Smart Finance Co. v. Dick

Bobbitt, J. The sole ground on which the judgment in favor of Haigler is based is Conclusion of Law No. 2, assigned as error by plaintiff, in which the court ruled “(t)hat the plaintiff is estopped to assert the lien of the mortgage against the defendant because the plaintiff Smart Finance Company was negligent in allowing the defendant William Val Dick to have both forms, 309 and 310, without forwarding the same to the North Carolina Department of Motor Vehicles itself.” The court held in Conclusion of Law No. 1, that Dick, on February 26,1960, was the owner of the Ford Falcon, and that the chattel mortgage to plaintiff, when executed, was valid. Whether the findings of fact support Conclusion of Law No. 1 is not presented by plaintiff’s appeal. The judgment is wholly in Iiaigler’s favor. Hence, Haigler was not a party aggrieved by the judgment and had no right to appeal therefrom. The circumstances did not require that he except to particular findings of fact or conclusions of law he deemed adverse and erroneous. Even so, in passing upon the question presented by plaintiff’s appeal, we must consider plaintiff’s chattel mortgage as valid when executed and recorded. Haigler pleaded equitable estoppel by way of affirmative defense. The burden of proof on that issue is on Haigler. Peek v. Trust Co., 242 N.C. 1, 12, 86 S.E. 2d 745; Solon Lodge v. Ionic Lodge, 245 N.C. 281, 289, 95 S.E. 2d 921. The general principles governing the operation of the doctrine of equitable estoppel are stated by Johnson, J., in Hawkins v. Finance Corp., 238 N.C. 174, 77 S.E. 2d 669. In accord: Wilson v. Finance Co., 239 N.C. 349, 79 S.E. 2d 908; Peek v. Trust Co., supra; In re Will of Covington, 252 N.C. 546, 114 S.E. 2d 257. The narrow question presented on this appeal is whether plaintiff was negligent as a matter of law and therefore is estopped because it allowed Dick “to have both forms, 309 and 310, without forwarding the same to the North Carolina Department of Motor Vehicles itself.” Courtesy Motors, Inc., a dealer, was not required to obtain a certificate of title for a new car prior to its sale thereof. G.S. 20-79 (b). The face of Exhibit #1 (Form 309) is entitled “DEALER’S APPLI [675] CATION,” and the reverse side is entitled “OWNER’S APPLICATION,” — “For Certificate of Title for the Following Described New Motor Vehicle or Trailer.” It appears from the face of Exhibit #1 that Courtesy Motors, Inc., acquired the Ford Falcon, a new car, from Ford Motor Company, on February 25, 1960, and on February 26, 1960, sold and delivered it, free and clear of lien, to Garrett, Wench & Garrett Corporation. It appears from the reverse side of Exhibit #1 that Garrett, Wench & Garrett Corporation on February 26, 1960, executed an application for a certificate of title for the Ford Falcon in which it certified its ownership thereof free and clear of lien. This application was executed in the name of Garrett, Wench & Garrett Corporation “by W. V. Dick, Vice Pres.” When Dick approached plaintiff for a chattel mortgage loan on the Ford Falcon, he exhibited Exhibit #1, discussed above, and also Exhibit #4. Exhibit #4 (Form 310) is entitled “OWNER’S APPLICATION” — “For Certificate of Title for the Following Described Motor Vehicle or Trailer.” On the face of Exhibit #4, the application of “William Val Dick” certifies his ownership of the Ford Falcon and asserts he purchased it from “Garrett Wench Garrett Charlotte, N. C.” An agent or employee of plaintiff filled in the portion of the application (above the applicant’s signature) entitled, “Notice of Lien or Encumbrance,” setting forth therein the chattel mortgage lien dated February 26, 1960, securing the payment of $2,274.60 to plaintiff. On the reverse side of Exhibit #4 under the caption “Certificate of Vendor of Former Owner,” there appears an assignment of the Ford Falcon to William Val Dick. This assignment was executed in the name of “Garrett Wench Garrett” by “W. V. Dick, Vice Pres.” The findings of fact establish that Dick, on February 26, 1960, executed the chattel mortgage to plaintiff as security for his $2,274.60 note; that the chattel mortgage was “duly recorded” in the Mecklen-burg Registry; and that no payment has been made on said $2,274.60 note. The findings of fact also establish that plaintiff allowed Dick to have possession of Exhibits #1 and #4 “in order that he may apply for North Carolina Certificate of Title and license plates for said automobile,” but neither Exhibit #1 nor Exhibit #4 was forwarded to the Department of Motor Vehicles and no certificate of title was ever issued by the Department to Garrett, Wench & Garrett Corporation or to Dick. When Dick completed his transaction with plaintiff and was allowed to have possession of Exhibits #1 and #4 for the purpose indicated above, Exhibits #1 and #4 were stapled or otherwise fastened [676] together. The court found that Dick, on March 29, 1960, “detached” Exhibit #4 from Exhibit #1. If Exhibit #1 had been forwarded to the Department, nothing else appearing, the Department would have issued a certificate of title for the Ford Falcon to Garrett, Wench & Garrett Corporation, as owner, free and clear of lien. Since the asserted negligence of plaintiff consists solely in its failure to forward Exhibits #1 and #4 to the Department, the inference may be drawn that the Department, upon receipt of Exhibits #1 and #4, and proof of financial responsibility as required by G.S. 20-309, would have issued to Dick a certificate of title showing plaintiff’s chattel mortgage lien. It is noted that each subsequent assignment referred to in the findings of fact was entered on an application form, not on a certificate of title. The only certificate of title was that obtained by Iiaigler. Haigler obtained this certificate of title by forwarding to the Department Exhibit #3 (Form 309) on which it appeared that Horne Auto Sales, Inc., sold him the Ford Falcon as a new car which it had received from Ford Motor Company, Dearborn, Michigan. Relevant to the alleged negligence of plaintiff, the only fact established by the court’s findings is that plaintiff did not forward Exhibit #1 and (attached) Exhibit #4 to the Department but permitted Dick to have them in order that he might do so. In our opinion, this fact, standing alone, is insufficient to constitute negligence as a matter of law, and we so hold. If Exhibit #1 and Exhibit #4 had remained attached, their condition when Dick’s transaction with plaintiff was completed, these documents disclosed the facts concerning plaintiff’s chattel mortgage. To perpetrate the fraud, it was necessary that Dick detach Exhibit #4 from Exhibit #1 and thereby conceal the fact that Exhibit #4 had been executed. It is noted that the court, in Conclusion of Law No. 3, held that Dick “was guilty of violating G.S. 20-71 in altering or forging the Certificate of Title after he received it from Smart Finance Company.” (Our italics) Suffice to say, no certificate of title had been issued when transactions in which Dick was involved were conducted. There is no finding of fact with reference to plaintiff’s prior dealings, if any, with Garrett, Wench & Garrett Corporation or with Dick. Nothing in the findings of fact suggests that plaintiff acted otherwise than in good faith. Moreover, nothing in the findings of fact suggests that plaintiff had any reason to believe or foresee that Dick, in order to perpetrate a fraud, would detach Exhibit #4 from Exhibit #1. Since the evidence and stipulations on which the findings of fact are based are not in the record, we cannot determine whether there was sufficient basis for a finding of fact that plaintiff was negligent. [677] Suffice to say, the court did not make such finding of fact. Decision is based on the ground that the findings of fact, which deal largely with evidential matters, are insufficient to establish negligence as a matter of law. Hence, on the present record, we need not consider other matters bearing upon Haigler’s plea of estoppel. Upon retrial, the relevant facts may be more fully disclosed. For the reasons stated, a new trial, upon all issues raised by the pleadings, is awarded. New trial. Shabp, J., took no part in the consideration or decision of this case.