Opinion
No. 31456.
March 4, 1935.
1. BANKRUPTCY.
Where trustee showed that bankrupt transacted business in own name, used automobile in business, displayed it for sale, and showed adjudication in bankruptcy, finance company which resold automobile had burden of showing that automobile belonged to it, was not acquired or used by bankrupt in his business with its consent, or that finance company had such lien, of which trustee had actual or constructive notice, as would make statute inoperative (Code 1930, section 3352).
2. BANKRUPTCY.
Bankrupt's trustee held not entitled to recover value of automobile repossessed by finance company, which was conditionally sold to bankrupt, who represented in finance papers that automobile was for personal use, but who used automobile in his business in violation of his agreement, in absence of evidence that finance company knew bankrupt was using automobile in his business or that it authorized him to do so (Code 1930, sections 173, 3352).
3. BANKRUPTCY.
In action by bankrupt's trustee to recover value of automobile repossessed by finance company, evidence that bankrupt, in application for credit, stated automobile was for personal use, that conditional seller's title was assigned to finance company with bankrupt's consent, and that finance company did not know bankrupt was using automobile in his business, sustained burden imposed on finance company, to defeat trustee's recovery, of showing it owned automobile and that automobile was not acquired or used by bankrupt with its consent (Code 1930, sections 173, 3352).
APPEAL from the chancery court of Grenada county.
HON. N.R. SLEDGE, Chancellor.
On suggestion of error.
Former opinion withdrawn, judgment of reversal set aside, and decree of court below affirmed. For former opinion, see 157 So. 709.
Stone Stone, of Coffeeville, and James Stone Sons, of Oxford, for appellant.
If appellee had simply recorded its contract it would have been entirely protected.
In re Loeb's Inc., Grand Rapids Showcase Co. v. Trustee of Loeb's, Inc., 279 Fed. 269.
It was not necessary for appellant to show that the car was used in the business of the bankrupt with the consent of appellee.
Bankston v. Hill, 134 Miss. 288, 98 So. 689; In re Waynesboro Motor Company, 60 F.2d 688.
There is nothing in the sign statute which says that the property must be used in the business of the trader with the consent of the owner. The statute simply says that it must be used or acquired in the business of the trader. So the statute does not place upon appellant the burden of proving that the car was being used by the bankrupt in his business with the consent of the owner.
Appellee has not established any such state of facts as will permit it to reclaim the proceeds of this car on the grounds of fraud.
Frank, Herman Co. v. Robinson, 65 Miss. 162, 3 So. 253.
A casual examination of the decisions will show that appellee has not met the burden upon it, even if it had been the original seller of the car, to an extent of putting itself where it would be entitled to reclaim the car or the proceeds thereof.
Frank, Herman Co. v. Robinson, 65 Miss. 162, 3 So. 253; Goodbar v. Knight, 89 Miss. 124, 42 So. 539; In re Sol Aarons Co., 193 Fed. 646, C.C.A., 2d cir.; In re Empire Grocery Company, 277 Fed. 73; In re Morrill Mascott Co., 286 Fed. 449.
Appellee cannot claim the proceeds of this car by reason of any laches or estoppel.
Hill v. Nash, 73 Miss. 849.
Royden Dixon, of Memphis, Tenn., for appellee.
Section 1300 of the Code does not apply, except where the thing sought to be treated as the property of him who transacted business with it was in his possession in such business, with the consent of the owner.
Adams v. Berg, 67 Miss. 234.
Whether or not complainant met the burden of proof and established a state of facts to bring the case within the provisions of section 3352 is a matter of record, and there is no controversy or dispute about this phase of the facts.
We do not understand this court in any case construing section 3352, has held expressly or impliedly that the effect of section 3352 is to change the rules of evidence pertaining to the burden of proof.
This court has gone far in holding parties to a strict accountability for the truth and veracity of statements made by them in inducing another party to enter into a contract.
Williams v. New York Life Insurance Company, 132 Miss. 345, 96 So. 97; Home Insurance Co. v. Gavin, 162 Miss. 1, 137 So. 490; Springhill Fire Marine Ins. Co. v. Nix, 162 Miss. 669, 138 So. 598.
We conceive it is not sufficient for appellant to say the statute does not throw the burden of proof on appellant. Neither does it throw the burden of proof on appellee. The statute is construed to mean the use or acquisition must be with the consent of the owner. We conceive the cardinal, fundamental rules of evidence put the burden of proof on appellant.
The decree of the court below herein was reversed on a former day, and a decree was here rendered for the appellant. The appellee now suggests that we erred in so doing and that we should have affirmed the decree in the court below. This, we think, is true.
The appellant is a trustee of the estate of R.L. Holley, a bankrupt, and instituted this suit, which is an attachment in chancery, under section 173, Code 1930, alleging that the appellee had obtained possession of, and sold for four hundred thirty-six dollars, an automobile, the property of the bankrupt. The appellee is a foreign corporation, but W.P. Moss, a local resident, was made a defendant to the bill, in which it was alleged that he was indebted to the appellee. The appellee appeared and answered the bill, and, by agreement, a decree was rendered dismissing the bill as to Moss; and the case thereafter proceeded as an ordinary suit in chancery, resulting in the dismissal of the bill of complaint.
The appellant claims title to the automobile by virtue of section 3352, Code 1930, under which, if any person transact business as a trader or otherwise in his own name without displaying a sign in connection therewith that another has an interest therein, "all the property, stock, money, and choses in action used or acquired in such business shall, as to the creditors of any such person, be liable for his debts, and be in all respects treated in favor of his creditors as his property." In order to maintain his case, it devolved upon the appellant to prove that Holley was transacting business within the meaning of the statute, and that the automobile was acquired or used by him therein. He introduced evidence to the effect that Holley transacted business as a trader in his own name, used the automobile, and displayed it at times for sale, therein, and in addition that, after Holley was adjudged a bankrupt, the General Motors Acceptance Corporation sold the automobile, and Holley, at its request, delivered possession thereof to the purchaser. It then devolved upon the appellee to prove that the automobile belonged to it and that it was not acquired or used by Holley in his business with its consent, or that it had a lien thereon of such character that would withdraw it from the operation of the statute, of which the appellant had actual or constructive notice. Adams v. Berg, 65 Miss. 3, 3 So. 465; Hall's Self-Feeding Cotton Gin Co. v. Berg, 65 Miss. 184, 3 So. 372; Frank v. Robinson, 65 Miss. 162, 3 So. 253; Adams v. Berg, 67 Miss. 234, 7 So. 225.
To meet this burden, the appellee introduced evidence, from which it appears the East Chevrolet Company is engaged in the sale of automobiles, and the appellee is engaged in financing such sales (by purchasing deferred payment notes given for the purchase of automobiles from dealers). Holley purchased the automobile from the East Chevrolet Company, making a payment thereon, and executing several notes for the remainder of the purchase money. When Holley applied to the East Chevrolet Company for the purchase of the automobile, he executed to it a written purchaser's statement addressed to the East Chevrolet Company and the General Motors Acceptance Corporation in which he made several representations, among which was that the car will be used for personal use. The form on which this statement was made contained also blanks for statements that the automobile would be used for business or both; that is, for both business and personal use. These blanks were not filled out. This statement also recited: "The undersigned (meaning Holley) warrants the truth and accuracy of the foregoing information, which is offered for the purpose of obtaining credit from the sources first named herein, and if credit is extended (the contract which this statement covers may be assigned GMAC) the undersigned agrees that if remittance or tender is made in any medium except cash, payment upon said obligation will only be affected to the extent of cash finally collected and received."
On this purchaser's statement a written conditional sales contract for the automobile was executed in triplicate, signed by Holley and the East Chevrolet Company, which reserved title to the automobile in the seller until the amount due thereon by the purchaser should be paid. Immediately following the signatures to this sales contract is an assignment thereof to the General Motors Acceptance Corporation. Neither this contract nor the assignment thereof was acknowledged and recorded. The General Motors Acceptance Corporation purchased the notes given by Holley immediately after their execution, having before it at the time all of the papers hereinbefore designated. Holley failed to pay the deferred purchase-money notes, and the appellee sold the automobile for less than the amount due thereon by him.
The representation by Holley that he purchased the automobile for personal use, and his failure to indicate therein that he intended to use it in his business, as the statement required him to do, was addressed to both the East Chevrolet Company and the General Motors Acceptance Corporation, and he expressly agreed that his contract of purchase "may be assigned to General Motors Acceptance Corporation." It therefore appears that he was using the automobile in his business in violation of his agreement with the owner not to do so. There being no evidence that the General Motors Acceptance Corporation knew that Holley was using the car in his business, or that it had authorized him so to do, its right must be determined by the written contract.
The former opinion herein will be withdrawn, the judgment of reversal will be set aside, and the decree of the court below will be affirmed.