Godfrey v. Gilsdorf

Melvin Godfrey (plaintiff) was the registered owner of a Toyota car. Commercial Credit Corporation (Commercial) held legal title to the car as security for the balance owed to it by Godfrey. Wanting to sell the car, Godfrey removed the license plates and delivered possession to Auto Center, a used-car dealership. Gary Gilsdorf (defendant) purchased the car from Auto Center by supplying a down payment and borrowing the remainder from Allstate Credit Corporation (Allstate). Gilsdorf was unaware of Godfrey’s interest. Allstate advised Gilsdorf that Auto Center would mail the certificate of title to Allstate directly. Gilsdorf delivered Allstate’s draft for the remainder, $1,600, as well as a personal check, and received a green copy of the dealer’s report of sale. Gilsdorf took this report to the Motor Vehicle Department, where he was issued license plates and a registration certificate. Godfrey visited Auto Center and was told that he would receive payment when the check cleared the bank, but he never received any payment. Auto Center went out of business. A few weeks later, Godfrey received the title certificate after paying off the debt to Commercial. Godfrey commenced a replevin action and obtained possession of the car. Godfrey argued that title could only be transferred pursuant to the motor vehicle and registration law, which required the legal owner, which was Commercial, and Allstate to sign the certificate of ownership, which had not occurred. Gilsdorf filed a counterclaim, demanding that Godfrey transfer the title certificate to him. Gilsdorf based his argument on Uniform Commercial Code, Nevada Revised Statutes (NRS) 104.2403(2), under which a buyer who entrusted goods to a merchant dealing in goods of that kind effectively gave the merchant the power to transfer all rights to a buyer. A trial court sided with Gilsdorf and awarded him title to the car. Godfrey appealed.