Opinion
December 9, 1931.
March 5, 1932.
Replevin — Automobile — Bailment lease — Delivery — Possession — Title — Sale — Rights of execution creditor of vendee — Judgment n.o.v.
In an action of replevin to recover an automobile, the testimony established that a dealer in automobiles entered into a written contract with a customer for the sale of a new automobile. The contract provided that the customer was to be credited a certain sum as a trade-in allowance for his used car and that the balance of the purchase price was to be financed by the plaintiff. After the execution of the order the dealer delivered a bill of sale for the car to the plaintiff and the latter entered into a bailment lease with the customer. The plaintiff did not receive the used car and never had possession of the new car. Subsequently the defendant, a creditor of the vendee of the car, obtained a judgment against him, issued execution and purchased the car at the Sheriff's sale.
Held: (1) That the transaction between the customer and the plaintiff, so far as the defendant was concerned, was that of debtor and creditor, (2) that the defendant, being a bona fide creditor can sustain his title to the car and (3) the order of the court below entering a judgment for the defendant non obstante veredicto, will be affirmed.
Where persons trafficking in and loaning money on automobiles, execute a number of papers giving a similitude of the passing of title, the courts will look through the screen of paper titles to ascertain what was the real situation.
When a vendee or pledgee takes title to personal property, without taking possession of it, he takes the risk of the integrity and solvency of his vendor or pledgor, when the rights of subsequent bona fide purchasers or of levying creditors arise.
Appeal No. 375, October T., 1931, by plaintiff from judgment of C.P. Delaware County, September T., 1929, No. 112, in the case of Commercial Banking Corporation v. Edward B. Meade.
Before TREXLER, P.J., KELLER, LINN, GAWTHROP, CUNNINGHAM, BALDRIGE and STADTFELD, JJ. Affirmed.
Replevin to recover an automobile. Before BROOMALL, J.
The facts are stated in the following opinion of the court below:
This was an action of replevin to recover possession of a Reo automobile. At the conclusion of the trial both plaintiff and defendant presented written motions for binding instructions, and the trial judge gave binding instructions in favor of the plaintiff. Defendant has moved for judgment n.o.v. and the motion is before us for disposal.
There was no substantial dispute in regard to the facts, the evidence showing that on November 21, 1928, Robert B. Hines signed a written order of purchase to the Chester Reo Company for a new Reo, model 1929, coupe. The written order stated, inter alia:
"Price of car, $1,925. Allowed for trade in $900, balance to be taken care of by finance. Finance terms-name of company Commercial Banking Corporation Amount $1,025. Finance and insurance $212.13. Total note with finance company $1,237.13. 16 payments at $77.32 per month."
This was signed Robert B. Hines, purchaser. It was marked accepted November 21, 1928 — Chester Reo.
On the same date, to wit, November 21, 1928, the Chester Reo Company executed a bill of sale for the automobile which is the subject of this suit, and which is the one mentioned in the order of purchase above referred to, to the Commercial Banking Corporation, and for this bill of sale the Commercial Banking Corporation paid the Chester Reo Company the sum of $1,025. The used automobile turned in by Hines at the sum of $900 was received by the Chester Reo Company for its benefit, and it was never transferred to nor was it intended that it should be transferred to the Commercial Banking Corporation.
On November 21, 1928, a bailment lease covering the new automobile was drawn up at the office of the Chester Reo Company, in which lease the Commercial Banking Corporation, plaintiff in this action, was named as lessor, and Robert B. Hines, the person who had signed the purchase order, and Mary Hines, his wife, were named as lessees, and Robert B. Hines and Mary, his wife, executed this lease on November 21, 1928, at the office of the Chester Reo Company, and the automobile in question was then delivered to Robert B. and Mary Hines. This lease and the bill of sale from the Chester Reo Company to the Commercial Banking Corporation were then sent by mail to the Commercial Banking Corporation, which thereafter executed the bailment lease by that corporation's officers. In this bailment lease the total rental was mentioned as $2,137.13; it was stated that the lessees had paid by trade-in $900 and that the lessees agreed to pay the lessor a balance of $1,237.13, the exact amount mentioned in the order of purchase above referred to.
Robert Hines and Mary Hines continued in possession of the automobile and payments of the rentals mentioned in the lease of the Commercial Banking Corporation were paid up to and including June, 1929.
Prior to the transaction between the Hines', Chester Reo Company and the Commercial Banking Corporation, Robert B. Hines and Mary Hines were indebted to defendant, Edward B. Meade, in the sum of $1,200. This indebtedness was evidenced by judgment note dated April 6, 1927, upon which judgment was entered in this county as of No. 916, March Term, 1927. In the summer of 1929, Edward B. Meade issued an execution on his above mentioned judgment, levy was made upon the personal property of Robert B. Hines and Mary Hines and the Reo coupe mentioned in the above lease was also levied upon. A sale was had under this fi. fa. on September 5, 1930, and at that time the automobile in question was bought in by Edward B. Meade, the defendant. Upon learning of this sale, plaintiff issued the present writ of replevin and the automobile in question was delivered to it.
What was said by the Supreme Court in the case of Root v. The Republic Acceptance Corporation, 279 Pa. 55, is entirely pertinent here, namely:
"The complicated dealings between many of those trafficking in and loaning money on automobiles has reached a point where the courts must strip transactions of their pretenses, and look at them as they really are, with the camouflage of papers giving a similitude of the passing of title removed, or they will be dealing with fictions instead of facts. Those who buy and sell, bail and loan money on motor vehicles must be given to understand that the realities of their transactions will be sought for by the courts; that they will look through the screen of paper titles to ascertain what was the real situation."
Applying this principle to the facts of the present case, it appears that the Hines' desired to purchase an automobile which the Chester Reo Company desired to sell; that the Chester Reo Company was willing to accept the automobile then owned by the Hines' as a first payment on account and as the equivalent of $900; that such payment was, in fact, made as was evidenced by the written paper in which Hines was described as the purchaser; that Hines was unable at that time to pay the balance of the purchase price and it was arranged and intended by the Chester Reo Company and Hines that he should secure the balance of the purchase money from the present plaintiff, the Commercial Banking Corporation, and in order that this might be done the Chester Reo Company executed the bill of sale for the new automobile to the Commercial Banking Corporation, the purchase price therein mentioned being the balance that Hines would otherwise have paid, and it was recognized at the time that in carrying this out Hines would be obliged to pay the banking corporation $212.13 more than he would have paid the Chester Reo Company if he had had sufficient funds to complete the purchase himself. It was never intended that the used car of Hines should in any manner pass into the possession and control of the Commercial Banking Corporation. The bailment lease, upon which the plaintiff relied to establish its title here, was then drawn up at the office of the Chester Reo Company, it was executed by the Hines' but not at that time by the banking corporation, but the new automobile was immediately turned over to the Hines as soon as they executed the lease, and it was not until later that the banking corporation executed the lease or that it paid the balance of the purchase price to the Chester Reo Company. In passing upon the real nature of the title of the various parties, these three papers, namely, the order of purchase between Hines and the Chester Reo Company; the bill of sale of the Chester Reo Company to the Commercial Banking Corporation, and the bailment lease of the Commercial Banking Corporation to the Hines should be considered as one transaction: Brunswick Balke Co. v. Hoover, 95 Pa. 508; Bank v. Rudolph, 83 Pa. Super. 439.
"However much plaintiff desired and endeavored to disguise the transaction between it and the Hines by the dressing of the papers which were executed ...... the real transaction, so far as third persons were concerned, was that of a loan by plaintiff to the Hines and the actual relation between them was not that of bailor and bailee but debtor and creditor": Root v. Republic Acceptance Corporation, 279 Pa. 55-58.
This conclusion is made clear as well as strengthened by the conditions shown in regard to the used car turned in by Hines and retained by the Chester Reo Company.
"How this amount, which was taken in trade as part payment, would subsequently be turned into rental is hard to say. The whole thing on its face is a device to secure the balance of the purchase money by a pledge of the car": Bank v. Rudolph, 83 Pa. Super. 439.
As far as defendant here was concerned he was a bona fide creditor of the Hines, his debtors were the pledgors of the automobile in question which he found in their possession at the time he issued execution on his judgment, and plaintiff here, having allowed the pledge to remain in the possession of the pledgor is not in a position to sustain its title to the pledge against a bona fide creditor of the pledgor.
"When a vendee or pledgee takes title to personal property, without taking possession of it, he takes the risk of the integrity and solvency of his vendor or pledgor, when the rights of subsequent bona fide purchasers or of levying creditors arise": White v. Gunn, 205 Pa. 229; Bank of North America v. Penn Motor Car Company, 235 Pa. 195.
We are compelled to conclude, therefore, that the sheriff"s sale in this county passed a good title to the purchaser at that sale, who was the defendant in this action of replevin before us, and that he was, therefore, entitled to binding instructions in his favor, of which he asked on the trial.
And now, to wit, July 17, 1931, it is directed that judgment be entered in favor of defendant notwithstanding the verdict.
The trial court gave binding instructions in favor of the plaintiff but subsequently on motion, entered judgment for the defendant non obstante veredicto.
Error assigned, among others, was the entry of judgment.
William Potter Davis, for appellant.
Edw. D. McLaughlin, for appellee.
Argued December 9, 1931.
The judgment is affirmed on the opinion of Judge BROOMALL.