Simons v. Northeastern Finance Corp.

Carroll, J. The plaintiff was in possession of an automobile which he had purchased under a conditional sale from the Boulevard Motor Sales Company (hereinafter called the Boulevard company). The automobile was taken from him by the defendant. The action is in tort for conversion. In the Municipal Court there was a finding for the defendant. The Appellate Division dismissed the report. The plaintiff appealed. There was evidence tending to show that the Boulevard company through its representatives interviewed one Shorey, who was president of the defendant and of the New England Velie Company, concerning the purchase of four used motor vehicles belonging to the Velie company. The Boulevard company wanted the cars to sell on its own account and desired to make a cash payment and give notes [288] for the balance. Shorey did not agree to this, but arranged the plan now to be narrated: The price of $1,700 was agreed on; thereupon the Velie company sold the motor vehicles to the defendant by bill of sale. The Velie company drew a draft on the Boulevard company for $1,000, payable in two instalments on time. The Boulevard company paid the Velie company $600 in cash. Either the defendant or the Velie company already had in its possession $100 belonging to the Boulevard company. The draft, the cash payment and $100 belonging to the Boulevard company made up the total of $1,700, the price of the motor vehicles agreed upon between the defendant and the Boulevard company. The cars were then delivered to the Boulevard company by the Velie company. The defendant took from the Boulevard company an instrument in writing, which in the record is called a “trust receipt.” It is signed by the Boulevard company and acknowledges the receipt of the motor vehicles from the Velie company as agent of or “acting for” the defendant; and it contains in addition to the description of the four cars and other provisions not here material the following: “For valuable consideration, Undersigned agrees to hold said motor vehicles in trust as the property of Northeastern Finance Corporation, and to return all or any of them to Northeastern Finance Corporation upon demand. Northeastern Finance Corporation at any time may examine said motor vehicles and the books or records of Undersigned with reference thereto, and may repossess all or any of said motor vehicles without notice or demand, and for such purpose it and its representatives may enter any premises at any time without legal process. Undersigned shall not lend, rent, mortgage, pledge, encumber, operate, use, demonstrate or sell said motor vehicles, except upon a written order or orders to release the same, but may immediately drive them direct to Undersigned’s place of storage. Undersigned may sell all or any of said motor vehicles, upon receiving an order or orders duly signed by the Northeastern Finance Corporation, for cash for not less than the sum mentioned in the order or orders to release them from [289] trust, and immediately after any sale shall deliver the proceeds thereof to Northeastern Finance Corporation, and until delivered shall hold such proceeds in trust for Northeastern Finance Corporation, separate from the funds of Undersigned . . . The acceptance by Undersigned of a time draft in connection herewith or the negotiation or assignment of such draft . . . shall not divest Northeastern Finance Corporation of title to such motor vehicles.” The automobiles were thereafter taken by the Boulevard company to its place of business. The car in question was placed in the window of its showroom and sold to the plaintiff. The Boulevard company defaulted on its payments and the defendant took possession of the vehicle. The plaintiff testified that he saw the automobile in the showroom window of the Boulevard company; that it was sold to him by that company, part of the purchase price being paid in cash “and the balance by note under a conditional sales contract.” Shorey testified that he knew the Boulevard company was in the automobile business, “that the purpose in taking the cars in question was to place them in their showroom, in hope of securing purchasers, and to eventually sell the cars.” The instrument in writing between the Boulevard company and the defendant designated by the name “trust receipt,” and so called in the record, was in no sense a “trust receipt.” That term is applied to an instrument in writing whereby a banker, having advanced money for the purchase of imported merchandise and having taken title in his own name and retaining such title, delivers possession of the merchandise to the importer upon an agreement in writing to hold the merchandise in trust for the banker until he is paid. The only kind of instrument which we have recognized and called a trust receipt is one where the banker at the request of the importer buys goods directly from the foreign seller and takes title in his own name from the foreign seller and then turns the goods which he has thus bought directly in his own name over to the importer upon a trust receipt in order that the latter may carry on his own commercial adventure. Peoples [290] National Bank v. Mulholland, 228 Mass. 152, 155. T. D. Downing Co. v. Shawmut Corp. of Boston, 245 Mass. 106, 113, 114. 22 Colum. L. Rev. 395-420, 546-562. See also 34 Harv. Law Rev. 758-760. The essential elements of a trust receipt were lacking in the instrument executed between the defendant and the Boulevard company. The Boulevard company was not an importer and the transaction was one directly between the defendant and the Boulevard company. The written instrument was not a trust receipt. The instrument was not a conditional sale contract: no price is mentioned, and it is not contemplated by the terms of the instrument that title to the motor vehicle shall vest in the Boulevard company. The purpose of the transaction was to enable the Boulevard company to arrange for a sale of the motor vehicles; and one who is not a party to a written lease, conditional sale contract, or other writing, may show that the real relation between the parties to the instrument was different from that shown in the written instrument. The plaintiff was not a party to this written agreement between the Boulevard company and the defendant, he was not bound by its terms, he could show what in fact was the true relation between the parties. Spooner v. Cummings, 151 Mass. 313. Guaranty Security Corp. v. Eastern Steamship Co. 241 Mass. 120. Tripp v. National Shawmut Bank of Boston, 263 Mass. 505. The defendant knew that the Boulevard company was in the automobile business and was exhibiting motor vehicles in its showroom for the purpose of sale. The agreement gave the Boulevard company authority to sell upon terms approved by the defendant. On the evidence in the case it should have been found that the Boulevard company was the agent of the defendant. The limited authority in the written agreement to the effect that sales could be made upon the order of the defendant was a secret limitation upon the apparent authority of the Boulevard company and did not bind the plaintiff, who knew nothing about this limitation and was an innocent purchaser for value. The apparent and ostensible powers of the Boulevard company were its real powers, so far as the plaintiff [291] was concerned. Brooks v. Shaw, 197 Mass. 376, 379, 380. American Railway Express Co. v. Mohawk Dairy Co. 250 Mass. 1. Lewis v. Chapin, 263 Mass. 168, 172. Guinan v. Famous Players-Lasky Corp. 267 Mass. 501, 518. The Boulevard company was in the lawful possession of the automobile, under the circumstances already disclosed. The possession of property with the exercise of rights of ownership over it is some evidence of title: it makes out a prima facie case. “If testimony is introduced to control it, the whole evidence is considered together to determine the true title.” United Shoe Machinery Co. v. Bresnahan Shoe Machinery Co. 197 Mass. 206, 216. Silver v. Roberts Garage, Inc. 240 Mass. 571. If the transaction between the defendant and the Boulevard company amounted to a mortgage, as it was not recorded it was not valid as such against the plaintiff. G. L. c. 255, § 1, as amended by St. 1921, c. 233. In conclusion it is our opinion that by the circumstances shown here the defendant is estopped to rely upon title in itself against the plaintiff: he has been misled to his injury by the defendant’s conduct; the defendant virtually gave the Boulevard company power to mislead the plaintiff to his injury, and the defendant had reasonable cause to know that such consequences would follow. Boston & Albany Railroad v. Reardon, 226 Mass. 286, 291. The case at bar is distinguishable from Oliver Ditson Co. v. Bates, 181 Mass. 455, Royle v. Worcester Buick Co. 243 Mass. 143, Lynn Morris Plan Co. v. Gordon, 251 Mass. 323, and similar cases. The order dismissing the report is reversed, and the case remanded to the Municipal Court for the assessment of the plaintiff’s damages. So ordered.