2004 Ct. Sup. 3402
No. CV 02 0078189 SConnecticut Superior Court, Judicial District of Tolland at Rockville
March 2, 2004
MEMORANDUM OF DECISION
KLACZAK, JUDGE TRIAL REFEREE.
The plaintiff in this case has filed an amended complaint in two counts.
The first count alleges that the plaintiff (Ace), as a buyer in the ordinary course of business, purchased a stone crushing machine from the Pace Equipment Corp. (Pace), paying $175,000 to Pace; that when it went to retrieve the machine, it learned that the defendant, H.O. Penn Machinery Company, Inc. (H.O. Penn), held a security interest on said machine and, that in order to obtain the machine it had to pay H.O. Penn an additional $175,000.
Ace claims its contract with H.O. Penn is void ab initio and seeks a reformation, recission, cancellation or termination of the contract it entered into with H.O. Penn.
The second count claims H.O. Penn was unjustly enriched as a result of the $175,000 paid by Ace to H.O. Penn.
The third count alleges a violation of the Connecticut Unfair Trade Practices Act (CUTPA), Connecticut General Statutes §42-110a et seq.
An answer together with eighteen special defenses was filed by H.O. Penn.
The parties, by agreement, submitted a joint stipulation of facts in lieu of trial which are appended hereto together with three documents as referenced in paragraph 41 of the stipulated facts, which are also appended.[*]
The Court can discern no basis by which Ace would be entitled CT Page 3403 to recovery.
The contract between Ace and H.O. Penn was not void. H.O. Penn had recorded financing statements and held a valid and perfected security interest in the subject machine. Both parties were commercial dealers of used construction equipment and, in that capacity, should have known the procedures for perfecting security interests and for determining if a piece of equipment had a security interest against it on file.
The plaintiff, with full knowledge of the underlying facts, entered into a contract with H.O. Penn to purchase the machine (exhibit A). It received the machine it bargained for and there is no allegation of fraud or misrepresentation. In short, Ace made a reasoned business decision that it was in its best interest to buy the machine from H.O. Penn. H.O. Penn did not act improperly in the course of its dealings with the plaintiff.
Nor is there any basis to conclude H.O. Penn was unjustly enriched in this case. It did not receive any money it was not entitled to. The parties contracted for the sale of the machine to Ace for $175,000. Ace got the machine it bargained for at the contract price. It is noted that Pace owed H.O. Penn “well in excess of $175,00” “secured by the crusher.” (Paragraph 17 — stipulated facts.)
As to the third count, there was no unfair or deceptive act on the part of H.O. Penn in its dealings with Ace. This allegation must also fail.
For these reasons, judgment shall enter for the defendant with no costs to either party.
Klaczak, J.T.R.
STIPULATION OF FACTS IN LIEU OF TRIAL
Now Come the Plaintiff and Defendant and stipulate to the following statements of fact for the purpose of alleviating the time needed to try this case. Unless otherwise stated, all documents identified and included below are acknowledged by both parties to be true and accurate copies of the documents and are admitted for the purpose of this matter, only.
1. Plaintiff, Ace Equipment Sales, Inc. (“Ace”) is a CT Page 3404 Connecticut corporation with its principal office located at 171 Tolland Turnpike, Willington, Tolland County, Connecticut.
2. Defendant, H.O. Penn Machinery Company, Inc. (“H.O. Penn”) is a New York corporation with its principal place of business at 122 Noxon Road, Poughkeepsie, New York.
3. H.O. Penn maintains several places of business including a facility located at 225 Richard Street, Newington, Hartford County, Connecticut and is authorized to do business in the State of Connecticut.
4. Pace Equipment Corp. (“Pace”) was a Massachusetts corporation and had maintained its place of business at 34 Faith Avenue, Auburn, Massachusetts.
5. Richard M. Farrell was the principal owner, operator and employee of Pace.
6. On or about January 27, 2000, Pace filed a voluntary petition for relief pursuant to the provisions of Chapter 7 of the Federal Bankruptcy Code.
7. David M. Nickless, Esquire was duly appointed and has served as trustee for the administration of Pace’s bankruptcy proceedings.
8. On or about August 26, 2003, the Trustee filed a report with the Bankruptcy Court indicating that estate of Pace has been fully administered and that the Trustee did not locate any property of the estate to be distributed to creditors.
9. On or about May 6, 1996, Pace made, executed and delivered to H.O. Penn two (2) Conditional Sales Contracts for the sale of eight pieces of construction equipment, including a Cedar Rapid Crushing Plant Model 1313, serial number 42FO689 (the “Crusher”), from H.O. Penn to Pace.
10. No sales tax was paid in connection with the sale from H.O. Penn to Pace, because the transaction was a sale from dealer to dealer and therefore qualified for exemption from sales tax.
11. This litigation revolves around the Crusher, a large piece of construction equipment used to crush rock and other similar material. CT Page 3405
12. The Conditional Sales Contracts were subject to the provisions of Article 9 of the Uniform Commercial Code, H.O. Penn had recorded Financing Statements and held a valid and perfected security interest in the Crusher and proceeds from the sale thereof.
13. Pace did not have physical possession of the Crusher on its property. Due to the prohibitive cost of transporting heavy construction equipment such as the Crusher, it is customary in the industry for a dealer not to have physical possession of equipment the dealer owns and is offering for sale.
14. The Crusher remained at the premises of a third party who owned the crusher before Penn acquired it.
15. Pace did not have physical possession of the other equipment which were the subject of the Conditional Sales Contracts.
16. Pace acted both as a broker for the sale of used construction equipment and as a dealer for the sale of used construction equipment which Pace itself owned.
17. As of March 28, 1998, in connection with the eight pieces of equipment H.O. Penn had sold Pace, Pace owed to H.O. Penn a total obligation well in excess of $175,000.00 plus continuing interest, attorneys fees and costs secured by the Crusher and the other collateral as set out in the Conditional Sales Contracts.
18. On July 31, 1997, Ace entered into a contract with Pace to purchase the Crusher for the purchase price of $175,000, and Ace paid that amount on that date to Pace.
19. No sales tax was paid in connection with the sale from Pace to Ace, because the transaction was a sale from dealer to dealer and therefore qualified for exemption from sales tax.
20. In August 1997, Pace paid to H.O. Penn the sum of $110,000.00 out of the funds available to Pace.
21. The Crusher was being offered for sale by Pace with the authorization, knowledge and consent of Penn. Pace represented to Ace that Pace owned the Crusher and was authorized to sell it to Ace. Pace was the owner of the Crusher at the time Pace sold the CT Page 3406 crushing plant to Ace.
22. Prior to purchasing the Crusher, representatives of Ace physically inspected the Crusher. At that time, there were no stickers or other indicia on the Crusher that indicated that H.O. Penn had a security interest in the Crusher.
23. On July 31, 1997, Pace Equipment Corp. was a person/entity in the business of selling used crushers and other related construction equipment which it owned.
24. The business of Ace, as of July 31, 1997, was the purchase, sale and leasing of construction equipment.
25. As of July 31, 1997, when Ace purchased the Crusher from Pace, Ace had no actual knowledge of the security interest which Pace had granted in favor of Penn.
26. Ace purchased the Crusher to keep in its inventory of construction equipment which it would later sell or lease to a customer or customers. At the time Ace purchased the Crusher from Pace, the Crusher was located on property of a third party who is not a party to this lawsuit. As is customary in the industry, Ace did not take physical possession of the Crusher until it had a customer for it, due to the prohibitive expense of transporting the Crusher.
27. On or about March 9, 1998, representatives of Ace went to retrieve the Crusher which it had purchased from Pace Equipment Corp. and observed stickers attached to the crusher stating “Property of H.O. PENN.”
28. Ace knew that Pace, in addition to being a dealer in the business of selling used construction equipment Pace itself owned, also sold goods belonging to others, sold goods on consignment and that Pace also was in the business of brokering the sale of used construction equipment.
29. On July 31, 1997, Ace knew that the Crusher was not physically located on property owned by Pace.
30. Ace has made demand upon Pace and its principal to refund the $175,000.00 that had been paid, but has not received a refund. CT Page 3407
31. The Crusher was used construction equipment.
32. The Crusher was located at the property of VS Construction, 37 Croton Dam Road in Ossining, New York prior to Ace taking possession of the Crusher in 1998.
33. In March of 1995, the Crusher was owned by VS Construction. At that time, Ace was interested in buying the Crusher from V S Construction. At that time, the Crusher was located at 37 Croton Dam Road in Ossining, New York. Ace was unsuccessful in its attempt to buy the Crusher in 1995 from V S Construction.
34. After Ace took possession of the Crusher, H.O. Penn paid to VS Constriction a credit of $1,500.00 for having stored the Crusher on its behalf. The payment was in the nature of a credit because it was applied as a set-off against obligations of V S Construction to H.O. Penn.
35. When Ace went to retrieve the Crusher or about March 9, 1998, after making the Agreement with Pace, Ace discovered that the Crusher had labels that identified it as property of H.O. Penn.
36. Subsequent to March 9, 1998, the plaintiff made further inquiry with the defendant concerning the status of the Crusher, and at that time first learned of the security interest which had been granted to H.O. Penn by Pace.
37. On March 9, 1998, the defendant H.O. Penn refused to release the Crusher to the plaintiff Ace, unless Ace paid additional monies to Penn for the Crusher.
38. On March 9, 1998, Ace needed the Crusher because it had agreed to lease the Crusher to a customer, a contractor who needed the Crusher for work on construction project. If Ace did not obtain the Crusher, it would have defaulted on its commitment to lease the Crusher to its customer, and its customer would have been left without the equipment it needed for its construction project.
39. On or about March 12, 1998, Ace agreed to pay within 30 days to H.O. Penn the sum of $175,000.00 in exchange for H.O. Penn releasing the crusher to Ace. On or about April 14, 1998, Ace did pay $175,000.00 to H.O. Penn. CT Page 3408
40. On or about March 12, 1998, Ace took physical possession of the Crusher at 37 Croton Dam Road in Ossining, New York.
41. In connection with the foregoing, H.O. Penn and Ace exchanged the following documents:
a. FORECLOSURE BILL OF SALE — PERSONAL PROPERTY, a copy of which is annexed as Exhibit “A.”
b. Conditional Sales Contract, a copy of which is annexed as Exhibit “B.”
c. Resale Certificate, a copy of which is annexed as Exhibit” C.”
42. Since on or about March 12, 1998, no challenge has been made upon Ace’s right of ownership of the Crusher.
PLAINTIFF,
ACE EQUIPMENT SALES, INC.
DEFENDANT,
H.O. PENN MACHINERY COMPANY, INC.
CT Page 3409