Appeal from judgment of Court of Common Pleas of Lancaster County, April T., 1962, No. 36, in case of Al Maroone Ford, Inc., now to use of Bank of Buffalo, v. Manheim Auto Auction, Inc.
F. Lyman Windolph, with him Windolph, Burkholder & Hartman, for appellant.
Richard M. Martin, with him John J. Stork, for appellee.
Ervin, Wright, Watkins, Montgomery, and Flood, JJ. (Rhodes, P. J., and Woodside, J., absent). Opinion by Flood, J.
[ 205 Pa. Super. Page 156]
Gordon K. Brown and his wife, Avis, on April 6, 1961 bought a new automobile in Middleport, New York, from Al Maroone Ford, Inc., under an installment sales contract under which the seller retained title until full payment of the purchase price, and the buyers agreed not to sell or encumber the car or remove it from New York State without the seller's written consent.
The car was driven to the appellee's place of business in Manheim, Pa., on the same day and on the next day, April 7, 1961, Gordon K. Brown executed a New York certificate of sale for the car in favor of Manheim Auto Auction, Inc., the appellee, and delivered the car to it. The certificate indicated that Kirby's Used Cars was the "dealer". The case stated recites that Kirby's Used Cars was a trade name used by Gordon K. Brown and that the certificate indicated that Kirby's Used Cars was the owner of the car.
On April 6, 1961, the seller assigned the contract to the Bank of Buffalo, the use-plaintiff and appellant, and on April 12, 1961, the bank filed the contract in
[ 205 Pa. Super. Page 157]
the office of the Clerk of the Town of Newfane, New York. At this time New York had not yet adopted the Uniform Commercial Code. Under the New York Conditional Sales Act then in effect (40 McKinney's Personal Property Law, §§ 60-81) this filing, since it occurred within ten days of the execution of the contract, made the reservation of title valid against all persons under New York law, even though no notation of the seller's interest appeared on the title certificate. New York law did not require such notation. Under these circumstances, at the time Brown purported to sell the car to the appellee, the appellant held a perfected security interest in the car in Pennsylvania under § 9-103(3) of the Uniform Commercial Code, 12A PS § 9-103(3). Casterline v. General Motors Acceptance Corporation, 195 Pa. Superior Ct. 344, 171 A.2d 813 (1961).*fn1
Thereafter the appellant brought this action of replevin without bond against the appellee. Upon a case stated setting forth the above facts, the court below held that the appellee was a "buyer in ordinary course of business" under § 1-201(9) of the Uniform Commercial Code and therefore took the car free of the seller's perfected security interest under § 9-307(1) of the Code.
1. A buyer in ordinary course of business is defined in § 1-201(9) of the Code as a "person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods buys in ordinary course from a person in the ...