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District Court of Appeal, First District, Division 1, California.



Civ. 11799.

Decided: April 13, 1942

Dinkelspiel & Dinkelspiel and Alfred Del Carlo, all of San Francisco, for plaintiffs and appellants. O'Connor, Neubarth & Moran and Harold H. Cohn, all of San Francisco, for defendant and appellant. Daniel J. O'Brien, Jr., and R. H. Cormany, both of San Francisco, for defendants and respondents.

These consolidated actions are to recover damages for the death of Gabriello Ferroni and for personal injuries to Julia Ferroni arising out of an automobile accident which occurred when an automobile in which they were riding collided with one being operated by John T. McConnville. The latter had purchased the car on November 2d, the day prior to the accident, under the following circumstances: One Houser, an independent automobile salesman, visited the premises of the Pacific Motor Sales on that day with McConnville; they selected a car; Houser was given the net price thereof, and with the permission of the motor sales company he and McConnville took it out for a demonstration. Upon their return, Houser advised the motor sales company that the purchase had been made; that it was an installment sale, and that Pacific Finance Corporation of California would finance the transaction. Pacheco, one of the partners of the sales company, in its behalf authorized by his signature the purchase order signed by McConnville, which contained the following provision: “It is understood and agreed that the Title of Ownership of car as above described does not pass to me until the final cash payment is made.” On the same day the motor sales company confirmed the sale with the finance corporation, received the latter's check in its favor for $319.30 (which amount covered the net price of the car as quoted by the motor sales company to the salesman Houser, plus the salesman's commission and the sales tax), and in turn delivered to the finance company the “pink and white” certificates for the car. It should be mentioned in this connection that these certificates, duly endorsed by former respective owners of the car (neither showing registration nor ownership in the motor sales company) were received by the Motor Vehicle Department for transfer to McConnville as registered owner, and to the finance corporation as legal owner, on November 9th, six days after the accident. McConnville had endorsed the certificate of ownership as “purchaser” and the finance company as “new legal owner.”

With regard to McConnville's transaction in the meantime with the finance corporation, an employee of the latter had inserted as “seller” or vendor in the body of the conditional sales contract, the name of Geis, one of the partners of the motor sales company. Such employee had also signed the contract, and an assignment to the finance corporation, “Geo. D. Geis.” All details in the sale of the car appear to have been completed on November 2d, the day prior to the accident.

The consolidated actions were tried without a jury. Judgment in favor of plaintiffs Ferroni was entered in each action against defendants McConnville and the finance corporation, and against plaintiffs in favor of defendants Pacheco and Geis, copartners in the motor sales company. The finance corporation appeals from the judgment in favor of plaintiffs in each action. Plaintiffs appeal from both judgments insofar as they are in favor of the motor sales corporation. They urge that the judgment against the finance corporation stand, but the appeals are precautionary interposed for the purpose of preserving the rights of the plaintiffs. In effect, plaintiffs request that in the event the judgment against the finance corporation is reversed, they may hold the motor sales company if upon retrial the liability of the latter should be established. All points urged on appeal are primarily directed to the question of the liability of the finance corporation under Vehicle Code section 402, St.1937, p. 2353, wherein “Every owner of a motor vehicle is liable and responsible for the death of or injury to person or property resulting from negligence in the operation of such motor vehicle * * * by any person using or operating the same with the permission, express or implied, of such owner.”

The subject of conditional vendor, and the construction to be placed upon Vehicle Code section 402, have been treated in Guillot v. Hagman, 30 Cal.App.2d 582, 86 P.2d 865; Bunch v. Kin, 2 Cal.App.2d 81, 37 P.2d 744; Schmidt v. C. I. T. Corporation, 14 Cal.App.2d 92, 57 P.2d 1016; Helmuth v. Frame, 46 Cal.App.2d 372, 115 P.2d 846; Parke v. Franciscus, 194 Cal. 284, 228 P. 435.

McConnville concededly is the conditional vendee. The question is, which of the firms as vendor transferred rights to him as such. From the facts that, after negotiations with the motor sales company, the “purchase order” form of that company was used in the transaction; that such company made delivery of the car to McConnville and delivered certificates of ownership and registration to the finance corporation, an inference may be drawn that the motor sales company was the vendor, unless it appears from the evidence that the latter, on receipt of the payment made by the finance corporation, had transferred to such corporation its interest therein. There is no evidence of such sale or assignment except by the delivery to it of the “slips” and the payment by it above mentioned. As stated, the finance corporation, although it appears to be registered as the legal owner, prepared the conditional sale contract showing Geis (one of the partners of the motor sales company) as seller and McConnville as purchaser. Such contract was followed by an “Assignment,” executed by the seller named in the contract, in favor of the finance corporation. If the finance corporation was the vendor, such an assignment would appear to have been superfluous. The testimony of both partners of the motor sales company was that the execution of the conditional sales contract by an employee of the finance corporation for and on behalf of Geis as seller or vendor was unauthorized. If the finance corporation was in fact authorized to transact the conditional sale on behalf of the motor sales company, or of Geis, one of its partners, the fact that the motor sales company subsequently refused to ratify the contract would not affect its liability as conditional vendor. If it was not, the transfer by the motor sales company to the finance corporation of the certificates endorsed by their former holders would appear to make the finance company the conditional vendor to the McConnville transaction. The theory of the motor sales company is that it sold the car to the finance corporation and that the latter was in fact the conditional vendor by direct sale. The trial court found that on the date of the accident the finance company was the owner of the motor vehicle in question, and Pacheco and Geis, copartners doing business as Pacific Motor Sales, were not. Whether, by virtue of a prior course of conduct between them the finance corporation was authorized to procure McConnville's signature to a contract of conditional sale binding the motor sales company as vendor, is of importance.

Ordinarily in transactions of the kind the “dealer” is the conditional vendor, the “finance company” simply contracting with the purchaser to finance the sale. In some instances the finance company is in fact the conditional vendor, though it may, as a matter of business convenience, in the preparation of transfer instruments purport to act as the agent of the dealer, and, so far as the record indicates, appear as the vendor.

Vehicle Code section 402 should be construed with section 177, St.1935, p. 115, and, when applicable, other sections, in determining whether a conditional vendor, having neglected to comply with the provisions of the Vehicle Code, is attempting to take advantage of such omission. In some instances, record registration is conclusive as to liability (Helmuth v. Frame, 46 Cal.App.2d 372, at page 376, 115 P.2d 846, and cases cited), but the actual conditional vendor should not escape liability by such a strict interpretation of the sections as will thrust the burden of liability upon one who is only technically liable. Helmuth v. Frame, supra; Schmidt v. C. I. T. Corporation, supra; McCalla v. Grosse, 42 Cal.App.2d 546, 109 P.2d 358.

Appellant finance corporation sought to introduce evidence that the procedure it adopted in the matter of affixing Geis' signature as “seller” to the conditional sale contract was the normal and customary way of transacting business with the motor sales company. An objection to such evidence was sustained and an offer of proof rejected. The offer of proof of a course of dealing theretofore followed was made in an effort to overcome the testimony that the execution was unauthorized. The objection that the offer of proof was insufficient is not well founded.

Previous performance of acts like the one in question, and acquiescence by the principal, is a recognition and approval of an assumed agency, particularly when the alleged principal has accepted the benefits derived from the transaction. In Smith v. Schuttpelz, 1 Cal.2d 158, 161, 33 P.2d 836, 838, the court said: “The relation of agency need not depend upon express appointment and acceptance thereof, but it may be, and frequently is, implied from the words and conduct of the parties and the circumstances of the particular case.” 1 Mechem on Agency, 2d Ed., sec. 271; 2 C.J.S., Agency, § 68, pp. 1048–1049; Mischel v. Harnden, 63 N.D. 107, 246 N.W. 644; MacDonnell v. California Lands, Inc., 15 Cal.2d 344, 101 P.2d 479; Pacific Acceptance Corp. v. Jones, 95 Cal.App. 365, 272 P. 1084; Caspary v. Moore, 21 Cal.App.2d 694, 70 P.2d 224.

In the present record as it stands there is sufficient evidence to sustain the judgments of the court. However, under all of the circumstances herein we think it was error, prejudicial to the rights of appellant finance company, to reject the proffered testimony, the admission of which might have resulted in a contrary judgment. It is obvious that either the finance corporation or the motor sales company or both, is or are liable for the damages suffered by plaintiffs. The issues of the negligence of McConnville and the contributory negligence of plaintiffs have been determined by the judgments heretofore entered; likewise the issue of the amounts of damages has been settled by such judgments. On these appeals the correctness of these determinations is not challenged. No useful purpose would be served by retrying those issues.

The judgments in favor of Aurelia Ferroni and Serafino Ferroni and Julia Ferroni, his wife, respectively entered against the Pacific Finance Corporation of California, and against them in favor of defendants Louis Pacheco and George D. Geis, copartners doing business as Pacific Motor Sales, from which appeals were taken by the plaintiffs Ferroni and the Pacific Finance Corporation of California, are and each of them is reversed, and the cause is remanded for a new trial for the sole purpose of ascertaining whether the finance corporation or the motor sales company is liable. Under the circumstances of these cases justice requires that the costs of all the appeals should be assessed against the Pacific Motor Sales. It is so ordered.

WARD, Justice.

PETERS, P. J., and KNIGHT, J., concurred.

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