Solomon's Marina, Inc. v. Rogers

Hammond, J., delivered the opinion of the Court. A vendor of a boat to a corporate vendee, of which he was a major stockholder, director and officer, repossessed it and successfully defended a replevin action on the ground that passage of title was conditioned on payment of the purchase price. The corporate vendee appealed. Rogers, the appellee, and Jefferson and Lutes were the ¹⁹⁶ stockholders, officers and directors of Titanium Ores Corporation, chartered in 1953.

In 1954 the corporation needed a boat to survey for ore in the Chesapeake Bay. It purchased a hull from Rogers, who among other related activities carried on a boatyard and marina. The minutes of the meeting of the directors of the corporation, held October 9, 1954, provide: “It was agreed to purchase from Tidewater Pier and Dredging a 26 foot Navy motor sailer hull for $1300.00. Payment for the hull to be made at the convenience of the corporation.

If at some later date the corporation no longer desires or has need for the boat, the boat may be returned to Tidewater Pier and Dredging Company with improvements intact which improvements shall serve as payment for any and all use of the hull. The boat, named T102 is to be used for the exploration of our present and other mineral deposits.” At the same meeting the corporation agreed to purchase a truck from Jefferson, “Payment to be deferred and made at the convenience of Titanium Ores Corporation.” Truck and title were passed to the corporation. On October 23, 1954, beneath the word “approved,” Rogers, Jefferson and Lutes each signed his name to the minutes. The minutes refer to the purchase of a hull, and Rogers says that was what was sold.

The other two, particularly Jefferson, say that additions had been made to the hull before the sale in October, 1954. However, it is agreed that, whether before or after the sale, an engine, a cabin, a toilet and bunks were installed by Rogers at a cost to Titanium Ores of $2,854.70, so that its total investment in the boat was $4,154.70, of which $1,300.00, the original purchase price, remains unpaid. The boat was delivered to and used by the corporation until 1958 when, after a falling out with his confreres, Rogers went to Solomon’s Marina, Inc., where the ■craft was berthed, and had it towed to his own yard. The replevin suit' followed.

In addition to the boat, Rogers sold or leased to the corporation equipment and services for which ¹⁹⁷ he was paid over $82,000. The corporation, at the time of the trial, was in low financial condition and the trial judge appears to have concluded that, as of that time, it could not pay Rogers the $1,300.00 purchase price of the boat. Jefferson and Lutes say that the sale of the boat to Titanium Ores was unconditional and that title was intended to, and did, pass to the corporation, just as did the title to the truck. Rogers says he was supposed to be given a note for $1,300 and that he kept the Coast Guard certificate of identity of the boat in his name as evidence that title was not to pass until the note was paid.

He does not claim that a conditional contract of sale was intended to be, or ever, was executed. In 1955 and in 1957, pursuant to exemptions from the Securities and Exchange Commission, Titanium Ores offered securities for sale to the public. On October 18, 1955, by offering circular of that date, 300,000 shares of common stock were offered at $1.00 a share from which the corporation realized over $200,000 net from purchasers of stock. The balance sheet of Titanium Ores, as of July 31, 1955, made a part of the offering circular, showed in the assets column equipment and machinery of $107,014.65 which, it was testified to without challenge, included the boat at a cost of $4,154.70, and in the liabilities column showed “Notes on Equipment—J. B. Rogers (boat)—$1,300.00.” On May 16, 1957, by offering circular of that date, Titanium Ores offered for sale to the public $250,000 face value of 6% convertible debentures and received approximately two hundred thousand dollars net from various purchasers.

The balance sheet of the corporation, this time as of December 31, 1956, again was made a part of the offering circular. It showed among the assets various items of equipment, including