J. STEVEN STAFFORD, J., delivered the opinion of the court, in which ALAN E. HIGHERS, P.J., W.S., and HOLLY M. KIRBY, J., joined.
Appellant purchased a commercial truck from a merchant who dealt in goods of that kind. Before obtaining good title, Appellant entrusted the merchant with the truck to allow the merchant to make agreed upon repairs. While the merchant had possession of the truck, he sold it to the Appellee. Appellant filed suit to recover the truck. The trial court found that Appellee was a bona fide purchaser in the ordinary course of business and that under Tenn.Code Ann. § 47-2-403, Appellant's entrustment of the truck to the merchant provided the merchant the authority to transfer title to the Appellee. Finding no error, we affirm.
Chris and Donna Sandefur are the owners of Best Signs, Inc. ("Appellant"). Best Signs manufactures and installs on-site ID signs for commercial and residential customers. In May of 2005, the Sandefurs were in the market for a truck to use in their business. Through a business acquaintance, the Sandefurs were put in contact with Appellee Bobby King, who is a dealer in the type of equipment the Sandefurs wished to purchase. Mr. Sandefur informed Mr. King that he was looking for a truck with a square-tube crane, and a two-man basket, which had a 2.5 ton lifting capacity. Mr. King informed Mr. Sandefur that he would contact him if he located a truck that met the specifications. Within a week of their initial conversation, Mr. King notified the Sandefurs that he had found a truck and emailed photos and specifications to the Sandefurs. After reviewing this information, Mr. Sandefur concluded that the truck met Best Signs' requirements except that it was slightly
Mr. King brought the truck to Best Signs within a week of receiving the initial deposit check of $4,000.00. Mr. Sandefur then took the truck to a repair and service shop for the purpose of inspection. The inspection revealed that the switchbox for the two-man basket was damaged and the main boom had a hydraulic leak, which would require it to be rebuilt. Best Signs decided to proceed with the purchase on the condition that Mr. King would repair the switchbox and hydraulic leak. In addition, the parties negotiated a $2,800.00 discount because the truck bed was not painted as requested.
The agreed purchase price of the truck was $65,000.00. Best Signs received credit against this amount for the $4,000.00 deposit, the $2,800.00 discount, and an additional payment of $3,700.00. The purchase was evidenced by a Bill of Sale executed by Mr. King and Mr. Sandefur on May 24, 2005 and by an invoice reflecting the price, credits, and discount given to Best Signs. Also noted on the invoice were the two repairs to be made to the truck.
Best Signs delivered a total of five checks to Mr. King. In addition to the $4,000.00 deposit, and the $3,700.00 check mentioned above, the Sandefurs also tendered checks in the amounts of $9,500.00, $3,000.00, and $45,000.00. Best Signs financed the $45,000.00 through a loan, for which the Sandefurs executed a promissory note secured by the truck.
Best Signs took possession of the truck on May 24, 2005, with the understanding that it would be returned to Mr. King for repairs when the parts arrived. Mr. King executed a title and gave it to the Sandefurs upon delivery of the truck. Best Signs also obtained insurance on the truck. Best Signs began making its own repairs/modifications prior to returning the truck to Mr. King for the major repairs. It sandblasted the bed and bins, rhino-lined the bed and bins, made new doors for the bins, replaced the rear outriggers, replaced all assemblies in the driver and passenger doors, replaced wires running from the bottom to the top of the crane with welding leads, and repaired the hydraulic hose reels. Mr. Sandefur testified that Best Signs spent a total of 165 labor hours on the repairs, and $2,127.87 in parts. Mr. Sandefur estimated that, with the labor, Best Signs' total investment was $9,551.87 in addition to the purchase price.
In February of 2006, Mr. King notified Best Signs that he had received the ordered parts and was ready to make the agreed upon repairs. Mr. King came to Best Signs and picked up the truck and gave Best Signs a loaner truck for use while its truck was being repaired. During the time that Mr. King had the truck, the Sandefurs contacted him regularly to check the status, and eventually to inquire about the delays. Mr. King made numerous excuses for the delays. Mr. Sandefur testified that he became concerned about the continuous delays in the completion of the repairs.
After Mr. King took the truck, the Sandefurs did not see him again until they met at the bank to attempt to resolve an issue with the truck's title. The title given to the Sandefurs on the date of purchase was a New York state title, which identified the owner of the truck as "RJD Leasing Corp." The title had been executed by what appears to be RJD Leasing Corp. and below that by Mr. King. When the Sandefurs attempted to have the truck titled in the name of Best Signs, they encountered problems because Mr. King
Once the title issue was resolved, the Sandefurs did not see Mr. King again until approximately two or three days prior to learning that Mr. King had sold the truck to Appellee Design Team, Inc., a Savannah, Tennessee sign company. On that occasion, Mr. King came to Best Signs to retrieve the loaner truck. Shortly thereafter, the Sandefurs received a call from a Chicago company asking for their truck (i.e., the loaner truck). Upon further discussion, the Chicago company advised the Sandefurs that they might want to check with Design Team, Inc. concerning the truck Best Signs had purchased from Mr. King. In response, the Sandefurs contacted Mr. King who informed them that Design Team had ordered a truck from him, which had not arrived. Mr. King told the Sandefurs that he had "loaned" their truck to Design Team, pending arrival of its truck. Upon further investigation, the Sandefurs learned that, while Mr. King had possession of their truck for repairs, he had actually sold it to Design Team.
Chris Pierce, part owner of Design Team, testified that he purchased the truck for Mr. King in February 2006. Mr. Pierce also testified that he had known that Mr. King was a dealer in goods of this type for approximately eight to ten years prior to this purchase.
After Mr. King delivered the truck to Design Team, it was never able to obtain title to the truck. Thereafter, Design Team attempted to remove the bed and crane from the truck and place it on a new truck. Mr. King was ultimately jailed.
On September 28, 2006, Best Signs filed a complaint to recover personal property against Mr. King, Design Team, Inc., and the City of Savannah, Tennessee in the General Sessions Court of Hardin County. The case was heard on November 6, 2006 and on January 5, 2007 a judgment was entered in favor of Best Signs. The January 5, 2007 order also dismissed the City of Savannah as a defendant. Design Team filed a notice of appeal in the Circuit Court at Hardin County, and on February 20, 2008 a judgment was entered in favor of Design Team. Best Signs appeals and raises one issue for review as stated in its brief: Whether the trial court erred in its determination as to the rightful owner of the 1997 International truck and crane at issue.
Tenn.Code Ann. § 16-15-729 (Supp.2007) governs appeals from general sessions court to circuit court, and requires a de novo review by the circuit court.
Id. at 184 (citations omitted).
Consequently, this Court reviews the decision of the circuit court de novo upon the record with a presumption of correctness as to the trial court's findings of facts. We must affirm those findings unless the evidence preponderates to the contrary. Tenn. R.App. P. 13(d); Union Carbide v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993).
The Uniform Commercial Code (UCC), specifically Tenn.Code Ann. § 47-2-403, governs the type of transaction at issue in this case. The statute states:
The UCC defines a "Buyer in the Ordinary Course of Business" as follows:
Tenn.Code. Ann. § 47-2-201(9).
"Good faith" is defined as "honesty in fact in the conduct or transaction concerned." Tenn.Code Ann. § 47-2-201(20). From the record, it is clear that both Best Signs and Design Team were the victims of a scheme orchestrated by Mr. King. Although the equities may dictate another conclusion, we are bound by the mandates of the UCC. Here, the trial court specifically found that Design Team was a buyer in the ordinary course of business, and was a bona fide purchaser. Despite Best Signs' argument on appeal, we find that the trial court's finding is supported by the record. The facts indicate that Design Team purchased the truck from Mr. King without knowledge that this transaction violated Best Signs' rights. Moreover, it is undisputed that Mr. King was a "a merchant who deals in goods of that kind"—a fact that both Best Signs and Design Team acknowledge. Under the statutory definition set out above, Design Team is a buyer in the ordinary course of business. The record also reveals that neither Best Signs nor Design Team was able to receive a Certificate of Title from Mr. King at the time of purchase. In fact, Best Signs did not obtain a valid title until September 2006, which was approximately sixteen months after it purchased the truck, and approximately seven months after Design Team purchased the truck.
The gravamen of this case rests on the question of whether Best Signs "entrusted" the truck to Mr. King, a "merchant who deal[t] in goods of that kind," for repairs. As set out in the statute, entrusting includes "any delivery and any acquiescence in retention of possession
Best Sign relies upon the case of Ballard v. Wetzel, No. 03A01-9705-CH-00189, 1997 WL 650878 (Tenn.Ct.App. Oct. 16, 1997) to support its argument for ownership of the disputed truck. We find Best Signs' reliance upon this case to be misplaced. In Ballard, the Court's decision was based, inter alia, upon a finding that the goods at issue were "stolen or otherwise obtained against the will of the owner." Id. at *2. In this case, Best Signs voluntarily relinquished possession of the truck to Mr. King. As stated in the UCC, entrustment to a merchant who deals in goods of that kind gives that merchant power to transfer all rights of the entruster to a buyer in ordinary course of business "regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law." Tenn.Code Ann. § 47-2-403. Although the actions of Mr. King appear to rise to the level of larceny under the criminal law, this fact does not negate the power that was conferred
For the foregoing reasons, we affirm the order of the trial court. Costs of this appeal are assessed against the Appellant, Best Signs, Inc. and its surety.