Appeals, Nos. 13 and 18, Feb. T., 1963, from order of Court of Common Pleas of Lackawanna County, Jan. T., 1962, No. 336, in case of Main Investment Company v. Anthony Gisolfi. Judgment in appeal No. 13 affirmed; judgment in appeal No. 18 reversed.
Ralph P. Carey, for plaintiff.
Myron A. Pinkus, with him Jack Rubenfeld, for defendant.
Before Rhodes, P.j., Ervin, Wright, Woodside, Watkins, Montgomery, and Flood, JJ.
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OPINION BY MONTGOMERY, J.
This is an action in replevin brought by Main Investment Company (Ain), a New Jersey finance company, authorized to do business in the State of Pennsylvania, against Anthony J. Gisolfi, a resident of Scranton, Pennsylvania, to obtain possession of a 1961 Chevrolet Impala convertible automobile. After the case was submitted to the court on the pleadings, consisting of complaint, answer with new matter, and reply, and on an agreed statement of facts, the court awarded the automobile to Gisolfi but denied to him an award for damages. Both parties have appealed.
The facts applicable to these appeals are as follows. On October 28, 1961, for $3,300 Gisolfi bought and received delivery of a 1961 Chevrolet Impala convertible automobile from Casterline Auto Marts (Casterline), a partnership, formerly doing business as a nonfranchised dealer in new and used automobiles. The automobile had been purchased by Casterline from another automobile dealer for resale from inventory. At the time of the
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sale Gisolfi paid Casterline the fee for title registration and tags, paid the Pennsylvania sales tax, and received a temporary registration transfer certificate and an executed bill of sale. On November 8, 1961, Casterline executed and delivered to Main a trust receipt security agreement for financing nine automobiles in the total amount of $17,950 but, disregarding its prior transaction with Gisolfi, included the automobile in question for a loan of $2,300. A certificate of title on this automobile in the name of Casterline, dated November 15, 1961, and listing an encumbrance of $2,300 in favor of Main, was delivered to Main. After reciprocal demands for the vehicle and certificate of title were refused by both parties, Main issued a writ of replevin with bond in the amount of $5,000 on January 5, 1962, and Gisolfi filed a counterbond and retained possession of the vehicle. The certificate of title remained with Main. The automobile could not be used from October 28, 1961, until May 1, 1962, because Gisolfi had no certificate of title nor registration tags. In their stipulation of facts, the parties agreed, "14. The vehicle has depreciated in value since October 28, 1961. The depreciation shall be determined and established by the differential in retail price reflected in N.A.D.A. (Dealers' Guide) and the original purchase price."
In regard to the replevin action, we are constrained to agree with the lower court's summary of the facts, wherein it stated, "that at the time of these events that Casterline had title to the vehicle, else a certificate in its name could not have been issued to Main as the lien holder, that the vehicle whether 'new' or 'used' was in Casterline inventory, that Main financed it as part of inventory, that Main had no security interest in the vehicle at the time of the sale to Gisolfi, and that as to this vehicle at least, Casterline perpetrated a fraud on Main in securing an advance on a vehicle which
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had passed out of Casterline's possession by a sale from inventory in the ordinary course of trade." We further agree that the lower court correctly concluded that the Uniform Commercial Code § 9-307 conclusively controls this matter. That section states: "(1) A buyer in ordinary course of business (subsection (9) of Section 1-201) other than a person buying farm products from a person engaged in farming operations takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence." Act of October 2, 1959, P.L. 1023, § 9, 12A. P.S. § 9-307. Gisolfi was a buyer in the ordinary course of business in ...