[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 96-3637 02/23/99
THOMAS K. KAHN
CLERK
D. C. Docket No. 92-2014-CIV-T-25B
B.R.L. EQUIPMENT RENTALS LTD.,
a Canadian Corporation, YVONNE
CHADWICK, an individual,
B.M.R.GOLF INTERNATIONAL, a
Canadian Corporation,
Plaintiffs-Appellants,
versus
SEABRING MARINE INDUSTRIES, INC.,
a Florida Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Middle District of Florida
(February 23, 1999)
Before HATCHETT, Chief Judge, and TJOFLAT and COX, Circuit Judges.
TJOFLAT, Circuit Judge:
In the summer of 1992, Bridge Bay Marina, a marina and boat retailer in Kelowna,
British Columbia, acquired eleven luxury boats from Seabring Marine Industries in Archer,
Florida. The boats were purchased by Bridge Bay using company checks. Each check was
returned for insufficient funds. When Seabring’s Vice President of Operations learned in late
July that the checks had not been honored, he immediately contacted a regional sales
representative, who met with representatives of Bridge Bay. Bridge Bay advised the
representative of its financial difficulties, and attempted to persuade Seabring that it would soon
receive payment. Seabring, understandably skeptical, immediately repossessed four of the boats
and instructed Bridge Bay not to sell any of the others.
Unbeknownst to Seabring, Bridge Bay had already sold two of the other boats; a third
one was sold two weeks later. The purchasers – appellants B.R.L. Equipment Rentals Ltd.,
Yvonne Chadwick, and B.M.R. Golf International – stored their boats at Bridge Bay’s marina.
By December, Seabring had still not received payment from Bridge Bay, and again sent
representatives to British Columbia to discuss the matter. At this meeting, Bridge Bay informed
Seabring that it had no intention of paying for the boats or returning them. In response, Seabring
covertly repossessed the remaining seven boats that evening, including the boats purchased by
the appellants.
These three purchasers thereafter brought suit against Seabring for conversion (or, in the
alternative, a writ of replevin) in the United States District Court for the Middle District of
Florida. After extensive discovery, both the plaintiffs and the defendant filed motions for
summary judgment. Seabring's motion was granted; the plaintiffs’ motions were denied.
The district court had previously determined that the law of British Columbia governed
the suit. In its order granting Seabring's motion for summary judgment, the court noted that
Section 26 of the British Columbia Sale of Goods Act states that “where goods are sold by a
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person who is not the owner of them, and who does not sell them under the authority or with the
consent of the owner, the buyer acquires no better title to the goods than the seller had.”
R.S.B.C., ch. 410, § 26 (1996). The district court then explained that Section 58 of the Act
creates an exception to this rule for a “mercantile agent”: A disposition of goods made by a
mercantile agent, who is acting in the ordinary course of business and possesses the goods with
the consent of their owner, is binding on the owner regardless of whether the owner has actually
authorized the disposition. See R.S.B.C., ch. 410, § 58 (1996). The court, however, held that
Bridge Bay was not Seabring’s mercantile agent, and therefore the exception found in Section 58
was inapplicable. Consequently, the general rule of Section 26 applied and the plaintiff’s title to
the boats was no better than that of Bridge Bay.1
We review a district court’s grant of summary judgment de novo. See City of Tuscaloosa
v. Harcros Chems., Inc., 158 F.3d 548, 556 (11th Cir. 1998). Our review of this case convinces
us that the district court erred in its legal analysis and that, under a proper analysis, genuine
issues of material fact exist that require us to remand the case for further proceedings. See Fed.
R. Civ. P. 56(c) (stating that summary judgment is appropriate only when “there is no genuine
issue as to any material fact”).
Whenever a seller allows a buyer to use a check to purchase an item, regardless of
whether the item is a luxury boat or an egg salad sandwich, that seller is extending credit to the
buyer – the seller tenders the item in exchange for the buyer’s written promise of payment at a
future date. The extension of credit always entails the risk that the buyer will be unable to pay.
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The district court did not discuss the quality of Bridge Bay’s title, but presumably
concluded that it was something less than good title. As discussed infra, the district court was
correct – the title held by Bridge Bay was voidable title.
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For this reason, sellers have developed a variety of ways to minimize the risk they face in
accepting checks – asking for identification, using a verification service, exacting stiff penalties
for returned checks, requiring a cashier’s or certified check, or simply refusing to deliver the
property until the check has been honored. In addition, a seller may insure against a credit risk
by taking a security interest in the property sold on credit.
In this case, Seabring, either through negligence or the taking of a calculated risk, did not
take adequate precautions to protect itself against the risk of Bridge Bay’s nonpayment.
Seabring failed, for instance, to require a certified check or to take a security interest in the
boats. Seabring’s lack of precautions is no excuse for Bridge Bay’s fraud, but it is a justification
for refusing to allow Seabring to repossess the property from an innocent third-party purchaser.
The situation is exactly as if Seabring had given the boats to Bridge Bay in exchange for a 90-
day note, a note that Bridge Bay had no intention of honoring when drafted and that Bridge Bay
in fact failed to honor when due. The remedy in such a situation would be clear: Seabring would
have a cause of action against Bridge Bay for the value of the note – or possibly even a claim
against Bridge Bay for replevin or conversion of the boats (if the boats were still in Bridge Bay's
possession) – but would not have a claim against a third party that purchased the boats from
Bridge Bay.
The law expresses these ideas through the notion that the possessor of property obtained
via a worthless check has “voidable” title to the property – the possessor has title, but the seller
can avoid that title as against the buyer upon discovery of the fraud. See Regency Auto Invs.
Inc., v. Doe [1997] No. SO41698, 1997 ACWSJ LEXIS 92196, at *5 (B.C. Sup. Ct. November
4, 1997). In other words, the fact that the title is voidable means that the equitable remedy of
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recission is available to the seller, whereas in an ordinary breach of contract situation the only
remedy available to the seller is damages. See Mitsubishi Int’l Corp. v. Cardinal Textile Sales,
Inc., 14 F.3d 1507, 1518 (11th Cir. 1994) (stating that equitable remedies are ordinarily available
only if there is no adequate remedy at law).
Because Bridge Bay had voidable title to the boats, Section 26 of the British Columbia
Sale of Goods Act, upon which the district court relied, is inapplicable. That section applies to
sales “by a person who is not the owner,” R.S.B.C., ch. 410, § 26 (1996); in this case, Bridge
Bay was the owner of the boats. The district court therefore misapplied the law to the facts, and
consequently we conclude that it erred in granting Seabring's motion for summary judgment on
the basis of Section 26.
Having decided that the district court's analysis was in error, we turn to the question of
whether there is any other analysis under which we can sustain the district court's ruling. See
Bonanni Ship Supply, Inc. v. United States, 959 F.2d 1558, 1561 (11th Cir. 1992) (noting that
“this court may affirm the district court where the judgment entered is correct on any legal
ground regardless of the grounds addressed, adopted or rejected by the district court” and
affirming grant of summary judgment on alternative ground). We conclude that there is not.
The applicable provision of the British Columbia Sale of Goods Act in this case is
Section 28, which reads:
When the seller of goods has a voidable title to them, but his title has not been
avoided at the time of sale, the buyer acquires a good title to the goods, if he buys
them in good faith and without notice of the seller’s defect of title.
R.S.B.C. ch. 410, § 28 (1996). Seabring contends that Bridge Bay’s title had been avoided at the
time of sale. There do not appear to be any British Columbian cases addressing the question of
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what constitutes avoidance of a voidable title; indeed, there appears to be very little case law
anywhere on the topic. However, because voidable title is exactly the same as ordinary title –
with the exception of the remedies available to the transferor of that title – voidable title can
presumably be avoided in the same ways in which ordinary title can be passed, namely, through
voluntary relinquishment, legal action, or repossession. There is no indication that Bridge Bay
voluntarily agreed to return the boats to Seabring; on the contrary, Bridge Bay communicated to
Seabring that it had no intention of ever returning the boats. Seabring never brought a legal
action against Bridge Bay, and it did not repossess the boats until after the boats had been sold.
Consequently, Seabring had not avoided the voidable title held by Bridge Bay at the time of sale.
Seabring also contends, in its answer, that the appellants had either actual or constructive
notice of Bridge Bay’s defect of title. This is a factual question to be determined by the district
court. If the appellants did have such notice, then they had “unclean hands” under the statute
and had only voidable title as against Seabring. If, however, the appellants had no notice of
Bridge Bay’s title defect, then the appellants acquired good title to the boats and Seabring had no
more right to repossess them from Bridge Bay’s marina than they had to repossess the
appellants’ cars from their own driveways.
For the foregoing reasons, the district court’s grant of summary judgment for Seabring is
REVERSED, the district court’s denials of appellants’ motions for summary judgment are
AFFIRMED, and the case is REMANDED for further proceedings consistent with this opinion.
SO ORDERED.
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