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COMMERCIAL NATIONAL BANK TIFFIN v. REEDMAN CHEVROLET (04/20/79)

decided: April 20, 1979.

THE COMMERCIAL NATIONAL BANK OF TIFFIN, OHIO,
v.
REEDMAN CHEVROLET, INC., APPELLANT



No. 212 October Term 1978, Appeal from the Order Entered Oct. 12, 1977, by the Bucks County Court of Common Pleas at March Term, 1971, No. 1249, Civil Action, Law.

COUNSEL

Thomas W. Murrell, III, Philadelphia, for appellant.

Alan J. Dion, Morrisville, for appellee.

Jacobs, President Judge, and Hoffman, Cercone, Price, Van der Voort, Spaeth and Hester, JJ. Cercone, President Judge, concurs in result. Hester, J., files a dissenting statement. Jacobs, former President Judge, and Hoffman, J., did not participate in the consideration or decision in this case.

Author: Spaeth

[ 265 Pa. Super. Page 515]

This is an appeal from an order entered in an action in replevin brought by the Commercial National Bank of Tiffin, Ohio, to recover ten automobiles, or their value, from Reedman Chevrolet Inc. of Langhorne, Pennsylvania. The automobiles were purchased by Reedman from the Bill Simonis Chevrolet-Buick car dealership of Loudanville, Ohio, and were floor-plan-financed by Commercial and the Farmers Savings Bank of Loudanville. After a hearing, the lower court made findings of fact and held that Commercial was entitled to the value of the automobiles, with interest. The narrative that follows is based on the lower court's findings.

During 1968 and 1969 Reedman purchased between four and six thousand automobiles from other dealers. As part of its effort to locate automobiles, Reedman mailed a form letter from its Langhorne office to various dealers in the eastern part of the United States, informing them of its interest in purchasing available automobiles. One of these letters was sent to Simonis, and on or about November 4, 1968, Simonis called Robert J. Ebert, Reedman's General Sales Manager, and offered to sell Reedman two automobiles. Ebert accepted the offer, and on that same day sent Simonis a certified check in full payment for the two automobiles.

[ 265 Pa. Super. Page 516]

Upon receipt of this check, Simonis sent Reedman a dealer's invoice showing that the cars had been paid for in full by Reedman. Simonis also sent Reedman cards to be sent to the General Motors Corporation upon the resale of the automobiles, and copies of the manufacturer's invoices. These invoices described the automobiles in question as having been sold to Farmers. Reedman dispatched a driver to take possession of the automobiles in Ohio, and in late November 1968 they were delivered to Reedman. Reedman had been doing business with Simonis since 1964 and had purchased automobiles from Simonis on four or five prior occasions. In making these purchases Reedman had checked with General Motors to make sure that Simonis was not in any financial difficulty. On or about July 26, 1969, again as a result of a call by Simonis to Ebert, Reedman purchased eight more automobiles from Simonis.

At no time did Simonis advise Ebert that the ten automobiles thus purchased by Reedman were subject to any financing arrangement or that Simonis planned to use the proceeds out of trust. Reedman never obtained from Simonis, or from any other source, Ohio certificates of title or manufacturer's certificates of origin for the automobiles. Reedman did not need these documents to obtain valid title in Pennsylvania at that time. All ten automobiles were resold by Reedman, and certificates of title were obtained for the purchasers by using the documents that had been forwarded to Reedman by Simonis.

As indicated, the ten automobiles purchased by Reedman from Simonis were in fact floor-plan-financed. Commercial had an agreement with Farmers to finance no more than twelve vehicles in the Simonis inventory. Under this agreement Farmers would obtain from Simonis and send to Commercial an undated note for the price of each automobile, signed by Simonis, and with the note, as collateral, the manufacturer's certificate of origin for each automobile, and also the duplicate manufacturer's invoice. Because of this arrangement first Farmers, and then Commercial, held the note and the certificate of origin for each of the ten automobiles

[ 265 Pa. Super. Page 517]

    purchased by Reedman from Simonis. All ten of the automobiles had been floor-plan-financed by Farmers before Reedman's purchase, and all but four of the automobiles had been delivered to Reedman before Commercial got from Farmers the notes and manufacturer's certificates of origin pertaining to the automobiles.

The following findings of fact by the lower court are pertinent to understanding how Commercial and Farmers did business with Simonis:

20. In bank financing of automobile dealers floor plans, after the dealer's credit has been approved by the financing bank, the dealer then informs the manufacturer of the vehicles he wishes to be financed whereupon the manufacturer forwards to the financing bank, for each vehicle to be financed, the Manufacturer's Statement of Origin (which contains a statement of the name of the manufacturer, a description of the vehicle, the fact of transfer to the dealer, the date of the transfer and the Manufacturer's Invoice number for the vehicle) and the Manufacturer's Invoice for the vehicle . . . . The financing bank then takes a note from the dealer for the price of the vehicle and sends its check for the price to the manufacturer.

25. It is the custom and usage in the banking and financing trade in Ohio not to transfer possession of a financed motor car from a dealer to a purchaser without the dealer obtaining from the bank the Manufacturer's Statement of Origin. It is also the custom and usage in the financing trade in Ohio for a ...


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