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KDG Auto Sales, Inc. v. Asta Funding, Inc.

Judgment in favor of original financer of three cars reversed and case remanded for entry of judgment in favor of defendant, which had financed the cars to consumers, because buyers in the ordinary course of business took ownership without respect to plaintiff's interest, and defendant also took ownership without respect to plaintiff's interest upon buyers' defaults.

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OPINION

� 1 Thomas Automotive Group, Inc. (“Thomas”) operated a used car lot in Philadelphia. Principals from Thomas entered into an agreement with Barry Portnoy whereby Portnoy would provide financing for Thomas to purchase vehicles for resale or consignment. The business agreement provided that Portnoy would own the cars, but the title would be in Thomas’s name. The agreement further provided that Portnoy would physically possess the titles until an authorized sale was made.

� 2 Several months later, Thomas entered into a separate agreement with Asta Funding, Inc. (“Asta”). This agreement provided that Asta would purchase retail installment contracts and security agreements for vehicles which were sold to consumers from Thomas’s lot. Upon completion and approval of a credit application by a customer of Thomas, Asta would forward a check to Thomas. The purchaser would be obligated to make payments to Asta per an installment contract.

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