Jasper v. Bryant

IN THE COURT OF APPEALS

AT KNOXVILLE FILED

July 30, 1998

BRUCE and CRYSTAL JASPER, ) C/A NO. 03A01-9711-CV-00521

) Cecil Crowson, Jr.

Plaintiffs and Appellants, ) Appellate C ourt Clerk

)

v. )

)

)

DON STRECK, )

)

Defendant, )

)

and )

) APPEAL AS OF RIGHT FROM THE

) KNOX COUNTY CIRCUIT COURT

PETERBILT OF KNOXVILLE, INC., )

)

Defendant, )

Third-Party Plaintiff, and )

Appellee, )

)

v. )

)

)

)

JESS BRYANT, )

) HONORABLE HAROLD WIMBERLY,

Third-Party Defendant. ) JUDGE

For Appellants For Appellees

GARY BLACKBURN KEITH McCORD

JAY C. BALLARD McCord, Troutman & Irwin

Blackburn, Slobey, Freeman & Knoxville, Tennessee

Happell, P.C.

Nashville, Tennessee

O P I N IO N

AFFIRMED IN PART

REVERSED IN PART

REMANDED Susano, J.

1

This case arises out of a transaction involving the

original plaintiffs, Bruce Jasper and his wife, Crystal Jasper

(collectively “the Jaspers”), and the defendant Peterbilt of

Knoxville, Inc. (“Peterbilt”), regarding a 1994 Peterbilt tractor

titled in the name of Mrs. Jasper’s father, the third-party

defendant Jess Bryant (“Bryant”). The Jaspers claimed an

interest in the subject vehicle. They sued Peterbilt and its

former employee, Don Streck (“Streck”),1 claiming that the

defendants were guilty of breach of contract, conversion, fraud,

and negligent misrepresentation, in securing the transfer of the

truck to Peterbilt. At the close of the Jaspers’ proof before a

jury, the trial court held that the Jaspers had “no claim”

against Peterbilt, because the vehicle in question had not been

titled to either of the Jaspers. Accordingly, the trial court

directed a verdict in Peterbilt’s favor,2 and the Jaspers

appealed, presenting the following two issues:

1. Do the Jaspers, who had an ownership

interest in the 1994 truck according to

Tennessee, Georgia and Ohio laws, have

capacity and standing to maintain an action

for conversion and fraud?

2. Do the Jaspers, regardless of any

interest in the 1994 truck, have capacity and

standing to maintain an action for fraud?3

1

The record does not reflect the disposition of the claim against

Streck; but it is clear that the trial court’s judgment from which this appeal

is being pursued brought this litigation to a close.

2

Peterbilt filed a third-party complaint against Bryant, the title owner

of the subject vehicle. With the dismissal of the original complaint, the

third-party action was rendered moot.

3

We note that the Jaspers do not address the breach of contract claim in

either of the two issues presented for our review; by the same token, they

have not advanced any argument in support of that claim in their brief. The

statement of issues, as well as the rest of the brief, speak only in terms of

the Jaspers’ other claims, i.e., conversion, fraud and misrepresentation.

Issues not raised and argued in the brief are deemed waived. See Rule 13(b),

T.R.A.P.; Blair v. Badenhope, 940 S.W.2d 575, 576-77 (Tenn.App. 1996).

2

I. Standard of Review

We review a trial court’s grant of a directed verdict

under well-established rules:

In ruling on the motion, the court must take

the strongest legitimate view of the evidence

in favor of the non-moving party. In other

words, the court must remove any conflict in

the evidence by construing it in the light

most favorable to the non-movant and

discarding all countervailing evidence. The

court may grant the motion only if, after

assessing the evidence according to the

foregoing standards, it determines that

reasonable minds could not differ as to the

conclusions to be drawn from the evidence.

Sauls v. Evans, 635 S.W.2d 377 (Tenn. 1982);

Holmes v. Wilson, 551 S.W.2d 682 (Tenn.

1977). If there is any doubt as to the

proper conclusions to be drawn from the

evidence, the motion must be denied.

Crosslin v. Alsup, 594 S.W.2d 379 (Tenn.

1980).

Eaton v. McLain, 891 S.W.2d 587, 590 (Tenn. 1994); see also

Williams v. Brown, 860 S.W.2d 854, 857 (Tenn. 1993).

II. Facts

Construed in a light most favorable to the Jaspers, the

relevant facts are these. The Jaspers, who are Ohio residents,

have been in the trucking business since 1989. In 1993, a 1994

Peterbilt semi-tractor unit (“the 1994 truck”) was purchased in

Bryant’s name from Nalley Motors in Atlanta. According to the

Jaspers, they made the down payment on the 1994 truck, but the

3

purchase was made in Bryant’s name in order to obtain financing.

After Bryant and the Jaspers returned to Ohio with the truck,

Bryant obtained a certificate of title from the State of Ohio in

his name only. On August 17, 1993, Bryant and the Jaspers

executed an agreement that provides as follows:

I, Jess Bryant, hereby lease to purchase one

1994 Peterbilt semi tractor trailer unit VIN#

tractor 1XP5DB9X4RN339557 and trailer VIN#

[number omitted in document] to Bruce N.

Jasper and Crystal A. Jasper; All due and

earned monies for above described vehicle(s)

are sole responsibility of the Jasper’s [sic]

including; Monthly payments of M.E.T. dues

icluding [sic] insurance, cargo, and

liability, fuel taxes, IRP dues -- State and

Federal taxes, all operating expenses (i.e.

tolls, fuel etc.) and repair bills including

routine equipment maintenance, also inclusive

of monthly rental charge payable to Jess

Bryant of $2000 until extent of 48 payments

are made for clear title to the Jaspers. The

15% down payment to be paid back as follows;

$8000. to T&G Enterprises, Wilmington, N.C.

$5000. to Jess Bryant, 394-B Seroco ave.,

Newark, Oh.

Pursuant to the terms of this agreement, the Jaspers assumed the

specified payments and expenses and began using the 1994 truck in

their business.

In July, 1994, the Jaspers stopped at Peterbilt’s

location in Knoxville to see Bryant, who was there in connection

with repairs to another truck. They found Bryant talking with

Streck, a sales representative of Peterbilt. Streck proposed to

the Jaspers a trade of the 1994 truck for a newer model,

explaining that they could actually lower their monthly payments

from approximately $2,500 to $2,100. A representative of Paccar,

a truck financing company, who was present at the time, indicated

4

that such a deal would be “no problem,” so long as Bryant co-

signed the note. After consulting with Peterbilt’s finance

manager, Streck informed the Jaspers that “everything is go.”

Although initially skeptical, the Jaspers ultimately

agreed to the deal. They testified that they then signed a

“purchase order,” prepared by Streck, which set forth the details

of the trade of the 1994 truck for the newer model. Although

requested to do so, Peterbilt failed to produce this document at

trial. It did produce a document entitled “Offer to Purchase,”

but this document reflects that the new truck was to be purchased

in the name of Bryant’s son -- and Mrs. Jasper’s brother -- James

H. Brown.4 The Jaspers contend that the original purchase order,

which did not list Brown as a purchaser, reflected the true

agreement between the parties, and that the document produced by

Peterbilt was altered and/or contained a forgery of Bryant’s

signature. Bryant and Mr. Jasper also testified that Bryant

signed a release to enable the Jaspers to purchase the new truck.

In August, 1994, Streck called and informed Mr. Jasper

that the new truck had arrived and that he should bring the 1994

truck down from Ohio to complete the transaction. According to

Mr. Jasper, Streck stated: “[D]on’t worry about a thing. It’s

all covered. Financing’s all approved, it’s been approved. You

couldn’t back out now if you wanted.” The Jaspers drove the 1994

truck down to Knoxville on a Friday, but upon arriving at

Peterbilt, they were informed that the new truck was not ready

yet. Anticipating that they would soon be taking delivery of the

4

The difference in last name was not explained.

5

new truck, the Jaspers turned over possession of the 1994 truck

to Streck, along with a Power of Attorney and Bill of Sale that

had been faxed to Ohio by Peterbilt and there signed in blank by

Bryant. At Streck’s suggestion, Mrs. Jasper also wrote two

checks to the lender, Paccar, in the aggregate amount of about

$3,600.

Planning to return the following Monday to pick up

their new truck, the Jaspers drove back to Ohio. On Monday

morning, however, Streck called to inform them that there was a

problem with the financing and that Paccar wanted “accelerated

payments” of $3,500 per month for the first two years of the

deal, instead of the $2,100 per month originally promised by

Streck. After first insisting on the original deal, the Jaspers

then offered to pay $3000 per month. Streck indicated that he

would make that proposal to Paccar; shortly thereafter, he called

back and stated that the lender had decided not to finance the

deal at all. He also informed the Jaspers that the 1994 truck

had already been sold and was “long gone.”

The Jaspers subsequently pursued other means of

financing the purchase of the new truck but were ultimately

unsuccessful. Without a truck, they were unable to continue

their business. In November, 1995, the Jaspers filed this

action, alleging that Peterbilt and Streck were guilty of a

breach of the contract to purchase the new truck, conversion of

the 1994 truck, fraud, and negligent misrepresentation.

6

The case proceeded to trial before a jury. The

defendants sought to portray the facts in a much different light,

depicting the transaction as a simple sale of the 1994 truck from

Bryant, its title owner, to Peterbilt. Among other things,

Peterbilt contended that due to poor health and financial

difficulties, Bryant had authorized Peterbilt to sell his

trucking equipment, including the 1994 truck; that the buyer of

the new truck was to be Mrs. Jasper’s brother, James Brown, but

that Paccar had rejected the proposed deal; and that because the

financing had never been approved, it, Peterbilt, had never

accepted or signed the proposal. Peterbilt pointed to the fact

that it had paid a fair price for the 1994 truck, and also

introduced an October 11, 1994, letter, signed by Bryant,

ratifying the sale and stating that the Jaspers were not parties

to the transaction. Bryant and the Jaspers claimed that Bryant’s

signature on this letter had been forged, or that Bryant had not

understood what he was signing.

As stated earlier, the trial court directed a verdict

in favor of Peterbilt following the close of the Jaspers’ proof,

concluding that the Jaspers “have no claim against the

defendant.”

III. Analysis

The precise basis for the trial court’s ruling is not

clear; however, it apparently involves a question of standing, as

opposed to one of capacity, real party in interest, or joinder.

See Rules 17.01, 17.02, and 19.01, Tenn.R.Civ.P. Generally

7

speaking, a determination of whether a party has standing to sue

depends upon whether that party has a personal stake in the

outcome of the litigation sufficient to warrant the exercise of

the court’s power on its behalf. Browning-Ferris Indus. v. City

of Oak Ridge, 644 S.W.2d 400, 402 (Tenn.App. 1982).

In the instant case, the doubt regarding the Jaspers’

standing revolves around the fact that the 1994 truck in question

was titled to Bryant, and not to either of the Jaspers. Thus,

the threshold question is whether the Jaspers had a legally-

cognizable interest in the 1994 truck sufficient to provide a

foundation for this action. However, we must first resolve a

question not specifically addressed by the trial court, i.e.,

which state’s law applies to the analysis of the August 17, 1993,

contract? Tennessee follows the traditional rule of lex loci

contractus; thus, absent any enforceable choice-of-law

provisions,5 questions involving the construction of a contract

are governed by the law of the state where the contract was made.

See Ohio Cas. Ins. Co. v. Travelers Indemnity Co., 493 S.W.2d

465, 467 (Tenn. 1973); Solomon v. FloWarr Management, Inc., 777

S.W.2d 701, 704-05 (Tenn.App. 1989). In the instant case, Mrs.

Jasper testified that the contract was executed in Ohio.

Therefore, our construction of the contract is controlled by Ohio

law.

Peterbilt agrees that Ohio law applies and specifically

argues that Ohio Rev. Code Ann § 4505.04 precludes the Jaspers

5

As can be seen from a review of the contract, there are none.

8

from asserting any interest in the 1994 truck. That section

provides, in pertinent part, as follows:

(A) No person acquiring a motor vehicle from

its owner whether the owner is a

manufacturer, importer, dealer, or any other

person, shall acquire any right, title,

claim, or interest in or to the motor vehicle

until such person has had issued to him a

certificate of title to the motor vehicle, or

delivered to him a manufacturer’s or

importer’s certificate for it; and no waiver

or estoppel operates in favor of such person

against a person having possession of the

certificate of title to, or manufacturer’s or

importer’s certificate for, the motor

vehicle, for a valuable consideration.

(B) Subject to division (C) of this section

[which is not applicable to this action], no

court shall recognize the right, title,

claim, or interest of any person in or to any

motor vehicle sold or disposed of or

mortgaged or encumbered, unless evidenced:

(1) By a certificate of title,....

* * *

According to Peterbilt, this statute compels a finding that the

Jaspers lack standing to assert an interest in the 1994 truck.

A review of Ohio appellate cases applying § 4505.04

reveals that it is limited in scope. The Ohio Supreme Court has

held that § 4505.04 is “irrelevant to ownership issues except

those regarding importation of vehicles, rights between

lienholders, rights of bona fide purchasers and instruments

evidencing title and ownership.” Calderone v. Jim’s Body Shop,

599 N.E.2d 848, 851 (Ohio App. 1991)(citing Smith v. Nationwide

Mut. Ins. Co., 524 N.E. 2d 507, 509 (Ohio 1988)); see also

9

Hoegler v. Hamper, 607 N.E.2d 89, 91 (Ohio App. 1992). As

explained by the Ohio Supreme Court,

[t]he purpose of [§ 4505.04] is to prevent

the importation of stolen motor vehicles, to

protect Ohio bona-fide purchasers against

thieves and wrongdoers, and to create an

instrument evidencing title to, and ownership

of, motor vehicles.

* * *

[§] 4505.04 was intended to apply to

litigation where the parties were rival

claimants to title, i.e., ownership of the

automobile; to contests between the alleged

owner and lien claimants; to litigation

between the owner holding the valid

certificate of title and one holding a

stolen, forged or otherwise invalidly issued

certificate of title; and to similar

situations.

Hughes v. Al Green, Inc., 418 N.E.2d 1355, 1358 (Ohio 1981)

(citations omitted). Thus, it is well-established that the

statute’s “proof of title requirements... apply only in cases

where there are competing claims to a motor vehicle.” Calderone,

599 N.E.2d at 851; Hoegler, 607 N.E.2d at 90. Significantly, it

also has been held that the statute “was not adopted to clarify

contractual rights and duties.” Hughes, 418 N.E.2d at 1358.

This case does not involve competing claims to

ownership of the 1994 truck -- this is not a lawsuit between

Bryant and the Jaspers; instead, it involves a claim of

conversion, fraud and misrepresentation surrounding the transfer

of the 1994 truck to Peterbilt. See Calderone, 599 N.E.2d at

851, and Hoegler, 607 N.E.2d at 90. The Jaspers simply seek to

10

recover for the deprivation of their interest in the vehicle and

other damages.

It is clear that the statute in question, and the cases

that have applied it, do not preclude one who is not the holder

of the certificate of title from asserting a claim based upon

some legally-cognizable interest in the vehicle. In fact,

several Ohio decisions have restricted application of the statute

while acknowledging the existence of other non-title interests in

a motor vehicle. See, e.g., Gibson v. Dan Phillips Repair Serv.,

1998 WL 32587 (Ohio App., January 30, 1998)(plaintiff, whose ex-

husband was still title owner of van, nevertheless had interest

in the vehicle sufficient to give her standing to sue for

unauthorized repairs thereto); Simmons v. Dimitrouleas

Wallcovering, Inc., 1995 WL 19136 (Ohio App., January 18,

1995)(upholding recovery based on theory of unjust enrichment for

improvements and payments to seller of truck who repossessed

vehicle, because there were no competing claims for ownership);

Plum v. Gelateria Umbertos, Inc., 1987 WL 27797 (Ohio App.,

December 8, 1987)(recognizing a leasehold interest in a truck as

distinct from a “title or ownership” interest, and rejecting the

argument that the trial court’s grant of summary judgment for

defendant, on plaintiff’s claim for conversion of that interest,

was predicated on § 4505.04); Graham Leasing Corp. v. Barr

Trucking, 1981 WL 3436 (Ohio App., August 27, 1981)(under lease

of truck, “it is clear that the right of possession and use of

the vehicle is transferred to the lessee or customer, thus an

incident of ownership is transferred.”). Furthermore, in a

11

decision involving an action to establish a resulting trust in a

truck, the Ohio Court of Appeals said the following:

Was it the intention of the Legislature, when

it enacted the certificate of title law, to

remove from the law of trusts that species of

personal property known as motor vehicles, so

that under no circumstances could the legal

title, as evidenced by a certificate of

title, be in one person and the beneficial

interest remain in another? We do not

believe that any such thought was in the

legislative mind when it enacted [the

predecessor to § 4505.04].

Douglas v. Hubbard, 107 N.E.2d 884, 886 (Ohio App. 1951).

Given the foregoing, we find that Ohio Rev. Code Ann.

§ 4505.04 does not present a legal bar to the Jaspers’ claims,

even though the certificate of title to the 1994 truck remained

in Bryant’s name.

We now turn our attention to the contract between

Bryant and the Jaspers for the purpose of ascertaining the

Jaspers’ interest in the 1994 truck under Ohio law. First and

foremost, we must interpret the contract so as to effectuate the

intent of the parties. Pharmacia Hepar, Inc. v. City of

Franklin, 676 N.E.2d 587, 592 (Ohio App. 1996); Forstner v.

Forstner, 588 N.E.2d 285, 288 (Ohio App. 1990). We initially

look to the language of the contract. Pharmacia Hepar, Inc., 676

N.E.2d at 592. While the contract contains the language, “lease

to purchase” -- signifying a lease of the vehicle -- the totality

of the language of the contract, as illuminated by the testimony,

indicates otherwise. Cf. State ex rel. Celebrezze v. Tele-

12

Communications, Inc., 601 N.E.2d 234, 239-41 (Ohio Ct. Cl.

1990).6 We find and hold that the substance of the agreement

between Bryant and the Jaspers is that of a contract to transfer

title upon the satisfaction of certain conditions -- a

transaction akin to a conditional sale. See Rockwell v. Thomas,

189 N.E.2d 168, 170 (Ohio App. 1962) (“[t]he prime essential

element and distinguishing feature of a contract of conditional

sale is the reservation of title in the seller until the

performance of some condition or the happening of some

contingency, usually the full payment of the purchase price.”);

see also State ex rel. Celebrezze, 601 N.E.2d at 239-41, and

Bellish v. C.I.T. Corp., 50 N.E.2d 147, 150 (Ohio 1943).

The contract, which was obviously drafted by a lay

person, is ambiguous, and hence the trial court was correct in

permitting the introduction of parol evidence to explain its

terms. See Pharmacia Hepar, Inc., 676 N.E.2d at 592; Forstner,

588 N.E.2d at 288; Bellish, 50 N.E.2d at 150. This testimony

indicates that the parties to the contract intended that the

Jaspers would have exclusive use and possession of, and an

equitable ownership interest in, the 1994 truck. Pursuant to

this interest, the Jaspers took possession of the vehicle and

commenced payment of the expenses set forth in the contract.

When all of the conditions of the contract had been satisfied,

the Jaspers were to then receive full title to the vehicle.

Until then, the Jaspers had a legally-cognizable interest,

6

The fact that the contract does not provide for the return of the truck

to Bryant at the end of the term, but instead contemplates the transfer of

title to the Jaspers upon full payment, indicates that it is not a true lease.

Id.

13

including the right to exclusive possession. If the jury finds

that they were tortiously deprived of that interest, it will be

the duty of that body to determine the value of that interest as

shown by the proof so that compensatory damages can be awarded.

We find that the August 17, 1993, contract conferred

upon the Jaspers a legally-cognizable interest in the 1994 truck,

and that the Jaspers therefore have standing to bring this

action.

The parties had different theories and sharply

contrasting evidence as to the facts surrounding the transfer of

the 1994 truck to Peterbilt. It is the prerogative of the jury

to determine which version is true. Taking the strongest

legitimate view of the evidence in favor of the Jaspers, Eaton v.

McLain, 891 S.W.2d 587, 590 (Tenn. 1994), we find that a jury

reasonably could conclude that Peterbilt tortiously deprived the

Jaspers of their interest in the 1994 truck. Accordingly, we

hold that the trial court erred in directing a verdict in favor

of Peterbilt.7

IV. Conclusion

It results that the judgment of the trial court

dismissing the Jaspers’ conversion, fraud and misrepresentation

claims is reversed. The judgment of the trial court as to the

breach of contract theory is affirmed. This case is remanded to

7

In light of this holding, it is obvious that we do not agree with

Peterbilt’s argument that this appeal is frivolous under T.C.A. § 27-1-122.

14

the trial court for further proceedings, not inconsistent with

this opinion. Costs on appeal are assessed to the appellee.

__________________________

Charles D. Susano, Jr., J.

CONCUR:

_________________________

Herschel P. Franks, J.

_________________________

Don T. McMurray, J.

15