
    BARNETT FIRST NATIONAL BANK OF JACKSONVILLE, a corporation, Appellant, v. CUSTOM FINANCE COMPANY, a corporation, Appellee.
    No. J-58.
    District Court of Appeal of Florida. First District.
    April 23, 1968.
    Rehearing Denied June 6, 1968.
    William D. King and Gerald Bard Tjo-flat, of Mahoney, Hadlow, Chambers & Adams, Jacksonville, for appellant.
    Frank X. Friedmann, Jr., of Rogers, Towers, Bailey, Jones & Gay, Jacksonville, for appellee.
   JOHNSON, Judge.

This is an appeal from a judgment entered by the Circuit Court of Duval County, Florida, Judge Gooding presiding, which judgment was entered from issues raised by the complaint, and amended answer and counterclaim and a stipulation filed in evidence as plaintiff’s exhibit “A,” and testimony submitted. The case was tried without a jury.

The final judgment was some ten pages in length and set out in great detail the facts involved, including the custom of the trade and dates, etc. Its consummate result was, that plaintiff (appellee herein and so referred to hereafter) had a claim, lien, right and interest in and to each mobile home involved in this suit, which was and is superior to the right, title, lien or interest of the defendant (appellant herein and so referred to hereafter) in and to said mobile homes to the extent of the unpaid principal amount plus interest due or to become due in respect to each such mobile home. Said order also provided that .the plaintiff had a claim, right, lien and interest prior and superior to that of the defendant on the proceeds of the first retail sale of each mobile home, “that is, on the proceeds past and future received through installment payments or otherwise by the defendant under the conditional sales contracts or other security instruments executed by the original purchasers, equity purchasers or purchasers after repossession, * * * less reasonable handling charges.”

A constructive trust was declared by said judgment, on the proceeds of sale, including money already collected by the defendant on the conditional sales contracts as well as all future collections. Provision was made for periodic payments by the defendant to the plaintiff. Said order further provided that the appellee should deliver the manufacturer’s statement of origin to the appellant as to each home and the appellant directed to apply for title certificate on each home, showing plaintiff’s lien and then return the title certificates to the plaintiff.

The facts from which this controversy arose can be stated briefly as follows: Armor Manufacturing Company (or Armor Mobile Homes Sales Corp. of Georgia) manufactured mobile homes. Cardair Homes, Inc., Jacksonville, Florida, was a dealer in mobile homes and in cooperation with Armor obtained “floor pla? ” financing on said units through Custom Finance Co. of Vicksburg, Mississippi. The C.O. and bill of sale were sent to Custom Finance, who in turn paid Armor.

The floor plan contract between Cardair Homes, Inc. and Custom Finance Co., consisted of a “floor plan chattel mortgage,” which purports to encumber each mobile home for such amounts as were necessary to pay the manufacturer, Armor, and Armor was still liable, also, to Custom for the money advanced on the floor plan. In this contract or chattel mortgage, section 4 thereof, was the following provision:

“4. The mortgagor shall have the right to sell said property at retail in the regular course of business; provided, however, that the proceeds shall be fully and faithfully accounted for and promptly paid over to the mortgagee and applied, to the extent thereof, to the payment and discharge of said note and indebtedness hereby secured.”

The trial court found and so held in his final judgment, inter alia: “The terms of the transaction between plaintiff and Car-dair were either total payment within ninety days of the date of the mortgage or ten per cent curtailment or reduction of the principal amount plus interest within that period.”

Lot checks were made on the lot of Car-dair by a representative of Custom and it was discovered that certain units were not on the lot nor had Custom been paid therefor, and were therefore sold out of trust. Also, ninety days curtailment payments were made by Cardair and accepted by Custom, after the discovery of the “out of trust” sales. This fact was not included in the final judgment as a finding of the court, however, but was not disputed by the plaintiff.

The trial court further found that the retail purchasers from Cardair had no knowledge of the fact that the plaintiff held a floor plan chattel mortgage on the mobile homes, but that each purchaser failed to take any step to cause a certificate of title to be issued pursuant to the Florida Motor Vehicle Law. That in each instance of sale the purchaser executed a conditional sales contract to Cardair which in turn was assigned by Cardair to the defendant.

In each instant of the assignment of the conditional sales contract to the defendant, the dealer, Cardair, would take to the defendant the dealer’s copy of the original invoice of the respective homes, along with the executed conditional sales contract, containing an assignment thereof and some papers showing setup for payment, interest, etc. The copy of the invoice showed at one point thereon the statement: “Terms: 100% Custom Finance, Vicksburg, Mississippi.”

There was no dispute about the fact that the defendant did not demand nor receive at or before paying Cardair for the assigned conditional sales contract evidence of title or origin, nor was inquiry made to the Motor Vehicle Commissioner of Florida as to whether title had been applied for.

On the homes involved here, the original C.O.’s were never delivered to the defendant, although requested by the defendant,

Section 4 of the “floor plan” chattel mortgage gave the dealer the right to sell the mobile homes. This provision provided also that Cardair would promptly account to Custom for the proceeds of such sale. This imposed an obligation upon Cardair to pay, hut did not impose any obligation on anyone else to pay Custom, in the absence of a showing of collusion or fraud between such third person and Cardair. Barnett was not called upon to follow the payment from Cardair to Custom or Armor Mobile Homes. Even if Barnett had had actual knowledge of the floor plan chattel mortgage, which fact is in dispute as of the date the conditional sales contracts were assigned to Barnett, paragraph 4 thereof would have assured Barnett that the transaction was safe so long as it was not shown that Barnett conspired with Cardair not to pay Custom.

We view the facts in this case differently from the trial judge. The transaction was in the regular course of business of a licensed new mobile home dealer. The conditional sales contracts were assigned to Barnett “without recourse” and contained a warranty clause that there were no liens against the mobile home described in the contract.

There is evidence that Custom was aware of sales of units “out of trust” being made by Cardair. Barnett had no knowledge of this. Custom could have stopped its agent or dealer and dealt with Cardair at any time after discovery, which should have been within 30 days after each sale, if the testimony of Custom’s witness to the effect that “lot checks” were made on about a 30 day basis, is true.

The conditional sales contract created an obligation to pay running from the buyer who signed the contract to the seller or his assignee. No obligation to pay Custom was created thereby as against the buyer. Barnett became the financier of the buyer, not of the dealer.

We hold that the provisions of the Uniform Trust Receipts Act are applicable to the set of facts here involved and the honesty or dishonesty of the appellee’s dealer, Cardair, constituted an assumed risk on the part of Custom and not on the part of Barnett. The sale of the mobile home was made in the regular course of business, by a licensed dealer selling a “new” unit. Title was specifically retained by the seller and therefore until the purchase price was paid, no title could or would be issued to the buyer. There is a distinction between an instrument creating a lien against a title conveyed and withholding of title as security, so that the point raised about no application having been made to the Motor Vehicle Commissioner by the buyer is immaterial to the issues in this case.

We feel and so hold that Barnett stood in the shoes of the buyer and therefore its holding of the conditional sale or retained title contract was superior to the claim or right of Custom. This is therefore true as to the proceeds of any installment received or to be received by Barnett from the respective buyers.

To use a hypothetical case for emphasis, suppose Cardair had sold each of the mobile homes to buyers who paid Cardair cash, but immediately gave Barnett a chattel mortgage in order to obtain the money with which to pay Cardair, I don’t believe there could be any question but that Custom had lost its lien on the mobile home. It would have been forced to rely upon Cardair for payment under the Uniform Trust Receipts Act of Florida.

Barnett became the financier of the buyer the same as Custom was the financier of Cardair. Barnett did not rely upon Cardair for payment because it accepted the assignments “without recourse” on Cardair, thereby establishing beyond question the fact that Barnett was financing and looking for payment from the buyer, who the appellee admits is an innocent purchaser, not required to go back to Cardair’s possession of the new mobile home for resale. The Motor Vehicle Title Law does not supersede the Uniform Trust Receipts Act of Florida, to the extent of permitting a floor plan lien holder, which has given the dealer power of sale, to follow the vehicle with its lien into the hands of the bona fide purchaser in the regular course of business. Admittedly, there was no fraud charged against Barnett, and the Court only found carelessness or lack of prudent business concern in the transaction, but we think, and so hold, that Barnett had a lawful right to recognize the applicability of the Uniform Trust Receipts Act of Florida and to deal as it did with Cardair. Barnett was not required by custom of the trade nor contract to pay Custom Finance Co. Cardair was the only one charged with that duty, both by the custom of the trade and by contract. Custom Finance picked its trustee, Cardair, and therefore was bound by Car-dair’s actions.

Barnett picked its buyer (the conditional vendee) and was therefore bound by the vendee’s actions.

The judgment appealed from is therefore reversed and the trial court directed to enter judgment for the appellant herein.

SPECTOR, J., concurs.

RAWLS, Acting C. J., dissents.

RAWLS, Acting Chief Judge

(dissents).

In my opinion the decision of the trial judge should be affirmed.

Custom Finance Company floor-planned (financed by trust receipts) new mobile homes purchased by the dealer, Cardair Mobile Homes, from the manufacturer, Armor Manufacturing Company. According to their usual method of doing business Cardair puchased new mobile homes from Armor. Armor issued a Manufacturer’s Statement of Origin and Invoice on each mobile home. Plaintiff, Custom Finance Company financed 100% of the wholesale value of these mobile homes for Cardair. As security, plaintiff took a floor-plan chattel mortgage and promissory note from Car-dair. This chattel mortgage and note was executed by Cardair when the mobile home was delivered to it by Armor. Upon execution of the chattel mortgage and note, Armor would physically attach to this document the Manufacturer’s Statement of Origin and the original copy of the Invoice. These documents were forwarded to plaintiff, and plaintiff paid Armor the total amount due. The terms of the transaction between plaintiff and Cardair were either total payment within ninety days of the date of the mortgage or 10% curtailment or reduction of the principal amount plus interest within that period.

In'1965 the dealer sold five such mobile homes out of trust. This was accomplished by the purchasers executing a conditional sales contract with the dealer, who thereafter assigned same to Barnett First National Bank.

Barnett required credit applications for the purchasers and carried insurance with Delta Corporation of America against loss upon such contracts when title issued. The bank neither required the issuance of title prior to assignment nor did it inquire as to the status of floor planning or issue the check jointly to the dealer and the entruster. Barnett required a copy of the original invoice to accompany the conditional sales contract. In the case of four of the mobile homes in question this invoice indicated that same was financed 100% by Custom Finance.

The entruster kept in its possession the certificate of origin which is the only indicia of title and which must be presented to the Motor Vehicle Commission before title can be issued.

When it became known that the dealer had sold the five mobile homes out of trust, Barnett took a second mortgage on property in Duval County owned by the dealer. This mortgage was conditioned to secure delivery to Barnett of the title certificates on the five mobile homes. This mortgage was foreclosed and Barnett now has title to the property.

The entruster brought this action to determine its right and to impress a constructive trust upon the receipts from the conditional sales contracts.

The sole question is whether the en-truster with indicia of title has a superior lien to one who purchased from the dealer an assignment of the innocent purchasers’ conditional sales contract.

Both parties concede that the original purchasers were bona fide innocent purchasers for value and upon payment of their contracts are entitled to clear title.

The parties have stipulated that Florida law only is applicable in this case. The facts occurred in 1965, prior to the effective date of the Uniform Commercial Code, January 1, 1967. Therefore, the Uniform Trusts Receipts Law (Ch. 673) and Motor Vehicle titling laws control.

Section 673.09, Florida Statutes, F.S.A., provides that where the dealer has the privilege of sale, a good faith purchaser in the ordinary course of trade and for value takes free and clear of the entruster’s lien. Where the purchase is made on credit, the entruster is entitled to the debt owing to the trustee (dealer) and any security given therefor by reason of said purchase. Therefore, the entruster has a statutory right to the conditional sales contracts and their proceeds. This Court has previously held that the Act subrogates the en-truster to any debt owing from the purchaser.

The wrongdoing of the dealer here was in selling to Barnett that which was rightfully the entruster’s. It is important to note here that the conditional sales contracts were contracts between the purchaser and seller, and the seller assigned his interest to Barnett. The assignment reads:

“ * * * all right, title and interest of the undersigned dealer are hereby sold * * * [to Barnett].”

This is not a case of the purchaser arranging his own financing and paying the dealer in cash. In effect what actually occurred here constituted credit sales secured by the conditional sales contracts.

Section 673.09, Florida Statutes, F.S.A., provides that the entrusting of goods by the entruster to a trustee, under a trust receipts transaction, “shall be equivalent to the like entrusting of any documents or instruments which the trustee may procure in substitution, or which represent the same goods or instruments or the proceeds thereof, and which the trustee negotiates to a purchaser in good faith and for value.” Thus, Barnett and the purchasers of the mobile homes can under the Trust Receipts Law occupy the same position — one with respect to the entrusted goods and the other with respect to the conditional sales contracts — provided each in purchasing the item it purchased did so in good faith and for value. The first question to be decided here is whether Barnett purchased the contracts in good faith.

Unlike other goods in retail trade which may be financed by trust receipts, motor vehicles and mobile homes are subject to the Florida titling act, which now requires statements of origin on new vehicles. These statements must accompany an application for title, but Section 319.21, Florida Statutes, F.S.A., permits an entruster to hold the statement of origin until his security interest is satisfied. This statement of origin is the only existing indicia of title until a title certificate is issued. In the case of a new vehicle possession of the statement of origin is absolutely necessary for anyone purchasing a lien on the motor vehicle in order to have the lien recorded on the title certificate. Therefore, the fact that Custom retained possession of the statement of origin has a definite bearing on whether Barnett is a bona fide purchaser of the conditional sales contracts.

The trial judge found:

“The preponderance of the evidence showed that the major financial institutions which take assignments of retail paper from mobile home dealers, when they do not hold the wholesale paper, followed the practice of inquiring as to the location of the Manufacturer’s Statement of Origin and as to wholesale liens. If a wholesale lien is discovered, the accepted practice is to pay off the wholesale finance company directly with directions to the wholesale finance company to forward the Manufacturer’s Certificate of Origin and Original Invoice. Defendant must be held to have knowledge of the established custom and usage in the trade and of' plaintiff’s liens on the involved mobile homes. Further, with this knowledge, defendant was in the best position to insure that no party suffered loss by following that practice of direct pay-off which, according to custom and usage in the trade, is considered prudent.”

There is sufficient evidence to sustain the trial judge’s conclusion. A. B. Jewell, erstwhile President of Cardair Mobile Homes, testified that with the exception of Barnett, all other retail financiers who purchased their conditional sales contracts paid the floor planner direct. Earl Dawson of Dawson’s Mobile Homes stated that the retail financiers he dealt with before he started using Barnett allowed him to title the vehicles after they purchased the retail title contracts hut required that he maintain a reserve zvith them. The evidence further shows that it is the custom of the trade for the manufacturer’s invoice to list the floor planner under “Terms,” and that the general practice among financing institutions, including Westinghouse Credit Corporation, Pioneer Finance Corporation, Universal C.I.T. and Central Bank & Trust Company, is to check with the floor planner, pay him off, and request the floor planner to forward the statement of origin directly to the purchaser of the retail sales contract.

In contrast to the general practice of the trade, Mr. Leroy Gardner, Vice President and Manager of the Installment Loan Department of Barnett First National Bank, testified that bankers had common knowledge that new automobile dealers and new mobile home dealers floor-planned their inventory, but he never checked with the floor planner “* * * because on our contracts the dealers warrant us good title free and clear of all liens and encumbrances.”

It should be further noted that Barnett prior to receiving the assignments had before it the original invoices, four of which reflected that the sales between the dealer and the manufacturer were financed 100% by the entruster, Custom Finance Company. In Trumbull Chevrolet Sales Co. v. Seawright this Court held that a manufacturer’s window sticker containing the suggested retail price and reflecting that the vehicle was originally transferred to a Michigan dealer was sufficient notice to a purchaser from a licensed used car dealer in Florida so as to estop the purchaser from claiming that he was “an innocent purchaser for value” as against the one holding indicia of title, i. e. the certificate of origin. Certainly in the case sub judice the original invoices reflecting the terms of the sale of the mobile homes to the dealer was actual notice to a bank and would estop the hank from claiming a lien superior to that of the one holding indicia of title.

But even as to the mobile home for which the dealer improperly submitted to Barnett the wrong invoice, had Barnett taken advantage of what it admits is common knowledge or had it followed the general practice of the banking trade, it would have protected itself as well as the entruster.

Furthermore, it is noted here that Barnett repossessed three of these mobile homes and sold them to other persons. These three purchasers, who purchased used mobile homes from one other than a dealer, without obtaining a certificate of title, which is prohibited by Section 319.21, Florida Statutes, F.S.A., are estopped from claiming a lien superior to that of one with indicia of title. In fact, both the selling and the purchasing are prohibited by said section.

I conclude the trial judge was correct in ordering Barnett to remit the collections to. the entruster until his security interest was satisfied. I, therefore,

Dissent. 
      
      . Ch. 673, Florida Statutes, F.S.A.
     
      
      . Ch. 673.09, Florida Statutes, F.S.A.
     
      
      . Sections 673.09 and 673.10, Florida Statutes, F.S.A.
     
      
      . Universal C.I.T. Credit Corp. v. Thursbay Chevrolet Co., 136 So.2d 15 (Fla.App.1st, 1961).
     
      
      .Section 319.23, Florida Statutes, F.S.A.
     
      
      . Trumbull Chevrolet Sales Co. v. Seawright, 134 So.2d 829 (Fla.App.1st, 1961).
     
      
      . Id.
     