Preview:

IN THE COURT OF APPEALS 05/21/96 OF THE STATE OF MISSISSIPPI
NO. 94-CA-01084 COA

WORLDWIDE MACHINERY SALES, INC. AND RANDY BRASWELL APPELLANTS v. FEDERATED MUTUAL INSURANCE COMPANY AND MURPHY'S INTERNATIONAL, INC. APPELLEES

THIS OPINION IS NOT DESIGNATED FOR PUBLICATION AND MAY NOT BE CITED, PURSUANT TO M.R.A.P. 35-B

TRIAL JUDGE: HON. FRANK G. VOLLOR COURT FROM WHICH APPEALED: PIKE COUNTY CIRCUIT COURT ATTORNEY FOR APPELLANTS: ROBERT S. REEVES ATTORNEY FOR APPELLEES: WILLIAM W. SMITH SALES AND UNJUST ENRICHMENT NATURE OF THE CASE: TRIAL COURT DISPOSITION: FOUND THAT PLAINTIFF WAS NOT A GOOD FAITH PURCHASER AND WAS NOT ENTITLED TO RECOVER IN QUANTUM MERUIT

BEFORE FRAISER, C.J., McMILLIN, AND SOUTHWICK, JJ. FRAISER, C.J., FOR THE COURT: The Pike County Circuit Court granted summary judgment to Federated Mutual Insurance Company

and Murphy's International [Murphy's] on an action brought against Worldwide Machinery Sales [WMS] and Randy Braswell to replevy a caterpillar excavator. WMS via Braswell, WMS's agent, purchased the excavator from Thomas Equipment Company [TEC]. TEC purchased the excavator from Robert Macon who fraudulently appropriated the excavator from its owner, Murphy's. WMS and Braswell contend that WMS was a good faith purchaser of the excavator. The trial court held on summary judgment that WMS was not a good faith purchaser because there was no transaction to purchase between Macon and Murphy's and because Murphy's was not a merchant engaged in the sale of construction equipment. WMS and Braswell contend that the trial court erred in holding: (1) delivery of the excavator to Robert Macon was not in furtherance of a transaction of purchase and that, therefore, title did not pass to Macon and (2) Macon was not a merchant dealer capable of passing good title to a subsequent purchaser for value. Further, WMS argues that even if it was not a good faith purchaser it was entitled to a lien for repairs to the excavator. We conclude that the trial court, in a well reasoned opinion, properly granted summary judgment in this cause and, therefore, affirm. FACTS Murphy's International is an equipment dealer. Murphy's inventory included a used Caterpillar 211 LC Excavator, which was subject to a security interest of People's Bank and Trust Company. On October 8, 1992, Murphy's delivered the excavator to Macon, a prospective purchaser. The record is uncontradicted that the excavator was in Macon's possession only for demonstration purposes. Murphy's did not contract with Macon to pass title. Additionally, the record indicates that it is a common practice in the industry for dealers to deliver to prospective purchasers equipment for demonstration purposes. Macon and Mike Barns, representing they had title to the excavator, sold it to Keith Thomas of TEC sometime before October 13, 1992. TEC sold the excavator to WMS on October 13, 1992. WMS intended to resell the excavator at an auction on October 30, 1991. Prior to resale, WMS repaired the excavator. On October 30, 1992, Murphy's discovered that the excavator along with several other pieces of equipment leased to Macon were being sold by TEC. That same day, Murphy's, through its employees, reported Macon's actions to law enforcement authorities. Macon was charged and indicted in Booneville, Mississippi for unlawfully appropriating the excavator by false pretenses. Murphy's employees next contacted WMS and requested the return of the excavator. WMS refused to return it. Consequently, Murphy's filed an action in the Circuit Court of Pike County to replevy the excavator. WMS answered that it purchased the excavator from Keith Thomas and TEC. WMS claimed that Macon had voidable title to the excavator, which he sold to TEC. WMS argued that because TEC, Thomas, and Macon were merchant dealers in heavy machinery, WMS received valid title because WMS was a good faith purchaser for value without notice of Murphy's claim. Murphy's moved for summary judgment arguing that Macon never had title to the excavator and was not a merchant dealing in equipment. The circuit court granted partial summary judgment holding that Macon never obtained an ownership interest in the excavator and that Macon was not a merchant engaged in selling equipment. Thus, the circuit court found that Murphy's was entitled to replevy the excavator.

The only issue remaining was WMS's counterclaim for an equitable lien for repairs to the excavator, which the circuit court denied on Murphy's second summary judgment motion. WMS perfected its appeal alleging the following issues: I. WHETHER THE COURT ERRED AS A MATTER OF LAW IN HOLDING THAT THE DELIVERY TO ROBERT MACON WAS NOT IN FURTHERANCE OF A TRANSACTION OF PURCHASE AND THAT THEREFORE TITLE DID NOT PASS TO MACON?

II. WHETHER THE COURT ERRED AS A MATTER OF LAW IN HOLDING THAT ROBERT MACON WAS NOT A MERCHANT DEALER CAPABLE OF PASSING GOOD TITLE TO SUBSEQUENT PURCHASERS FOR VALUE?

III. IN THE EVENT THAT WMS AND BRASWELL ARE NOT ENTITLED TO THE DISPUTED EQUIPMENT, WHETHER THE COURT ERRED IN FINDING THAT THEY WERE NOT ENTITLED TO A LIEN FOR THE REPAIRS AND IMPROVEMENTS MADE BY THEM? DISCUSSION In Palmer v. Anderson Infirmary Benevolent Ass'n, the Mississippi Supreme Court provided the standard of review in determining whether a trial court properly granted summary judgment, and stated: In our de novo review, this Court looks to see if the moving party has demonstrated that no genuine issue of fact exists. A motion for summary judgment should be overruled unless the trial court finds, beyond a reasonable doubt, that the plaintiff would be unable to prove any facts to support his claim. The lower court is prohibited from trying the issues; it may only determine whether there are issues to be tried.

Palmer v. Anderson Infirmary Benevolent Ass'n, 656 So. 2d 790, 795 (Miss. 1995). The evidence must be viewed in a light most favorable to the party against whom the motion has been made. "The movant has the burden of demonstrating that no genuine issue of fact exists while non-movant is given the benefit of every reasonable doubt." Marsalis v. Lehmann, 566 So. 2d 217, 220 (Miss. 1990). If in this view the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. Northern Elec. Co. v. Phillips, 660 So. 2d 1278, 1281 (Miss. 1995) (citations omitted). I. WHETHER THE COURT ERRED AS A MATTER OF LAW IN HOLDING THAT THE DELIVERY TO ROBERT MACON WAS NOT IN FURTHERANCE OF A TRANSACTION OF PURCHASE AND THAT THEREFORE TITLE DID NOT PASS

TO MACON.

In the trial court WMS and Braswell argued that WMS was a good faith purchaser for value under section 75-2-403(1)(d) of the Mississippi Code of 1972. Section 75-2-403(1)(d) provides:

(1) A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though .... (d) The delivery was procured through fraud punishable as larcenous under the criminal law.

The trial court ruled that WMS was not a good faith purchaser in accord with 75-2-403(1)(d) because Murphy's did not deliver the excavator to Macon under a transaction of purchase. Consequently, Macon did not have any title voidable or otherwise to convey to WMS. On appeal, WMS argues that "Murphy's act was an act whereby it delivered to Macon the excavator under a transaction for purchase and which conveyed title to the property to Macon even if Macon obtained the property through fraud punishable as larcenous under the criminal law." As with most erroneous arguments, the flaw in WMS's argument lies in its premises. WMS alleges that the delivery of the excavator to Macon by Murphy's constitutes a transaction of purchase without justifying this bare assertion. As the trial court noted, WMS's assertion that delivery constitutes a transaction of purchase is unsupported by Mississippi law. The Mississippi Supreme Court has held that when a good faith purchaser asserts its good faith purchaser status based on a conveyance of a person who never received title: It encounters a rule as old as the hills and often enforced without regard to context, viz., no thief, forger or other felonious fraud has power to pass title to his ill-gotten goods. See, e.g., Morgan v. Morgan, 431 So. 2d 1119, 1120 (Miss. 1983); Craig v. Columbus Compress & Warehouse Co., 210 So. 2d 645, 648 (Miss. 1968); St. Paul Fire & Marine Ins. Co. v. Leflore Bank & Trust Co., 254 Miss. 598, 609-10, 181 So. 2d 913, 918 (1966) . . . . A purchaser can take only those rights which his transferer has in the subject goods; a thief has neither title nor power to convey such. Allstate, 345 So. 2d at 266. We reiterated this view in Walker v. Johnson, 354 So. 2d 792 (Miss. 1978), where we held: Even though the sale of the property is made to a bona fide purchaser for value, if it is stolen property, the person from whom it is stolen is not divested of his title. Walker, 354 So. 2d at 793.

It is certainly true the Sales Article of our version of the Uniform Commercial Code, see Miss .Code Ann.

Download Worldwide Mach Sales Inc vs. Federated Mut Ins Co.pdf

Mississippi Law