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American Container Corp. v. Hanley Trucking Corp.

Decided: July 31, 1970.

AMERICAN CONTAINER CORP., A NEW JERSEY CORPORATION, PLAINTIFF,
v.
HANLEY TRUCKING CORP., A NEW JERSEY CORPORATION, DEFENDANT AND THIRD-PARTY PLAINTIFF, V. HERSCHEL TRUCKING CO., A NEW JERSEY CORPORATION, THIRD-PARTY DEFENDANT



Herbert, J.s.c.

Herbert

On March 16, 1968 Hanley Trucking Corp. arranged to purchase from Herschel Trucking Co. certain vehicles, including a used 1965 Fruehauf semi-trailer. A week later the semi-trailer was sold to American Container Corp. as a result of negotiations between American and Hanley. The purchase price of $2,800 was paid by American to Hanley; Hanley forwarded $2,500 to Herschel and retained the $300 balance. A bill of sale and certificate of legal title were given to American by Hanley. The bill of sale was written on Hanley's stationery, signed by Hanley's president, and it stated:

This is to certify that we have this date sold 1-1965 Frehauf [sic] semi trailer to your company and have received your check and said unit is paid in full.

However, legal title on the certificate was still in the name of Herschel, which had endorsed the document in blank. Hanley had never taken physical possession of the semi-trailer, but delivery was made nevertheless by Hanley from Herschel directly to American.

American enjoyed full possession and use of the semi-trailer for 16 months until July 23, 1969, when the New Jersey State Police impounded it under the authorization of N.J.S.A. 39:5-47. That statute provides in part:

The commissioner may authorize the seizure of a motor vehicle operated over the highways of this state when he has reason to believe that the motor vehicle has been stolen or is otherwise being operated under suspicious circumstances and may retain it in the name of the department until such time as the identity of ownership is

established, whereupon he shall order the release of the motor vehicle to its owner.

After the expiration of ninety days from the date the motor vehicle came into the possession of the commissioner by seizure or otherwise, he shall sell it at public sale, upon notice * * *.

Upon the sale of the motor vehicle all claims for interest therein shall be forever barred and the proceeds realized therefrom shall become the sole property of the state, * * *.

Less than two weeks after the seizure, American notified Hanley that it desired to rescind the contract of sale between them. American offered to assign to Hanley the receipt given for the semi-trailer by the State Police, but Hanley refused to return the $2,800 purchase price. American thereafter instituted this action against Hanley for rescission. Hanley in turn filed a third party complaint against Herschel, alleging that if anyone is liable to American, it is Herschel. Hanley's third party complaint was filed more than 90 days after the semi-trailer was impounded; no allegations were made or evidence adduced of any earlier demands by Hanley on Herschel. Timely answers to both the complaint and the third party complaint were filed in due course.

Now American, Hanley, and Herschel have all moved for summary judgment. The parties having conceded at oral argument that there is no genuine dispute as to any of the material facts set forth above, this case is an appropriate one for partial summary disposition.

American contends that it bought the semi-trailer from Hanley, who impliedly, but falsely, warranted and represented good title. Hanley denies that it sold the semi-trailer to American and that it warranted good title. Rather, says Hanley, Herschel sold the semi-trailer directly to American and warranted good title to both American and Hanley. Herschel asserts not only that it never warranted good title, but also that in fact good title was conveyed and the seizure of the semi-trailer improper. Moreover, Herschel argues that rescission is an inappropriate remedy here, where American

cannot tender the semi-trailer itself, but merely the police receipt.

A "sale" is defined by the Uniform Commercial Code as "the passing of title from the seller to the buyer for a price." N.J.S. 12A:2-106(1). "'Seller' means a person who sells or contracts to sell goods." N.J.S. 12A:2-103(d). Black's Law Dictionary says a "sale" is "a contract between two parties called, respectively, the 'seller' (or vendor) and the 'buyer,' (or purchaser), by which the former, in consideration of the payment or promise of payment of a certain price in money, transfers to the latter the title and the possession of property." These are simply formalized statements of principles known to every layman: A sale is a transfer of goods for consideration, and the seller is generally the party that receives the consideration and effects the transfer.

In this case, if it be assumed that there was any title or participating interest in the allegedly stolen semi-trailer which could be the subject of a sale, there is no question but that there was a sale to American. I think it equally clear that Hanley, not Herschel, was the seller. Hanley was the equitable owner of the vehicle by virtue of its contract with Herschel; moreover, it held the instrument of legal title which, endorsed in blank by Herschel, enabled it to put the registration of title in its own name at will. It was Hanley that arranged the sale to American, received the purchase price, conveyed title and a bill of sale (which expressly acknowledged its status as seller), and effected delivery.

Herschel, on the other hand, had no part in the transaction by which American acquired the semi-trailer. Rather, Herschel was the seller to Hanley in the earlier -- and separate -- sale by which Hanley had acquired the semi-trailer for itself at a cost of $2,500. For an analogous case, see Pope v. Ferguson , 82 N.J.L. 566 (E. & A. 1912). There plaintiff had contracted, first, to buy certain iron plates from defendant and, second, to sell them to B. Nicoll &

Co. for a profit. Plaintiff had also arranged for all deliveries to be made by defendant directly to B. Nicoll & Co., and this had been done for a while until defendant breached its contract. Plaintiff then brought an action for damages. Defendant unsuccessfully sought from the trial court a nonsuit or a directed verdict on the ground that.

Although reversing on other grounds, the Court of Appeals specifically agreed with the lower court's rejection of ...


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