Pfluger v. Colquitt

620 S.W.2d 739, 32 U.C.C. Rep. Serv. (West) 804, 1981 Tex. App. LEXIS 3867

• Court: Court of Appeals of Texas
• Decided: July 1, 1981
• Docket: 20513
• Status: Published

Opinions

GUITTARD, Chief Justice.

Lee Pfluger sued Jeff Colquitt for two automobiles sold to Colquitt by Williams, a dealer to whom Pfluger had entrusted them. The trial court rendered judgment on a verdict for Colquitt. Pfluger contended in the trial court and asserts on this appeal that the sale was void because he had not transferred the certificate of title, as required by the Certificate of Title Act, Tex.Rev.Civ.Stat.Ann. art. 6687 — 1, §§ 33, 53 (Vernon 1977). Colquitt contends that the Act was inapplicable because of the entrustment provision of section 2.403(b) of the Texas Business and Commerce Code (Vernon 1968). We conclude that the Certificate of Title Act controls rather than the Business and Commerce Code, but we hold that Colquitt is entitled to the vehicle as between the parties in view of the jury’s finding that Williams was acting as Pflu-ger’s agent and within his actual authority when he made the sale. Accordingly, we hold that the jury’s answer to the issues concerning entrustment of the vehicles are immaterial. We also hold that Colquitt is entitled to an attorney’s fee under the Deceptive Trade Practices Act, Tex.Bus. & Com.Code § 17.50(d) (Vernon Supp. 1980-81), in view of the jury’s finding that Pflu-ger subsequently denied Williams’s authority to act as his agent. On these grounds we affirm the judgment.

The facts are without material dispute. Pfluger owned two antique Cadillac automobiles, which were displayed in a warehouse leased by Williams, owner of Classic Cars of Denton, for an antique automobile museum and restoration business. Colquitt visited the warehouse, examined the cars, and offered to purchase them for $14,500. Williams advised that in order to sell the cars he would need the approval of Pfluger and made a telephone call to Pfluger, who agreed to the price. Williams then signed two bills of sale from Classic Cars to Col-quitt, and delivered them and the vehicles to Colquitt, who gave Williams a check payable to Classic Cars. Williams promised to forward the certificates of title when Colquitt’s check cleared the bank. Subsequently, Williams failed to deliver the proceeds of the sale to Pfluger, who then refused Colquitt’s demand for delivery of the certificates and denied that he had authorized Williams to sell the cars. Colquitt refused to return the cars, and Pfluger then sued both Colquitt and Williams. Colquitt counterclaimed for title to the automobiles. Williams admitted liability. The jury found that Williams was acting as the agent of Pfluger and within his actual authority when he sold the vehicles to Colquitt, and also found that Colquitt purchased the vehicles in ordinary course of business from Williams, a merchant dealing in antique automobiles, to whom the vehicles had been entrusted by Pfluger. On this verdict the court rendered judgment for Colquitt for title to the vehicles and for Pfluger against Williams for the purchase money.

Pfluger appeals with respect to one vehicle only, abandoning his claim to the other. He makes no attack on the verdict for lack of evidence. He contends that the sale is void as a matter of law under the Certificate of Title Act, Tex.Rev.Civ.Stat.Ann. art. 6687-1, §§ 33, 53 (Vernon 1977). Section 33 of the Act provides that no motor vehicle shall be disposed of at a sale subsequent to the first and that no title shall pass at such a sale unless the owner transfers the certificate of title in the manner prescribed by the Act. Section 53 provides that sales made in violation of the Act are void and that no title shall pass until the provisions of the Act have been complied with.

In response, Colquitt relies on section 2.403 of the Texas Business and Commerce Code (Vernon 1968), which provides that any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business. Colquitt argues that this provision prevails over the Certificate of Title Act because section 65 of the Act expressly provides that in case of a conflict the provisions of the Code shall control.

We do not agree that section 2.403(b) of the Code conflicts with the Certificate of Title Act. It is the duty of the courts to interpret statutory language so as to harmonize apparently conflicting provisions and give effect to each in the light of its purpose, if such an interpretation is reasonable. State v. Standard Oil Co., 130 Tex. 313, 107 S.W.2d 550, 559 (1937); County of Harris v. Tennessee Products Pipe Line Co., 332 S.W.2d 777, 781 (Tex.Civ.App.-Houston 1960, no writ); Dallas Railway & Terminal Co. v. Strickland Transportation Co., 225 S.W.2d 901, 905 (Tex.Civ.App.-Amarillo 1949, no writ). We conclude that the two statutes here in question may reasonably be construed so as to give effect to both.

As we interpret section 2.403(b) of the Code, the merchant’s power “to transfer all rights of the entruster” is intended to give the merchant the same power to transfer which the owner of goods can exercise himself, even though the owner may not actually have authorized the merchant to make such a transfer. That section need not be interpreted to give the merchant greater power than the owner himself has to transfer the title to a motor vehicle. The power of the owner of a motor vehicle to transfer the title is limited by the Certificate of Title Act, and specifically by section 33, which provides that no motor vehicle shall be disposed of at a subsequent sale and no title shall pass without a transfer of the certificate in the manner prescribed by the Act. Under this provision, if the owner has no power to dispose of the vehicle without a proper transfer of the certificate, then no merchant to whom the vehicle is entrusted has the power to dispose of it without a proper transfer of the certificate. A purchaser from the merchant to whom the vehicle is entrusted acquires exactly the same rights as if he had purchased from the owner, but no more. If he purchased from a merchant without a proper transfer of the certificate, he gets no better title than if he had purchased from the owner without a proper transfer of the certificate.

If the contrary interpretation were adopted, a dealer to whom an owner has entrusted his vehicle for some other purpose, such as repairs, would have the power to sell the vehicle and pass title to a purchaser without a transfer of the certificate, thus defeating- the purpose of the Certificate of Title Act, which is to prevent theft of motor vehicles, traffic in stolen vehicles, and sale of encumbered vehicles without disclosure of existing liens. See Motor Inv. Co. v. Knox City, 141 Tex. 530, 174 S.W.2d 482, 484 (1943). Such a result may be proper in the case of goods which may be transferred by delivery, since in that case section 2.403(b) gives the merchant the power of the owner to transfer the title by delivery. In the case of a motor vehicle, however, the same result does not follow from the provisions of section 2.403(b) in view of the owner’s lack of power to transfer the title without a proper transfer of the certificate. This interpretation gives meaning to both the Act and the Code consistent with the purposes of both and obviates the necessity in this context to resort to section 65 of the Act to resolve any apparent conflict between the two. See Boswell v. Connell, 556 S.W.2d 624, 626 (Tex.Civ.App.-Beaumont 1977, writ ref’d n.r.e.).

Under this construction of the statutes, in the present case, Colquitt is in the same position as if he had purchased directly from Pfluger without a proper transfer of the title. Although the provisions of sections 33 and 53 of the Act might be construed to render the transaction entirely void because the certificate was not transferred to Colquitt, that result does not necessarily follow in the light of the relevant decisions. It has been held that the sale of a vehicle without compliance with the Act may be effective as between the parties and thus give the purchaser a right to demand a proper transfer of the certificate. Phil Phillips Ford, Inc. v. St. Paul Fire and Marine Ins. Co., 465 S.W.2d 933, 937 (Tex.1971); Ballard v. Associates Inv. Co., 368 S.W.2d 232, 234 (Tex.Civ.App.-Dallas 1963, writ ref’d n.r.e.); Rush v. Smitherman, 294 S.W.2d 873, 877-78 (Tex.Civ.App.-San Antonio 1956, writ ref’d). This result does not defeat the purpose of the Act, as previously stated. Accordingly, it has been held that the Act is intended to protect purchasers and lenders against schemes by persons without authority or ownership, rather than to permit owners to disavow the acts of authorized agents. See Texas State Bank v. Foremost Ins. Co., All S.W.2d 652, 655 (Tex.Civ.App.-Corpus Christi 1972, writ ref’d n.r.e.). As between the parties, a sale without a transfer of the certificate is analogous to a defective deed of real estate, which, though ineffective as a conveyance because of noncompliance with statutory requirements, may nevertheless be binding between the parties as an executory contract if the equities of the case so require. Cf. Tex.Rev.Civ.Stat.Ann. art. 1301 (Vernon 1980); Magee v. Young, 145 Tex. 485, 198 S.W.2d 883, 885-86 (1947). In light of these authorities and the jury’s findings, we conclude that the sale by Williams as Pfluger’s agent was binding on Pfluger, and, consequently, that the trial court was correct in holding that Colquitt was entitled to a transfer from Pfluger.

This result is not contrary to Freeberg v. Securities Investment Co., 331 S.W.2d 825 (Tex.Civ.App.-San Antonio 1960, writ ref’d), on which Pfluger principally relies. Although the facts in that case were similar in that the dealer to whom the vehicle was entrusted sold the vehicle without a proper transfer, there is a crucial distinction. Here, the jury found that Williams was acting as the “actual agent” of Pfluger and “within the scope of his authority” when he sold the vehicle to Colquitt, and no attack has been made on this finding. In Free-berg, on the other hand, the opinion points out that although Hilltop, the dealer, was authorized to act as agent for Freeberg, Hilltop did not purport to act as Freeberg’s agent in dealing with the purchaser, McClaugherty. Rather, the court based its decision on evidence showing that McClaugherty dealt with Hilltop as owner, although he knew that Freeberg was the owner. The court analyzed this situation as a conversion of the vehicle by Hilltop and an attempt by McClaugherty to purchase from a known converter. Thus, the court held that McClaugherty was not protected by demanding the certificate from Free-berg. This analysis is confirmed by the following statements in the opinion:

The error in this case has arisen from a confusion of Hilltop as mere agent for Freeberg, with Hilltop the dealer. Though Hilltop had power to sell for Freeberg, the owner, it was not the owner. Freeberg’s complaint is that Hilltop converted the trailer house and all evidence of title to its own use, and that the purchaser knowingly bought from the converter as owner, instead of as Free-berg’s agent.

In the present case, no issue of conversion of the vehicle was submitted to the jury. On the other hand, the jury found that Williams was acting as Pfluger’s agent in selling the vehicle, and since there is no attack on this finding, the transaction had the same effect as if Pfluger had dealt personally with Colquitt, because one who acts through a duly authorized agent is bound as if he had acted in person. Lucas v. Whiteley, 550 S.W.2d 767, 769-70 (Tex.Civ.App.-Amarillo 1977, writ ref’d n.r.e.); Texas State AFL-CIO v. Brown, 378 S.W.2d 917, 922 (Tex.Civ.App.-Austin 1964, writ ref’d n.r.e.). Therefore, Colquitt is entitled to demand a proper transfer of the title from Pfluger.

This result is not affected by Colquitt’s payment of the purchase price to Williams. Since Williams was found to be Pfluger’s agent in making the sale, when Williams accepted the check, he did so as Pfluger’s agent and became responsible to Pfluger for the money; thus, the payment had the same effect as a payment directly to Pflu-ger. See, e. g., Christopher v. General Computer Systems, Inc., 560 S.W.2d 698, 703 (Tex.Civ.App.-Dallas 1977, writ ref’d n.r.e.); Searle-Taylor Machinery Co., Inc. v. Brown Oil Tools, Inc., 512 S.W.2d 335, 337-38 (Tex.Civ.App.-Houston [1st Dist.] 1974, writ ref’d n.r.e.). Williams’s subsequent conversion of the money (rather than the vehicle) could not adversely affect Colquitt’s right to demand a proper transfer of the certificate from Pfluger. As between Pfluger and Colquitt, Williams’s defalcation should be borne by Pfluger, Williams’s principal.

Our holding that the transaction is controlled by the Certificate of Title Act rather than the entrustment provision of the Business and Commerce Code disposes also of Pfluger’s complaint that the court erred in submitting special issues three and four inquiring whether Pfluger entrusted possession of the automobiles to Williams, whether Williams was a merchant dealing in antique automobiles, and whether Colquitt was a buyer in the ordinary course of business. These issues are immaterial in light of our previous holding. The controlling question in this ease is whether Williams was the agent of Pfluger acting within the scope of his authority at the time of the sale so as to establish the transaction as one between Pfluger and Colquitt. The jury answered the issue of authority affirmatively, and the judgment was properly rendered on that ground. We hold that issues three and four have no bearing on the result of the case and, therefore, any error in their submission is harmless. Kelley v. Ward, 94 Tex. 289, 60 S.W. 311 (1901); Texas & N.O.R. Co. v. Blake, 175 S.W.2d 683, 687 (Tex.Civ.App.-Fort Worth 1943, writ ref’d); Schaff v. Scoggin, 202 S.W. 758, 761 (Tex.Civ.App.-Amarillo 1918, writ ref’d); Morris v. Brown, 173 S.W. 265, 270 (Tex.Civ.App.-El Paso 1915, writ ref’d).

Pfluger complains also of the award of an attorney’s fee to Colquitt under the Deceptive Trade Practices Act, Tex.Bus. & Com.Code § 17.50(d) (Vernon Supp. 1980-81). The attorney’s fee was awarded on the ground that Pfluger’s subsequent denial of Williams’s authority to sell the automobiles was a deceptive trade practice within section 17.46(b)(14) of that Act, which includes “misrepresenting the authority of a salesman, representative or agent to negotiate the final terms of a consumer transaction” among the “false, misleading or deceptive acts or practices” listed in section 17.46(b). Pfluger insists that as a matter of law a subsequent denial of the authority of a purported agent cannot constitute a ground of relief under the Act. We do not agree. As held in Williams v. Loftice, 576 S.W.2d 455, (Tex.Civ.App.-Texarkana 1978, no writ), denial of an agent’s authority, though made subsequent to the sales transaction complained of, may be a violation of section 17.46(b)(14) and thus may entitle the purchaser of a vehicle to an attorney’s fee if the purchaser prevails in the ensuing litigation. Here, Pfluger’s denial of Williams’s authority to sell the vehicle was the basis of Pfluger’s suit, and as a result of that denial Colquitt was required to employ an attorney for the purpose of defending the suit and asserting his rights in the vehicles. The jury found that Williams was the actual agent of Pfluger acting within the scope of his authority when he sold the automobiles to Colquitt and that Pfluger misrepresented the authority of Williams to negotiate the final terms of the sale. Pfluger does not contend that these findings should be disregarded for lack of evidence. Consequently, Colquitt is the “consumer who prevails” in this litigation and is entitled to receive his “reasonable and necessary attorney’s fees” as provided in section 17.50(d).

Affirmed.