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Phoenix Auto Auction, Inc. v. State Auto. Ins. Ass'n

Supreme Court of Arizona

November 5, 1959

PHOENIX AUTO AUCTION, INC., a corporation, Appellant,
v.
STATE AUTOMOBILE INSURANCE ASSOCIATION, a corporation, Appellee.

Page 147

[86 Ariz. 338] Langmade & Sullivan, Phoenix, and James F. Haythornewhite, Nogales, for appellant.

Perry & Perry and Raymond Huffsteter, Phoenix, for appellee.

ROYLSTON, Superior Court Judge.

[86 Ariz. 339] The appellant, Phoenix Auto Auction, Inc., filed an action against Charles Wilson and Fred Capps, dba Miracle Mile Used Cars, and their surety State Automobile Insurance Association, a bonding company doing business in Arizona. The matter was tried to the court sitting without a jury. The trial court found in favor of appellant against defendants, Wilson and Capps, but in favor of State Automobile Insurance Association on appellant's claim against it. Phoenix Auto Auction, Inc. appeals from this latter finding. Defendants Wilson and Capps perfected no appeal from the judgment, so it has become final as to them. Phoenix Auto Auction, Inc. will be referred to as appellant, State Automobile Insurance Association as appellee, and Wilson and Capps as defendants, or by name.

Appellant is an Arizona corporation engaged in the business of operating an automobile auction in Phoenix. Wilson and Capps were, at all times material to this case, engaged as a co-partnership under the name Miracle Mile Used Cars, in Tucson. Wilson and Capps, as principals, and appellee, as surety, had executed and filed With the State of Arizona an automobile dealer's bond pursuant to A.R.S. § 28-1305. This bond was in effect at the time of the acts complained of.

Defendants Wilson and Capps had made 25 or 30 similar purchases from appellants during a period of 12 to 18 months prior to July 14, 1955. At each transaction, the defendants Wilson and Capps made payment by check which appellant would deposit in the normal course of business. On July 14, 1955, appellant's president, H. L. Boniface, sold a 1951 Cadillac to defendant Capps for $1,500. Payment was made by a check drawn on the Bank of Douglas, Tucson, Arizona, payable to Phoenix Auto

Page 148

Auction, Inc., and signed 'Miracle Mile Used Cars by Fred Capps.' Mr. Boniface testified that this particular transaction was no different from the other 25 or 30. The check was presented for payment at the drawee bank on July 22, 1955, at which time there were insufficient funds to cover the check, so it was returned to appellant. It was later presented for payment on August 23, 1955, but again was returned to appellant because there were insufficient funds in the account.

The chief clerk at the bank testified at the trial, and records reflecting the account of the Miracle Mile Used Cars were admitted in evidence. These records cover the period June to November, 1955. The account was normally active and showed sufficient funds on deposit to cover the check only on July 25, and for the five-day period August 11 through August 15. The records show slightly over $100 on the date the check was written, July 14, and slightly over $1,100 on the date presented, July 22. There was some $600 on the second date that the check was presented, August 23.

[86 Ariz. 340] Although Wilson and Capps filed an snswer to appellant's complaint, neither appeared at the trial and no attorney appeared in their behalf. The only testimony was that of appellant's president, Mr. Boniface, and the representative of the Bank of Douglas.

The only question which this court needs to determine is whether there was any evidence presented on which the trial court could find in favor of the bonding company and against appellant.

As stated numerous times by this court, the evidence, on appeal, must be construed in the light most favorable to sustaining the judgment. Hansen v. Oakley, 76 Ariz. 307, 263 P.2d 807. Appellant contends that where there is no conflict in the facts, this court is 'not bound by the conclusions of the trial court, but are at liberty to draw our own legal conclusions from the admitted facts.' Sanders v. Brown, 73 Ariz. 116, 238 P.2d 941, 943; Hansen v. Oakley, supra. This rule of law concerns the trial court's legal conclusions. In the instant case, the trial court was necessarily required to make a factual finding, i. e., whether there was an intent to defraud on the part of Wilson and Capps. The trial court, by its judgment, must have found no such intent. Is there evidence to support this implied finding?

Section 28-1305, supra, provides that the bond required 'shall inure to the benefit of any person who suffers loss by reason of any unlawful act of the licensee.' The meaning of the term 'unlawful act', as used in this particular statute, has been construed in Commercial Standard Insurance Co. v. West, 74 Ariz. 359, 249 P.2d 830. We there adopted the rule set forth in Hartman v. Greene, 193 La. 234, 190 So. 390, 391, which states:

'The term 'an unlawful act' does not mean necessarily a criminal act; it means a wrongful act, or a tort--any wrongful act (not involving a breach of contract) for which a civil action will lie * * *.'

Appellant contends that the act of Capps, in drawing the $1,500 check on July 14, not only falls within this definition of 'unlawful act' but is sufficient to constitute a criminal violation of A.R.S. § 13-316, 'Drawing check or draft on insufficient account with intent to defraud; etc.' It is asserted that the trial court could correctly reach only one conclusion from the facts as stated. We disagree. the trier of fact must needs have decided as a factual question, 'Was there an intent to defraud?'

Is it useless to summarize appellant's arguments leading to the conclusion that such an intent existed. The question is not whether any member of this court, sitting as a trier of fact in this case, would have reached the same conclusion the trial court reached, but whether there [86 Ariz. 341] is any competent evidence to support the conclusion arrived at by that ...


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