PACIFIC FINANCE CORPORATION v. FAUST

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

PACIFIC FINANCE CORPORATION, Plaintiff-Respondent, v. Alvin Harrison FAUST, Charles H. Huffman and Alvin Harrison Faust, Charles H. Huffman and William J. Fulwiler, d/b/a Universal Motors, a partnership, Defendants-Appellants.

Civ. 20510.

Decided: February 21, 1955

William T. Selby and Glenn C. Garman, Ventura, for appellants. Hugh M. Foster, Jr., Ivan C. Tagert, Mansfield A. Mills, Los Angeles, William A. Reppy and F. Gile Tiffany, Jr., Oxnard, for respondent.

Universal Motors, a copartnership, delivered ten used automobiles to Lonnie's Used Cars, another copartnership. The automobiles were placed on Lonnie's lot and displayed for sale. When sold Lonnie's were to remit to Universal an amount agreed upon for each car. Anything in excess of that amount was Lonnie's profit.

When Lonnie's took delivery of each automobile they signed a writing in which the following recital appears: ‘It is understood and agreed that the title of ownership does not pass to me until the final cash payment is made.’

This, however, was not the entire agreement. The trial court found that the agreement, partly oral and partly in writing, was that Lonnie's could sell the automobiles consigned to them in the regular course of business, on credit pursuant to conditional sales contracts and could assign such contracts.

Lonnie's sold the ten automobiles, but did not pay Universal for them, and finally became insolvent.

As each automobile was sold to individual purchasers by Lonnie's, the plaintiff in this case Pacific Finance Company, a corporation, paid to Lonnie's that part of the purchase price which each purchaser borrowed. These sales to individuals were evidenced by conditional sales agreements, made by Lonnie's as seller, and assigned by Lonnie's to Pacific Finance.

But Universal kept at all times the pink slips for these ten automobiles. They never were turned over to Lonnie's, nor to any purchaser from Lonnie's.

Pacific Finance took Lonnie's agreement to furnish the pink slip for each automobile, showing ownership in Pacific Finance, when issued by the Motor Vehicle Department. Testimony in the record supports a finding that this is a customary practice in the business of selling used automobiles, because it usually takes three to four months to get pink slips through the Motor Vehicle Department.

When Pacific Finance learned that Universal claimed ownership of the automobiles, it brought this action to quiet title. Findings and judgment were for Pacific Finance, from which judgment Universal appeals. Upon the trial Universal disclaimed any intention to deprive any purchaser of the automobiles of his equity therein. Counsel for Universal stated that the controversy was between Universal and Pacific Finance only.

The trial court found, among other things, that it was the intention of the agreement between Universal and Lonnie's to create a consignment of factorage with respect to the automobiles in question; also that in addition to these ten automobiles, for a number of months the method of selling cars and financing them as above described had been carried on by Universal and Lonnie's with respect to numerous other automobiles.

Universal contends on appeal:

(a) That the title to the automobiles was in Universal until divested in some manner, and that by the terms of the California Motor Vehicle Act the only way in which title could have been transferred was by endorsement and delivery of the pink slips. In support of this contention Universal relies upon the applicable sections of the Vehicle Code, and particularly Section 186.

(b) That the burden of proof was on the plaintiff to show title in itself.

(c) That there is no estoppel.

(d) That the trial court erred in denying a motion for nonsuit.

(e) And that the evidence does not support the findings or conclusions of law.

This Court has determined that the evidence is sufficient to support the finding that Lonnie's was a factor for Universal. Having come to this conclusion, Pacific Finance is in the same position as the individual purchasers of the automobiles, and Universal may not assail the title of either of them.

In the recent case of Siegel v. Bayless, 113 Cal.App.2d 661, 248 P.2d 968 this Court held that a dealer in used automobiles is a factor within the definition of Civil Code, § 2026 when the owner of an automobile put it in the dealer's possession to be sold. Provisions of the Motor Vehicle Act were not pertinent in the Siegel case, for the automobile there in question had not been registered under the Motor Vehicle Act.

Other cases in which the law of factorage has been applied in determining ownership of automobiles are Kenny v. Christianson, 200 Cal. 419, 253 P. 715, 50 A.L.R. 1297; Cass v. Rochester, 174 Cal. 358, 163 P. 212; and Babson v. Salesbury, 46 Cal.App. 521, 189 P. 702. Also see 35 C.J.S., Factors, § 1, p. 390.

Universal's contention that the only way in which title to the automobiles in this case could have been transferred was to strictly comply with the provisions of the Vehicle Code was argued and relied upon in Kenny v. Christianson, supra. In that case our Supreme Court held that while compliance with the Motor Vehicle Act of 1925 was essential to complete a transfer of title to a motor vehicle, the failure of the transferee to procure a registration certificate did not render his right to possession of the vehicle so incomplete as to make the assertion thereof unavailing to him in an action to establish ownership. Transfers of motor vehicles not in accordance with the Motor Vehicle Act are not ineffectual for every purpose. Kompf v. Morrison, 73 Cal.App.2d 284, 166 P.2d 350. Failure to satisfy the registration requirements of the Vehicle Code does not taint with illegality every sale and purchase of motor vehicles. Henry v. General Forming, Ltd., 33 Cal.2d 223, 200 P.2d 785.

Having come to the conclusion stated, it is not necessary to consider the other specifications of error contended for by Universal: burden of proof, estoppel, and error in denying the motion for a nonsuit.

The judgment is affirmed.

DRAPEAU, Justice.

WHITE, P. J., and DORAN, J., concur. Hearing granted; CARTER, J., not participating.