From Casetext: Smarter Legal Research

Washington Lumber & Millwork Co. v. McGuire

District Court of Appeals of California, Third District
Sep 8, 1930
291 P. 458 (Cal. Ct. App. 1930)


Rehearing Denied Oct. 8, 1930

Hearing Granted by Supreme Court Nov. 3, 1930.

Appeal from Superior Court, Santa Barbara County; T.A. Norton, Judge.

Replevin by the Washington Lumber & Millwork Company against George M. McGuire, in which the defendant cross-complained. Judgment for defendant on his cross-complaint, and plaintiff appeals.

Reversed. COUNSEL

Coleman E. Stewart, of Santa Barbara, for appellant.

W.P. Butcher, Jr., of Santa Barbara, for respondent.



The plaintiff appealed from the judgment in this action to replevin a truck and for damages for the detention thereof, which was rendered in favor of the defendant on his cross-complaint.

The plaintiff was the registered owner of the truck in question. In 1925 the plaintiff sold and delivered this machine to G.H. Hubbard pursuant to the terms of a conditional contract of sale. The purchase price was never fully paid, although notes were executed and delivered for the balance thereof. At the time of the sale the plaintiff signed and transferred the certificate of ownership of the truck to the purchaser. This certificate was then forwarded to the motor vehicle department, which thereupon issued a certificate of ownership of the machine in the name of Hubbard pursuant to section 45 of the California Vehicle Act (St.1923, p. 524). The plaintiff soon discovered this error and communicated with both the motor vehicle department and Hubbard seeking to correct the error. Pending the negotiations for the adjusting of this erroneous issuing of the certificate of ownership, Hubbard attempted to borrow $1,080 from the defendant, who was engaged in the business of loaning money, by pledging the truck as security therefor. The defendant testified that he was then without knowledge of the fact that Hubbard had no actual title to the machine and did not know that he was merely holding it pursuant to the terms of a conditional contract of sale. The defendant nevertheless refused to accept a chattel mortgage on the machine as security for the loan. He testified in that regard: "I said I wouldn’t accept a chattel mortgage on personal property. *** If you want to transfer the title to me I will give you back a contract of sale and Mr. Hubbard said that it was satisfactory to him." This procedure was agreed upon between the parties. Hubbard purports to have sold the machine to the defendant July 3, 1926, contrary to the terms of his contract, and the certificate of ownership was transferred to him. The truck was then registered in the name of the defendant, who immediately executed a conditional contract of resale to Hubbard for the exact consideration for which he pretended to purchase the machine. The defendant, however, failed to take possession of the machine. The transaction of the purported sale from Hubbard to the defendant took place at Hubbard’s home. The machine was standing in the yard. It remained in the possession of Hubbard, who continued to use it as he had done before. The defendant testified in that regard:

"Q. The truck was standing in the same position all the time? A. Yes.

"Q. It was not moved at all either by yourself or by Mr. Hubbard? A. No."

Trouble immediately arose between the plaintiff and Hubbard over this subsequent transfer of the machine and the delinquent payments therefor. The plaintiff took possession of the truck during Hubbard’s absence, who followed the machine and repossessed it by means of force. A fight occurred. Hubbard secured the truck and drove it to Fresno, where he left it in a garage. He was arrested and placed in jail. He immediately sent for the defendant, informing him that he could make no further payments on the truck, and requested the defendant to take possession of it. The record is silent as to whether Hubbard then informed the defendant of the plaintiff’s claim of title. Since Hubbard was imprisoned for the affray that arose over a dispute with the plaintiff concerning the transfer of the machine, it seems improbable that he failed to inform the defendant of plaintiff’s claim of title at the time he told the defendant to take possession of the machine. At least the record fails to disclose any evidence that the defendant then had no knowledge of plaintiff’s claim. The defendant drove the machine to Santa Barbara and placed it in his garage. This was only about three weeks after he claims to have bought the car from Hubbard. This suit for replevin was commenced, and the truck was seized under process and retained by the officer pending the litigation. Judgment was rendered for the defendant upon his cross-complaint for the possession of the truck or the value thereof, which was fixed at the sum of $1,000, and for additional damages for detaining the machine from its owner in the sum of $2,880. From this judgment the plaintiff appealed.

The appellant contends that the transfer of the machine from Hubbard to the defendant was in violation of section 3440 of the Civil Code and void because there was no immediate delivery or continued change of possession; that the transaction merely amounted to a chattel mortgage to secure a loan with the transfer of title to the machine as collateral security therefor; that the transaction was usurious and void; and that the judgment for damages is excessive and unreasonable.

Upon the contrary, the defendant asserts that the plaintiff is estopped from disputing the title to the machine because of culpable negligence on the part of plaintiff in transferring it to Hubbard, together with the indicia of ownership thereof, and that the plaintiff parted with the title by accepting promissory notes in full payment of the balance of the purchase price of the truck.

The evidence is sufficient to support the findings of the court to the effect that the defendant had no knowledge of the plaintiff’s claim of title to the machine at the time of the alleged transfer to him.

The conditional contract from the defendant to Hubbard for the resale of the machine did not constitute a chattel mortgage in its application to the plaintiff, for the reason that the document contained no affidavit of good faith and was not acknowledged or recorded as required by statute. As a mortgage it would therefore be void as to prior creditors. Section 2957, Civ.Code; Old Settlers’ Inv. Co. v. White, 158 Cal. 236, 110 P. 922; United Bank & Trust Co. of Cal. v. Powers, 89 Cal.App. 690, 265 P. 403; 5 Cal.Jur. 51, § 10.

The contract of sale from the defendant to Hubbard does not appear to be usurious. If it be conceded the interest which is therein provided for is usurious, this does not invalidate the entire contract. Haines v. Commercial Mtg. Co., 200 Cal. 609, 622, 254 P. 956, 255 P. 805, 53 A.L.R. 725; Van Noy v. Goldberg, 98 Cal.App. 604, 610, 277 P. 538; Baker v. Butcher (Cal.App.) 289 P. 236. In Haines v. Commercial Mtg. Co., 200 Cal. 609, 622, 254 P. 956, 255 P. 805, 53 A.L.R. 725 it is said: "Even a casual reading of the [usury] statute itself shows that the legislative intent was not to declare the whole contract void, but only the portion thereof relating to interest." Rice v. Dunlap, 205 Cal. 138, 270 P. 199.

The execution and delivery of the promissory notes to the plaintiff for the balance of the original purchase price of the truck did not complete the purchase thereof so as to waive the lien and pass title to the machine. This would depend upon the intent with which the notes were accepted. Mr. Browne, the president of the corporation plaintiff, testified in that regard:

"He (Hubbard) signed notes.

"Q. And those notes were for the same amount that was due as the balance under the contract? A. Yes.

"Q. And you accepted them in lieu of cash, did you not? A. No. *** We took notes to cover the entire balance *** but it is not my understanding that the truck was paid for by issuing notes."

There is no substantial evidence in conflict with the foregoing. The general rule is that the giving of a note for the amount of a debt does not ordinarily constitute payment or the waiver of the security of a lien, in the absence of an agreement between the parties that it shall be so accepted. 20 Cal.Jur. 921, § 13.

The appellant asserts there is no evidence to support the court’s finding and judgment for damages in the sum of $2,880 for illegally detaining the machine and that this sum is excessive and unreasonable. It does seem absurd to award to a money lender nearly three times the ascertained value of an automobile as damages for detaining the machine in the absence of evidence that he would have used the truck or had occasion to use it. But in the course of the trial the attorney for appellant stipulated to the following: "As a part of the case counsel agreed to stipulate that $10.00 a day was the reasonable value of the loss of the truck." There is no evidence to the contrary. This stipulation is within the issues of the pleadings. The machine was detained from the defendant and at the request of the plaintiff was taken and retained by the officer for the period of about a year. Unreasonable as this amount is, we are unable to see how the court could escape the effect of the foregoing stipulation as to the value of the loss of the use of the truck. The stipulation was not conditioned upon the actual use of the truck, or at all. It was an unequivocal acknowledgment that the loss of the use of the machine should be estimated at the rate of $10 a day. The respondent invokes the doctrine of equitable estoppel against the appellant. It is asserted that, since the appellant delivered the possession of the truck to Hubbard and at the same time gave him the indorsed certificate of ownership of the machine, thereby investing him with the apparent title and indicia of ownership, he is estopped from asserting his title thereto.

The rule of equity is firmly established that an owner of property who deliberately or negligently clothes another person with apparent title, the indicia of ownership, and the power of disposition pursuant to which the property is sold and transferred to an innocent purchaser who in good faith and free from fault pays a valuable consideration therefor, the bona fide purchaser will be protected and the original owner will be estopped from asserting his title. Section 1142, Civ.Code; Parke v. Franciscus, 194 Cal. 284, 297, 228 P. 435; Rapp v. Hauger Motors Co., 77 Cal.App. 417, 421, 246 P. 1067; 3 Ency. of Auto Law, 2303, § 65; 10 Cal.Jur. 641, § 22; 2 Pomeroy’s Eq.Jur. p. 1668, § 811; 21 C.J. p. 1176, § 180. The entire doctrine of estoppel, however, is a creature of equity, which is governed by equitable principles, and it necessarily follows that one who claims the benefit of an estoppel must himself be free from fraud or fault in the transaction, and he must also have acted in good faith with reasonable diligence or he may not invoke the aid of equity. 2 Pomeroy’s Eq. supra, p. 1672, § 813. It therefore follows in the present case that, since the defendant failed to take immediate delivery of the truck and continued change of possession thereof, he is conclusively presumed to be guilty of implied fraud and the transfer to him is void. The defendant under the facts of this case is therefore not in a position to invoke the doctrine of estoppel. An estoppel in pais is never permitted to be used as an instrument of fraud, but only as a means of preventing injustice. 21 C.J. p. 1138, § 137. Section 3440 of the Civil Code provides that "every transfer of personal property *** is conclusively presumed if made by a person having at the time the possession or control of the property, and not accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things transferred, to be fraudulent, and therefore void, against those who are his creditors while he remains in possession. ***"

Because of the failure on the part of the defendant to take immediate possession of the machine, and because of a lack of actual and continued change of possession thereof, he is charged by statute with implied fraud, and may therefore not invoke the doctrine of estoppel against the real owner who was then a creditor of Hubbard. Nor will the subsequent possession of the machine, which was secured by the defendant three or four months thereafter under circumstances which should have warned him of the plaintiff’s claim of ownership, aid his title or legalize the former fraudulent and void transfer to him.

The defendant’s judgment for damages for the illegal detention of the machine from his custody depends upon his right of possession. His right of possession depends upon affirmative proof in support of the allegations of his cross-complaint. Samuels v. Barnet, 79 Cal.App. 529, 250 P. 405. There is no evidence to support the necessary elements of the transfer of title to the defendant. The transaction was in direct conflict with the statute. The evidence affirmatively shows there was no immediate delivery of the machine to the defendant and that he did not assume actual continued change of possession thereof. The finding of the court that "said defendant *** is the owner and entitled to the possession" of the machine is therefore unsupported by the evidence.

The judgment is reversed.

We concur: FINCH, P.J.; PLUMMER, J.

Summaries of

Washington Lumber & Millwork Co. v. McGuire

District Court of Appeals of California, Third District
Sep 8, 1930
291 P. 458 (Cal. Ct. App. 1930)
Case details for

Washington Lumber & Millwork Co. v. McGuire

Case Details


Court:District Court of Appeals of California, Third District

Date published: Sep 8, 1930


291 P. 458 (Cal. Ct. App. 1930)

Citing Cases

Booth v. Peoples Finance Etc. Co.

However, the value of the car being fixed at $1,000, and the damages for its detention at only $600, the case…