Autoville, Inc. v. Friedman
In Autoville, Inc. v. Friedman, 20 Ariz. App. 89, 510 P.2d 400 (1973), Friedman entered an oral agreement with Caplan and Siegel, the stockholders of a used car dealership called Autoville, Inc. 20 Ariz. App. at 90, 510 P.2d at 401.
Under the agreement, Friedman would obtain vehicles at wholesale prices and provide them to Autoville for resale. Id.
Upon sale of each vehicle, Friedman was to receive the wholesale cost he had expended and a service fee. Id. Under this arrangement, Autoville completed fifty-nine transactions, but remitted to Friedman his share of only thirty-one sales. Id. at 91, 510 P.2d at 402.
Caplan and Siegel liquidated all their vehicles, deposited the funds in Autoville's corporate account, and withdrew the funds for themselves. Id.
Friedman brought an action for conversion of the proceeds owed to him from the sale of the vehicles. Id. at 90, 510 P.2d at 401.
The trial court granted judgment in favor of Friedman. Id.
The Court reversed, finding both that Friedman had no possessory interest in the vehicles and so had none in the proceeds, and that the specific sale proceeds at issue had not been set aside in a special account for Friedman or otherwise segregated and so could not be the subject of conversion. Id. at 92, 510 P.2d at 403.
The Court noted that no evidence existed that the debt could not be discharged from a source other than the sale proceeds. Id.
In Autoville, Inc. v. Friedman, the plaintiff had financed the defendant dealer's purchase of used automobiles that the dealer would sell from its lot, remitting the proceeds to the plaintiff. Id. at 90- 91, 510 P.2d at 401-02.
When, after selling the cars, the dealership owners closed the business and declined to remit the sale proceeds, the plaintiff sued them for conversion, claiming that the owners had converted the proceeds by appropriating them to their own use. Id.
The Court concluded, however, that the plaintiff had not established a "possessory interest in the proceeds of the sale of the various vehicles he financed so as to support an action for conversion." Id. at 93, 510 P.2d at 404.
The court explained:
The sale itself was merely the triggering device which brought into existence the obligation of Autoville to pay its debt. This debt was to be paid from the proceeds of the sale, this being the primary source of Autoville's income, but there is no evidence to support a finding that this debt could not have been discharged from a source other than the sale proceeds. In this regard, defendants correctly contend that conversion does not lie to enforce the mere obligation to pay a debt which may be discharged by the payment of money generally. In our opinion, the agree- ment between the parties merely created the relationship of debtor and creditor. Id. at 92-93, 510 P.2d at 403-04.