granted ample authority to appellant to take possession when it did, which authority appellant concedes, and in addition authorized appellant to do any of the things which are now complkined of as a conversion.

The judgment on the third cause of action was reduced by the trial court with the consent of dealer from $2,000 to $1184.49. Without going into detail as to the facts, an analysis of the record reveals that there was admittedly $346.98 held for dealer in the reserve account, and that dealer, according to his testimony, would be entitled to $837.51 from the holdout account, if the contracts covering the cars were paid in full. On the latter item there is no proof whatsoever that the contracts ever were paid in full. The only proof of anything due to dealer at the time of trial in excess of $346.98 is the admission in Paragraph II of appellant's “2nd

The order denying motion for entry of judgment notwithstanding the verdict is appealed from, generally and not as to each separate cause of action. Such order is therefore affirmed. The judgment is reversed and the cause remanded for a new trial.

York; Acting P. J., and Doran, J., concurred.

A petition for a rehearing of this cause was denied by the District Court of Appeal on April 7, 1936, and an application by respondent to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on May 4, 1936.