Indianapolis Car Exchange, Inc. v. Alderson

Mike Thurman operated a used-car dealership with financing from Indianapolis Car Exchange (Indianapolis) (defendant). Indianapolis perfected its security interest by filing a financing statement. Bonnie Chrisman, the owner of another used-car dealership, purchased a truck from Thurman and sold it to customer Randall Alderson (plaintiff). Chrisman told Alderson that Thurman had mentioned having some sort of financial support from Danny Hockett, who was the owner of Indianapolis. Thurman failed to notify Indianapolis of the sale to Chrisman and did not make repayment, which was a requirement under Thurman’s financing agreement with Indianapolis. Indianapolis had the bureau of motor vehicles place a lien on the truck, and Alderson filed suit against Indianapolis. The lower court ruled in favor of Alderson, ordering the bureau of motor vehicles to remove the lien, and Indianapolis appealed. On appeal, the issue before the court was whether Chrisman and her customer, Alderson, qualified as buyers in the ordinary course of business. Indianapolis argued that neither Chrisman nor Alderson could be characterized as buyers in the ordinary course of business, because they knew that Indianapolis had a security interest in the vehicle Alderson purchased. However, in an affidavit, Chrisman explained that she was not aware of any specific details regarding Thurman’s financing and only knew that Thurman’s dealership was receiving some manner of support from Indianapolis.