Silbekt, J.,
This is an appeal by defendant T. Stenson White from a decision of the Court of Common Pleas which found against him and two co-defendants, Merrill L. Nielsen and Nielsen Sports Cars, Inc. Plaintiff-appellee, by her complaint, sought an order compelling appellant to deliver title to her to an automobile purchased from Nielsen and Nielsen Sports Cars, or in lieu thereof, restitution of the purchase priee and other equitable relief as might be appropriate, and exemplary damages. The court found that title was not transferred, and further determined' this to
be the result of fraud and deceit chargeable to all of the defendants. Finding that Mrs. Levin was entitled to have title transferred but that the car had depreciated substantially in value, the court awarded Mrs. Levin (1) $8,893.73 in compensatory damages, (2) $2,500 as punitive damages, plus $1,000 for attorney’s fees, and (3) interests and costs.
Appellant presents but two assignments of error: (1) that the judgment is contrary to law, and (2) that it is against the weight of the evidence. The first of these is supported by nine abstract propositions of law, and numerous lines of argument. While we treat all of what we understand to be the essential points of contention, in the interest of brevity we will specifically rule only on the two assignments of error formally presented. In weighing the evidence, we will not detemine the facts
de
novo; we cannot substitute our view of the testimony for that of the trier of fact which has heard the witnesses and observed their demeanor. The second assignment of error must be overruled unless it appears that the evidence was not sufficient to enable reasonable minds to render the judgment entered.
State, ex rel. Squire,
v.
Cleveland
(1948), 150 Ohio St. 303, approved and followed in
Cross
v.
Ledford
(1954), 161 Ohio St. 469; Ohio Const. Art. IV, Sec. 3(B)(3);
Ford
v.
Ford
(Cuyahoga Co., 1954), 69 Ohio Law Abs. 97, 98;
Preston
v.
Bricker
(Columbiana Co., 1959), 85 Ohio Law Abs. 329, 331.
Appellant suggests that this court weigh the evidence bearing in mind that Mrs. Levin failed to call him as a witness. The suggestion is utterly without merit. It was not Mrs. Levin’s obligation to make out White’s defense. White failed to present any evidence. His testimony could have shed light on the issues presented, and an inference can be drawn from his failure to testify. It is an inference against himself.
Taking the facts as expressly or necessarily found by the trial court, and supported by the evidence, it appears that appellant “floor-planned” cars for Nielsen and Nielsen Sports Cars. That is to say, White financed Neilsen’s
new and used car inventory, extending credit on demand cognovit notes under a security agreement between White and Nielsen Sports Oars, and holding the certificates of title or manufacturer’s or importer’s certificates of origin for the cars financed.
While we agree that “under Ohio law, a secured party is not liable for * * * [a] dealer’s contracts, nor is he liable for * * * [a] dealer’s torts,” without more, he is responsible for his own misconduct, and for the misconduct of his agents or of those he has clothed with apparent authority to act in his behalf.
Miller
v.
Wick Building Co.
(1950), 154 Ohio St. 93. A relationship of principal to agent may arise by express agreement, or by implication or estoppel. In the usual ease it arises because it is agreed that the agent will act for the principal, or because the principal has led a third party to reasonably believe such a relationship existed. C
f. Logsdon
v.
ABCO Const. Co.
(Montgomery Co., 1956), 103 Ohio App. 233;
Columbus Pipe & Equipt. Co.
v.
Ackerson
(Franklin Co., 1953), 72 Ohio Law Abs. 321. But it can arise as well where an agent is shown to have authority because his principal has permitted and approved his prior similar acts, where a third party has relied upon the agent’s capacity to do the act, to his detriment, without knowledge of an express limitation restricting the agent’s actual authority, or without knowledge of the existence of the agency, which is undisclosed.
Cf.t Lapham
v.
Spink
(Cuyahoga Co., 1901), 24 O. C. C. (N. S.) 348.
These rules may be limited in certain of their applications, but they are not abrogated by the Certificate of Title Act, R. C. ch. 4505, nor by R. C. 4505.04, in particular. No court may
recognise
title in anyone save one who holds and. proves a duly issued certificate of title, or manufacturer’s or importer’s certificate of origin.
Mielke
v.
Leeberson
(1948), 150 Ohio St. 528. A certificate of title (or certificate of origin), admissions in the pleadings, or stipu
lations are the only admissible evidence of title.
In Re Case
(1954), 161 Ohio St. 288. But these restrictions do not preclude or nullify the effect of a purported warranty or guaranty of title.
Shaw
v.
Wearley Motor Co.
(1962), 173 Ohio St. 185. We are not obliged to conclude,
ipso facto,
that no one else is entitled to have title transferred to himself, or that the General Assembly meant to require that automobile purchasers rely solely on a dealer’s moral commitment to complete his part of the bargain. The Certificate of Title Act was adopted to protect innocent purchasers, and to allow the public to rely on duly issued evidence of title. It was not meant to, and does not prevent a court of equity from ordering that title be transferred
if the holder has hound himself to do so,
directly or through an agent.
Cf.
the facts and limitation in
Kelley Kar Co.
v.
Finkler
(1951), 155 Ohio St. 541;
Commercial Credit Corp.
v.
Pottmeyer
(1964), 176 Ohio St. 1, as overruled in part,
Hardware Mut’l. Casualty Co.
v.
Gall
(1968), 15 Ohio St. 2d 261.
Within the limitation found in R. C. 1302.02 (compare,
e. g.,
R. C. 1302.42),
the provisions of the sales of goods chapter of the Uniform Commercial Code (R. C. ch. 1302) are applicable to the sale of a motor vehicle, and a seller warrants that he will convey good title free from any security interest or other lien or encumbrance of which the buyer is without knowledge when the contract of sale is made.
R. C. 1302.25(A);
cf.,
again,
Shaw
v
Wearley Motor Co., supra.
Absent express contractual language, or circumstances under which the buyer knows or should have known that only a limited warranty was intended (but only to the extent that such a warranty can be limited
see
R. C. 4505.-03 and R. C. 4505.04)), a floor-planner is bound by the warranty given, having clothed the dealer with the apparent capacity to sell the car and warrant title to it. R. C. 1302.25 (B).
A dealer having authority to expose floor-planned cars for sale in the ordinary course of business binds his mortgagee to deliver title to any car so sold, when payment is made to the dealer and whether or not the dealer remits the proceeds to his mortgagee, unless the
buyer
knows or should have known of the financing arrangements, or unless the contract of sale can and does expressly limit the warranty given.
Cf. Fouke
v.
Commercial Credit Corp.
(Montgomery Co., 1962), 116 Ohio App. 145. As we pointed out in
Mutual Finance Co.
v.
Kozoil, supra
(111 Ohio App. 501), 514, R. C. 4505.13 does
not
protect a security interest under the foregoing circumstances. Rather, and to this extent, the so-called “floor-plan doctrine” survived enactment of the Certificate of Title Act. Contrast
Mutual Finance Co.
v.
Municipal Employees Union
(Cuyahoga Co., 1960), 110 Ohio App. 341, opinion of Kovachy, J., in which Skeel and Hurd, JJ., refused to join;
Mutual Finance Co.
v.
Kozoil, supra,
515, dissenting opinion of Kovachy, J. See,
National Guarantee & Finance Co.
v.
Pfaff Motor Car Co.
(1931), 124 Ohio St. 34.
As shown by the evidence, on or about August 32,1970, Mrs. Levin approached Nielsen about buying a new car to replace a 3967 B. M. W. which she had also purchased from him, but which was no longer suitable for her needs. He showed her a 1970 B. M. W., and she was permitted to take it off the lot, and take if home, to try it out. She testified that as far as she was concerned, she was buying it. She left the 3.967 B. M. W. as security, or as a down payment against the purchase price on the 1970 car. Price was discussed, hilt no final figure was reached, largely because it was
understood that the final purchase price would have to depend upon what Nielsen could get for the trade-in. Mrs. Levin wanted $5,000, but authorized Nielsen to sell it for the best price he could get. The evidence discloses that he sold it within a week, taking $50 in cash and a check for $4,134.10 (which he cashed).
Mrs. Levin again met with Nielsen one or more times between the 8th and 10th of September, 1970. He told her that he had sold the car, or that he had found a buyer. He told her that the buyer wanted a 90-day or 4,000 mile warranty, and that he was going to put the car in suitable condition. Purchase price for the 1970 car was discussed. A work sheet dated September 9, 1970, indicates a total price of $9,503.30 (including a reduction of $635.50 off list price plus extras), less an allowance of $4,000 on the trade-in
Although a contract of sale was not signed, both Mrs. Levin and Nielson considered the sale certain. Mrs. Levin gave Nielsen her check for $2,394.50, as additional deposit. Title to the trade-in was endorsed September 10, 1970.
A contract of sale was not signed until October 24th.
List price was recalculated at $10,354.27. Mrs. Levin was allowed $7,855.04
in credits — $2,394.50 (paid by her check of September 9,1970) plus $5,460.54, denoted “UC Allow. This $5,460.54 figure includes a credit of $4,000 on the trade-in and an additional allowance of $1,460.54, the total credit necessary to justify the final totals shown on a memorandum dated October 26th.
Thus it was agreed that the final purchase price would be $8, 893.73.
Credit was given for Mrs. Levin’s $499.23 check (dated October 26th), leaving a net balance due of $2, 000. And on or about November 3rd appellant delivered her third and last check (for $2, 000) to Nielsen, covering the balance due, and marked “In full, B. M. W. C. S. Coupe.” This check (but not the previous two) was endorsed to “T. S. White” and was cashed by his office. An entry was made on White’s books crediting appellee with this $2, 000 payment.
But Mrs. Levin was not given title to the car. Mere possession of an automobile carries no implication of any right in it.
Veltri
v.
Cleveland
(1957), 167 Ohio St. 90;
cf., Brewer
v.
DeCant
(1958), 167 Ohio St. 411. During the first part of December, she returned the car to Nielsen’s lot, because, as she testified, she could not register, or insure it. Nor could she lawfully drive it. The car remained on Nielsen’s lot until White removed it, then taking repossession title in his own name.
Mrs. Levin did not then know the nature of Nielsen’s relationship with White, or that White had told Nielsen to return the car to the floor-plan because Nielsen had attempted to cover his remaining indebtedness with a bad check.
But
White knew about Mrs. Levin. By happenstance he had learned in mid-September that the 1970 B. M. W. was off the lot. White himself tallied to Nielsen. By October 27th he knew that the B. M. W. had been sold, that it had been sold to Mrs. Levin, and that over $6,000 had not been re
mitted, contrary to the security agreement and in total disregard of various financial procedures White had been trying to force Nielsen to adopt.
To establish that White may be called to answer in punitive damages it is necessary to show more than that he was under a duty to release title. A false apprehension of the law is not sufficient, but it must appear that his own conduct was fraudulent, or willful, or the result of actual malice, or that he authorized, ratified, or participated in his agent’s misconduct, or failed to exercise reasonable care in entrusting an agent to act on his behalf, or in allowing him to continue doing so, and that the agent’s conduct wa.s fraudulent, or willful, or resulted from actual malice, as appellant should reasonably have foreseen it might have been.
Columbus Ry., P. & L. Co.
v.
Harrison
(1924), 109 Ohio St 526;
Tracy
v.
Athens & P. C. & L. Co.
(1926), 115 Ohio St. 298, 302-303;
Saberton
v.
Greenwald
(1946), 146 Ohio St. 414;
Smithhisler
v.
Dutter
(1952), 157 Ohio St. 454;
cf. Bush
v.
Kelley’s, Inc.
(1969), 18 Ohio St. 2d 89;
Cleveland By. Co.
v.
Wiesenberger
(Cuyahoga Co., 1922), 15 Ohio App. 437;
Cleveland Ry. Co.
v.
Lesko
(Cuyahoga Co., 1931), 39 Ohio App. 339.
White commenced floor-planning for Nielsen in August, 1968. He continued to do so until Nielsen Sports Cars ceased doing business in April, 1971. In 1970, from January through March, he served as Chairman of the Board of
Nielsen Sports Cars, and during that period he retained the consulting services of HAW Corp., a company largely owned by himself. HAW Corp. was directed to make a study of Neilsen Sports Cars, and of Nielsen’s corporate practices, and to make recommendations, which it did. It found that Nielsen was not well suited to run an automobile dealership and recommended that that part of the company’s operations be phased out, allowing Nielsen to concentrate his full energies in developing a service oriented business. Nielsen had spent most of his career as an automobile company service manager. He wanted to sell cars. White advised Nielsen to concentrate on service, but White disregarded his own sound advice, cast prudence to the winds, used his personal loan to pay Nielsen’s debts, and agreed to finance the purchase of
additional
new car inventory, including the car involved here.
Under Nielsen’s security agreement with White, Neil-sen could not remove cars from his lot without express written permission. He was permitted to expose the cars for sale, but not sell them without
first
strictly accounting for all money received. White retained the right to enter upon the premises at any reasonable time to inspect the collateral, or Nielsen’s books and records.
In the opinion of White’s office manager, Nielsen was completely incapable of handling financial matters. He apparently did not keep good books, and his checks were sometimes returned for lack of sufficient funds. During the spring of 1970, White’s office instructed Nielsen that payment was not to be made on his personal or company checks. Customer’s checks were to be turned over to the bookkeeper, who was directed to follow stated precedures and to deposit such funds directly into White’s accounts (using deposit slips supplied by White). The bookkeeper alone was to be authorized to write checks to cover any deficiency resulting from credit given on a trade-in, or to request title Avhen payment was made. White’s personnel believed that these procedures would spare them any involvement in Nielsen’s affairs. The procedures were not strictly followed.
Nor was the security agreement strictly enforced. Per
haps as Nielsen testified he would not have been able to sell cars had it been. But White knew Nielsen was not complying with the agreement.
White knew Nielsen had in the past sold cars without turning over the proceeds received. He knew Nielsen had at times been “out-of-trust” on as many as five or six vehicles. He knew or should have realized that Nielsen had corrected this situation only as it was called to his attention — only when caught short.
White’s only concern was that he was paid, that the checks he received cleared. Until the end, he allowed Nielsen to hold title to two cars without first receiving payment. He did not keep an accurate check on his security. So long as Nielsen assured him that a particular car was in the hands of a prospective purchaser, he did not apparently care whether the ear was removed.
It is difficult to imagine a combination of practices fraught with greater hazard' to the unsuspecting buyer. Given White’s knowledge of Nielsen’s precarious financial condition (and not withstanding anything Nielsen may actually have been told), White’s acts (especially, omissions) can only be construed and should have been foreseen as effectively encouraging Nielsen to sell now, pay later — to sell a car one week in the hope that another car could be then sold to cover the indebtedness on the car sold first.
But that is not the full extent of White’s involvement. By the fall of 1970, he was demanding that Nielsen furnish financial statements. Nielsen did not do so. White did not himself examine Nielsen’s books. Nor did he then terminate the mortgage agreements, demand payment, and attempt to recover “his” collateral. Instead, he told Nielsen that his checks
would not be accepted unless first certified.
The money Mrs. Levin paid by September 10th, plus the trade-in, represented nearly three-quarters of the final purchase price. White’s books indicate that during the period' from mid-October through mid-December — in what was apparently Nielsen’s last surge of sales activity — Nielsen was trying to sell and have title released on at least six ears. Nielsen was unable to promptly cover his indebted
ness on five of the six. The indebtedness on the 1970 B. M. W. was considerably larger than that outstanding on any of the others. Title was eventually released on all but Mrs. Levin’s car, but only after the indebtedness on two of the cars was covered by misappropriating Mrs. Levin’s final $2,000 payment, and after at least two of Nielsen’s own checks failed to clear.
That Nielsen acted with actual and constructive fraud and deceit is beyond cavil. He held himself out as having power to sell the car with complete disregard for the truth, or with actual knowledge that he could not. He failed to disclose the nature of his relationship with White, even while knowing that he was converting appellee’s payments to his own use, and had converted funds received for the trade-in. He told Mrs. Levin that he could only return her money by reselling the car, thus inducing her to leave it on his lot for that purpose, without telling her that White had told him to have the car returned, and knowing that he could not sell the car — that he could only deliver title to a buyer by paying White, not Mrs,. Levin.
Moreover, it was he who told White to credit Mrs. Levin’s final $2,000 payment to clear title to the two other cars mentioned earlier. White did so.
White cannot ensconce himself behind a claim that he was only following Nielsen’s instructions. He knew too much about Nielsen’s business practices and financial condition. He made himself a party to the deliberate misappropriation of Mrs. Levin’s money without the slightest concern as to whether Nielsen had or had not returned what he knew Mrs. Levin had paid. As far as he was concerned (and he still maintains) he had only to deal with Nielsen, “let the buyer be damned.” He put the car in Nielsen’s hands, kept Nielsen in business, and relied wholly on what Nielsen toJd him even when his own knowledge and experience, much less ordinary prudence, should have told him that Nielsen was financially inept, less than candid, and prone to play fast and loose with other people’s money when short himslf.
We fully understand that a variety of factors may en
courage a lender to keep a dealer financially afloat if and as long as possible. Where unsecured loans have been made, the temptation may prove too strong to resist. But that business decision carries its price.
White’s negligence, indeed direct participation, overt cooperation and acquiescence, allowed Nielsen to do what was done. White is no remote holder in due course, but directly responsible and party to Nielsen’s misconduct.
Mrs. Levin was maneuvered into a position in which she is expected to bear the brunt of Nielsen’s subsequent financial collapse, all of which is fine with White so long as he gets "his” money. He has the audacity to suggest that "a basic question in this case is whether or not * * * [he] can be made to pay twice for an automobile which he has financed.” In the narrow sense, the question is whether he could honestly have believed that he had a right to expect Mrs. Levin would or could be required to pay
him
twice, when he knew that he held funds paid by her, and allowed and participated in their misappropriation. More broadly the issue is whether or not he is to be called' to account for the results of his totally wanton and callous disregard for the rights of anyone but himself, and of Mrs. Levin, in particular.
By devious paths he seeks to escape. He argues that execution of the contract of sale must have been delayed because appellee agreed to absorb any warranty claim which might have been made against the trade-in, that a final price could not be determined until the warranty had run. As the argument goes, title was not transferred by mid-December because he did not then have the certificate of origin in his possession, having returned it to the importer for what is known in the trade as "updating.” Mrs. Levin returned the car to Nielsen’s lot before title was returned, supposedly rescinding the contract and relieving appellant of any further obligation.
To the extent this argument was actually presented below, the trial court found otherwise. However, this hypothetical chain of events is largely a product of appellant’s imagination. The contract of sale was signed well before
ihe warranty period would have run, and there is no evidence that Nielsen then knew that the 4,000 mile limitation had been exceeded. Mrs. Levin testified that she did not know why a contract was not signed earlier. Nielsen was evasive, but it is plain that he told Mrs. Levin he was putting the trade-in in condition to warrant it — implying that he was to assume the risk, the cost being included as part of the package price.
(Cf.
the Sept. 9, 1970, work sheet written in Nielsen’s handwriting.)
Up-dating is a procedure followed with regard to some imported cars if the model year changes before the car is sold. If the model has not changed, the importer issues a new certificate of origin under the later date. Nielsen testified that title would normally be up-dated in the ordinary course of business, when the model year changed. The process usually took a week to ten days. Here it took two months from the time White knew a contract of sale was signed (four months from the time he first knew the car was off the lot and presumably in the hands of a prospective buyer),. White was able to get the new certificate immediately when he decided
he
wanted it.
Nor is title the central issue. By the time the contract was signed, Mrs. Levin had held the car three months thinking that she had agreed to buy it, and that title would be delivered when payment was complete. She told Nielsen she wanted title, up-dated or not. It was he who
insisted
that it be up-dated. When she returned in December, he told her it had not been returned. She thought he was making another excuse, that he was stalling, and that he would not give title to her. Nielsen by then knew that White wanted the car back. White had no intention of delivering title, and would not have delivered it had he had it. Nielsen could not and would not give Mrs. Levin reasonable assurance that title would be forthcoming. Understandably unhappy with the situation, she told Nielsen she wanted her money back. He told her he did not have it, that the only thing he could do would be to try to sell the car for her, and pay her what he could get. She agreed.
Assuming the relevance of the rescission argument (but c/., R. C. 1302.95), the facts clearly do not warrant
finding more than an agreement (induced by fraud) to rescind upon a condition precedent — any rescission was contingent upon Nielsen then being in a position to make Mrs. Levin substantially whole, a condition which did not occur, and could not have occurred so long as Nielsen could not and White would not deliver title to a subsequent purchaser. Moreover, at all times after the car was returned, Nielsen treated Mrs. Levin as the owner. At Mrs. Levin’s counsel’s insistence, he wrote Mrs. Levin expressly acknowledging that he held the car for her. He did not tell her that she could not remove it when on several occasions she threatened to do so. He persuaded her to leave it by telling her that he was expecting one or another of several potential buyers who had expressed an interest in looking at it.
It is likewise specious to argue that Mrs. Levin, was under a duty to demand title from White. At the outset, she had no knowledge of the true relationship between White and Nielsen — specifically, she did not know White held title. Thereafter, demand would have been futile.
Nor is that all. As a general rule, at law, a person aggrieved by the failure of another to perform a statutory duty imposed for the benefit of the public, or for the benefit of individuals, can assert a breach of that duty in a civil action if, but only if, he is himself within the class of persons meant to be protected.
Marsh
v.
Koons
(1908), 78 Ohio St. 68;
Variety Iron & Steel Works Co.
v.
Poak
(1914), 89 Ohio St. 297, 303, 307;
Miller
v.
East Ohio Gas Co.
(Cuyahoga Co., 1930), 35 Ohio App. 113;
New York, C. & St. L. R. R. Co.
v.
Lambright
(Seneca Co., 1891), 5 O. C. O. 433;
Zajkowski
v.
American Steel & Wire Co.
(C. C. A. 6, 1918), 258 F. 9.
R. C. 4505.03 provides, in material part, that:
“No person * 8 * shall sell or otherwise dispose of a motor vehicle without delivering to the purchaser or transferee thereof a certificate of title * # *; nor shall any person * * * purchase or otherwise acquire a motor vehicle without obtaining a certificate of title for it * * *.”
This legislation imposes a duty upon a dealer to deliver title to a buyer, a duty imposed for the benefit of the buyer and the general public. It requires that a buyer ob
tain title, a provision meant to protect the public, and subsequent purchasers, not one that inures to the benefit of the dealer, or those in privity with him. That the General Assembly did not mean to create reciprocal duties is apparent from the fact that it itself treated the two situations differently: a buyer’s failure to obtain title is at most punishable as a misdemeanor; a seller’s failure to transfer title can be punished as for a felony. R. C. 4505.18(E), R. C. 4505.19(F), and R. C. 4505.99
In giving effect to the legislature’s intent, it will not be supposed that an absurd result was intended, or that a person is required to do an impossible act. Of course, criminal statutes must be strictly construed.
We cannot believe that the General Assembly meant to impose criminal penalties upon an innocent buyer who is prevented from getting title by his dealer’s failure to comply with the express mandate of the Certificate of Title Act, and we hold that a buyer in the ordinary course of business is not within the intended purview of R. C. 4505.-03, where he has bought or attempted to buy a car in good faith, without knowledge that the dealer is actually without authority to warrant or deliver title to the automobile supposedly sold, or that others in privy with the dealer would make themselves party to criminal misconduct or refuse to relinquish title so that it may be properly delivered. He may rely upon the dealer’s warranty of title, and upon the dealer to deliver title as required by the Certificate of Title Act. He need not look beyond the dealer to demand title from others who by law would be bound to deliver title over, where such persons have actual knowledge or are presumed to share their agent-dealer’s knowledge of the sale.
A buyer does not fail to meet Ms obligations under R. C. 4505.03 if he has possession of the motor vehicle with the consent of the dealer and under the reasonable belief that title is to be or is being tranferred to him, and if, upon learning the contrary to be true, he relinquishes possession to the dealer, or holding naked possession, in good faith seeks timely relief from a court of equity to compel the dealer or others in privity with him to transfer title according to law.
Appellant further asserts that the rule announced in the
Kozoil
case is affected, if not undermined, by the subsequent adoption of Title 9 of the Uniform Commercial Code.
Mutual Finance Co.
v.
Kozoil, supra
(111 Ohio App. 501). We disagree.
For the most part, no conflict can exist between R. C. 4505.13 and those provisions of the U. C. C. dealing with secured transactions. R. C. ch. 1309. A certificate of title or a manufacturer’s or importer’s certificate of origin is not a “document” within the meaning of R. C. 1301.01(0). A security interest in a motor vehicle can be perfected only by complying with the procedure set forth in R. C. 4505.13. R. C. 1309.21(D); R. C. 1309.21(C)(2).
In adopting the Code, the General Assembly also amended the first paragraph of R. C. 4505.13. It modified the language of the U. C. C. (as drafted by the Nat’l Conf.
of Comm’rs on Unif. State Laws in cooperation with the A. L. I.) to expressly provide that R. C. 1309.26 not apply in motor vehicle title eases. It neglected to limit the applicability of R. C. 1309.31, or of R. C. 1309.29. A conflict can arise in at least two instances: (1) where R. C. 1309.31 would give priority to a subsequent purchase money security interest, and (2) where R. C. 1309.29 gives priority to an artisan’s lien though not perfected.
Neither conflict is of direct concern here, but it is significant that the Supreme Court has held that R. C. 4505.13 should be treated as a special statutory provision relating to a specific subject matter, and as therefore controlling over R. C. 1309.29.
Commonwealth Loan Co.
v.
Berry
(1965), 2 Ohio St. 2d 169:
Snyder
v
Ryan
(1965), 2 Ohio St. 2d 171. The apparent problem manifest in R. C. 1309.31 (C) and (D) is resolved if the limitation found in R. C. 1309.26(C) is read as intended to limit not just the literal effect, but the functional purpose of R. C. 1309.26(A) and (B) in its relation to Chapter 1309.
The most that can be argued here is that the omission of the phrase “subsequent purchaser” from the second of the two clauses of R. C. 4505.13' construed in the
Kozoil
case reflects a legislative intent that the common law and judicial interpretation of pre-existing authority should continue under Chapter 4505, but that this underlying body of law has been swept away and supplanted by the U. C. C. as adopted. But is this so ?
Certainly R. C. 1309.16 was meant to repudiate the rule in
Benedict
v.
Ratner
(1925), 268 U. S. 353, 69 L. Ed. 991.
Cf.
Uniform Commercial Code Sec. 9-205, Comments.
But R. C. 1309.16 is applicable only within its
terms. It provides, in material part, that
“A
security interest is not invalid or fraudulent against creditors by reason of liberty in the debtor to use, commingle, or dispose of all or part of the collateral * * * or to collect or compromise accounts, contract rights, or chattel paper, or to accept the return of goods or make repossessions, or to use, commingle, or dispose of proceeds, or by reason of the failure of the secured party to require the debtor to account for proceeds or replace collateral. * * V’
The appellee is not a creditor; she is a buyer.
Cf.
R. C. 1301.01 (L). And but for R. C. 1309.26(C), she would be protected under R. C. 1309.26(A), which is to say that R. C. 1309.16 and R. C. 1309.26(A) are functionally interrelated and should be read in
pari materia.
The latter provides that
“A buyer in the ordinary course of business * * * takes free of a security interest created by his seller
even, though the security interest is perfected
and even though the buyer knows of its existence.”
(Cf.
R. C. 1301.01(1), defining the term “buyer in the ordinary course of business. ’’ (Emphasis added.)
Even while R. C. 1309.16 repudiates the
Benedict
rule as against creditors, the protection afforded the purchaser in the ordinary course of business is expanded to provide absolute protection limited in Ohio to cases other than purchases of a motor vehicle. It cannot from this be concluded that the buyer is left unprotected, only that the Commercial Code, as adopted, fails to speak to the issue. Recourse must be had to the common law and other statutory law,
i. e.,
to the law as interpreted in the
Kozoil
case.
Accordingly, both of appellant’s two assignments of error are overruled. The judgment of the trial court is affirmed.
Judgment affirmed.
Manos, C. J., and Day, J., concur.