Present: All the Justices
MID-EAST SERVICES, INC.
v. Record No. 992543 OPINION BY JUSTICE DONALD W. LEMONS
September 15, 2000
ENTERPRISE FORD TRACTOR, INC.
FROM THE CIRCUIT COURT OF YORK COUNTY
Thomas B. Hoover, Judge
In this appeal, we consider whether the trial court erred
in finding that Enterprise Ford Tractor, Inc. (“Enterprise”)
was not a seller or an agent for a seller in a transaction
involving the sale of lawn servicing equipment to Mid-East
Services, Inc. (“Mid-East”).
I
On June 4, 1997, Mid-East, by its agent, Robert L.
Phillips, executed a bill of sale and tendered a check in the
amount of $47,000 to purchase certain lawn servicing equipment 1
from William T. Hall, the owner and operator of York River
Services, Inc. (“York River”). 2 The equipment was located in a
compound at Fort Bragg, North Carolina, where York River had
been performing a maintenance contract at the military base.
Apparently, for reasons undisclosed in the record, York River
1
The equipment consisted of three Ford Tractors, five
Alamo Flail Mowers, one swing trim, one 500-gallon fuel tank,
one bush hog, two 20-foot storage vans, one 40-foot storage
van, one base radio station, and nine hand-held radios.
2
Although the bill of sale listed William T. Hall,
individually, as “seller,” testimony revealed that the
was not able to complete its contract and Mid-East had been
requested to perform the services. During the period
pertinent to this dispute, Enterprise never took possession of
the equipment.
On the day after the check was issued, Mid-East stopped
payment on the check ostensibly because of concerns that “Mr.
Hall was not legitimate.” Also on the same day, Phillips
contacted Enterprise and spoke with its representative, Bruce
E. Strack, about the equipment itemized on the bill of sale
from Hall. Strack informed Phillips of an existing lien held
by Ford New Holland Credit (“New Holland”) on the equipment,
for which Enterprise was a guarantor. Strack told Phillips
that he would contact New Holland to determine the pay-off
amounts. With Strack acting as intermediary, a facsimile
transmission was sent from Strack to Phillips indicating that
a “check in the amount of ($47,000.00) will pay for” certain
equipment listed. Mid-East had been willing to pay $47,000
for the equipment listed on the bill of sale with Hall.
However, not all of the equipment listed on the bill of sale
was specified on the facsimile from Strack. Consequently, the
price was negotiated to $38,500 and Mid-East tendered its
check in that amount. Enterprise sent New Holland a check for
equipment had been previously sold by Enterprise to York
River, not to William T. Hall.
2
$30,000 and applied the balance of $8,500 toward Hall’s past-
due account of $20,000 with Enterprise. The parties agreed
that, at the time of this transaction, Enterprise did not have
knowledge of a lien on the equipment held by United Leasing
Corporation. At least for this transaction, Mid-East alleges
that Strack told Phillips that Enterprise owned the equipment.
Strack denies ever making such a statement.
Approximately three weeks later, Phillips contacted
Strack again regarding the purchase of an additional tractor
subject to New Holland’s liens. Strack confirmed the
conversation with a facsimile stating, “Per our conversation,
you have a signed retail sales agreement with Bill Hall of
York River Services for a 3930 s/n BD75226 in the amount of
$9,000. If you send us the money we will forward it to New
Holland to release the [lien].” According to Strack, this
second facsimile was more specific because United Leasing had
since called to inform him of its lien on the equipment.
Strack also testified that he had informed Phillips about the
United Leasing lien. Nonetheless, Mid-East tendered its check
for $9,000 to Strack, who forwarded it to New Holland.
Toward the end of June 1997, a representative of United
Leasing and a deputy sheriff went to the compound at Fort
Bragg with legal documents authorizing the repossession of the
subject equipment. Mid-East needed the equipment to perform
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its contract at Fort Bragg and, on July 1, 1997, Mid-East and
United Leasing entered into a lease agreement for the use of
some of the equipment in question for two months at a cost of
$2,500 per month. At the end of August, United Leasing took
possession of the equipment.
On January 9, 1998, Mid-East filed a motion for judgment
contending that Enterprise “induce[d]” Mid-East to enter into
the two contracts for the subject equipment by stating that
“it had full ownership and authority to sell the equipment
free of liens.” Mid-East alleged that Enterprise breached an
express contract, perpetrated fraud, and violated various
provisions of the Uniform Commercial Code as adopted in
Virginia, 3 as well as Code § 18.2-217(a). 4 Mid-East sought to
recover actual damages of $52,500 and $50,000 in punitive
damages, plus interest and costs.
On July 15, 1999, the circuit court heard evidence and
dismissed the case, stating in its order, “the [c]ourt is of
the opinion that the Plaintiff, MID-EAST SERVICES, INC. has
3
Specifically, Mid-East alleges violations of Code §§ 8.2-
206, 8.2-301, 8.2-312, 8.2-313, and 8.2-721.
4
Code § 18.2-217(a) states, in pertinent part:
Any person, firm, corporation or association
who in any manner advertises or offers for sale
to the public any merchandise, goods,
commodity, service or thing with intent not to
sell, or with intent not to sell at the price
or upon the terms advertised or offered, shall
be guilty of a Class 1 misdemeanor.
4
not proven its case on any count and, therefore, the Defendant
should prevail.” Specifically, the trial court found that
Enterprise acted “only as lienholder or agent for the
lienholder. They’re not the seller, they’re not the dealer,
they’re not an agent for the seller.”
II
In this appeal, Mid-East alleges that the trial court
erred as a matter of law when it: (1) failed to enforce the
statutory warranty of good title created by Code § 8.2-312;
(2) failed to find that the goods were entrusted to Enterprise
pursuant to Code § 8.2-403(2); (3) ruled that a formal bill of
sale was required to transfer ownership of the goods to Mid-
East; (4) “disregarded the complete failure of consideration
where the parties intended to transfer the goods with good
title and Mid-East paid Enterprise but received goods with
defective title and Enterprise refused to return Mid-East’s
consideration”; and (5) found Enterprise was acting as a
lienholder when no action pertaining to secured transactions
under Title 8.9 took place. 5
Enterprise argues it was not a “seller” under Title 8.2
of the Code and that, even if Code § 8.2-312 applied in this
case, the warranty of good title was excluded under subsection
5
The allegations of fraud and violation of Code § 18.2-
217(a) are not the subject of assignments of error.
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(2) because the circumstances gave Phillips reason to know
that Enterprise did not claim title to the equipment.
Additionally, Enterprise maintains that the evidence is
sufficient to support the trial court’s conclusion that
Enterprise acted as a “lienholder or agent of a lienholder” in
this transaction. Further, Enterprise argues that it did not
act as a merchant under an entrustment within the meaning of
Code § 8.2-403(2) and, finally, that because it did not act as
a seller or agent for the seller, it could not be accountable
for any failure of consideration.
III
A review of the record reveals that Mid-East never
alleged that Enterprise acted as a merchant entrusted with
goods pursuant to Code § 8.2-403(2). Because the matter was
not presented to the trial court, we will not consider the
argument on appeal. See Rule 5:25; Pulliam v. Coastal
Emergency Servs., 257 Va. 1, 16, 509 S.E.2d 307, 316 (1999).
IV
The remaining assignments of error are resolved by the
trial court’s factual finding that Enterprise was not the
seller or an agent for the seller in this transaction.
On appeal, we review the facts in the light most
favorable to the prevailing party at trial. Nationwide Mut.
Ins. Co. v. St. John, 259 Va. 71, 76, 524 S.E.2d 649, 651
6
(2000). A trial court’s judgment is presumed to be correct
and, on appeal, we will not set it aside unless the judgment
is plainly wrong or not supported by the evidence. Ravenwood
Towers, Inc. v. Woodyard, 244 Va. 51, 57, 419 S.E.2d 627, 630
(1992).
The trial court found that the only bill of sale in this
transaction was from Hall as seller to Mid-East as buyer. All
of the items referred to in the facsimile dated June 5, 1997
are identified in the bill of sale dated June 4, 1997. A
fourth tractor referred to in the facsimile dated June 17,
1997 was not listed in the bill of sale; however, Strack, on
behalf of Enterprise, clearly indicated in the facsimile that
a retail sales agreement existed between Mid-East and “Bill
Hall of York River Services” for the purchase of this
additional tractor. In both transactions Strack, on behalf of
Enterprise, identified his role as “negotiations middleman”
and the trial court found that he was acting for Enterprise
and for New Holland. The trial court specifically found that
Strack, acting on behalf of Enterprise, was not an agent for
Hall or York River.
A.
Mid-East asserts that Title 8.2 of the Uniform Commercial
Code as adopted in Virginia applies to these transactions.
Most assuredly it does. However, Mid-East mischaracterizes
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the parties to these transactions. As the trial court found,
the seller was Hall and the buyer was Mid-East. Enterprise
acted on its own behalf and on behalf of New Holland, a
lienholder. Enterprise was not a seller or an agent for a
seller under Title 8.2.
Mid-East’s arguments are dependent upon characterizing
Enterprise as a “seller” under Title 8.2 of the Code. See
Code § 8.2-103(d) (“seller” defined as “a person who sells or
contracts to sell goods”). If Enterprise is a “seller” under
Title 8.2, then Code § 8.2-312(1) provides, subject to
exclusion or modification under subsection (2), a warranty
from the seller that:
(a) the title conveyed shall be good,
and its transfer rightful; and
(b) the goods shall be delivered free
from any security interest or
other lien or encumbrance of which
the buyer at the time of
contracting has no knowledge.
Because Hall, not Enterprise, was the seller in
these transactions, Mid-East may not look to Enterprise
for a warranty under Code § 8.2-312(1). See, e.g., Moore
v. Allied Chem. Corp., 480 F. Supp. 364, 375 (E.D. Va.
1979)(breach of warranty within the meaning of Commercial
Code of Virginia requires a sale which “must involve the
passing of title of goods from the seller to the buyer
for a price”).
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B.
Mid-East maintains that the trial court was plainly
wrong in its finding that Enterprise was an agent for the
lienholder because Enterprise never utilized any of the
provisions of Title 8.9 of the Uniform Commercial Code
pertaining to secured transactions. Again Mid-East
misunderstands the nature of the transactions that took
place. Enterprise, acting for itself or as an agent for
New Holland, was not seeking to create, perfect, or
enforce a security interest. As the trial court found,
Enterprise was the “negotiations middleman” for the
purpose of the pay-off of New Holland’s lien and
Enterprise’s overdue account with York River.
C.
Mid-East states as an assignment of error that “[t]he
trial court erred in ruling that a formal bill of sale was
required to transfer ownership of the goods to Mid-East.”
Nowhere in the record was such a ruling made by the trial
court. Presumably, Mid-East’s quarrel is that the trial court
rejected the characterization of the two facsimiles as bills
of sale. What the trial court did find is that there was a
bill of sale, dated June 4, 1997, between Hall and Mid-East.
The evidence further supports the trial court’s conclusion
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that the transfer of the fourth tractor was the subject of a
“signed retail sales agreement” between Hall and Mid-East.
D.
Finally, Mid-East complains that “[t]he trial court erred
when it disregarded the complete failure of consideration
where the parties intended to transfer the goods with good
title and Mid-East paid Enterprise but received goods with
defective title and Enterprise refused to return Mid-East’s
consideration.” There may have been a failure of
consideration in this transaction, but once again Mid-East
mistakes the roles played by the various parties.
The trial court did not make a finding concerning failure
of consideration. With ample support in the record, the trial
court found that Enterprise was neither the seller nor an
agent for the seller. The consideration paid was to Hall in
the form of direct payment of Hall’s or York River’s
indebtedness. If a failure of consideration occurred, it was
between Mid-East and Hall rather than between Mid-East and
Enterprise.
V
For the reasons stated, we conclude that the trial court
was not plainly wrong or without evidence to support its
dismissal of the motion for judgment. See Wright & Hunt v.
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Wright, 205 Va. 454, 460, 137 S.E.2d 902, 907 (1964).
Accordingly, we will affirm the judgment of the trial court.
Affirmed.
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