Buyer can Cancel Auction Sale of an Automobile if Seller does not Deliver Certificate of Title Within Reasonable Time

In Clay v. Harris, 228 Ill. App. 3d 475, 592 N.E.2d 1154 (1992), the Fourth District Appellate Court of Illinois held that a buyer in an auction sale could rescind the sale if the seller does not deliver certificate of title within a reasonable time. 

In this case, the defendant-Appellee Harris (“Appellee”) purchased car from Plaintiff- Appellant, Alonzo Clay (“Appellant”), independent executor of Erma W. Dahl's estate. The Appellee successfully bid on the car. After the auction, Appellee’s son paid for the car and requested the certificate of title. However, the Appellant then found that the certificate of title was lost. He told that he would apply for a lost certificate and promised not to cash Appellee’s check until he delivered the certificate of title.

The Appellee told the Appellant that he needed the certificate of title by August 25th and he would return the car if he did not receive the certificate of title by that date. Because the Defendant did not receive the title, he returned the car and retrieved his check. On receiving the duplicate title, the Appellant contacted the Defendant on September 15th. However, the Defendant did not respond and consequently the Appellant filed a complaint to the Circuit Court. 

The judge held the contract between the parties required the Appellant to deliver a properly executed certificate of title. The Appellant’s delivery of the car without a certificate of title constituted delivery of nonconforming goods. The Appellant subsequently filed an appeal before the Fourth District Appellate Court of Illinois.   The Appellate Court affirmed the trial court’s decision and found that the Defendant- Appellee could rescind his purchase of the car due to the Appellant’s failure to seasonably cure the defect, the lack of title, in the vehicle.

The Appellant argued that the general principles of sale should apply in this case. The Illinois Vehicle Code should not override these principles. Clay, 228 Ill. App. 3d at 477. He pointed out that the Uniform Commercial Code-Sales states that title to goods sold passes to the buyer when the seller physically delivers the goods. Id. And according to the traditional rule a sale at a public auction is final and title to the property passes to the bidder once the auctioneer strikes off the item. Ill.Rev.Stat.1989, ch. 26, par. 2-328(3). Id.

The Appellate court found that the question to be decided in this case is whether the agreement between the parties created an implied term to deliver the certificate of title. Id. at 477. The court found that, based on the facts, the Appellant’s obligation to deliver the title to Harris was implied. Id. at 478. Therefore, the trial court correctly concluded the parties' agreement contained an implied term requiring Appellant to deliver a properly executed certificate of title to Defendant when he took possession of the car. Id. Or at least, the title had to be delivered within a reasonable time after passing possession of the car. Id.

In this case, the agreement between the parties did not include a specific time at which this would occur. Where the time for performance of a particular obligation is not specified, a reasonable time to perform is implied. Id. at 480. Guel v. Bullock (1984), 127 Ill.App.3d 36, 42, 82 Ill.Dec. 264, 269, 468 N.E.2d 811, 816. The trial court concluded that five days, the length of time Harris waited for delivery of the certificate of title before he returned the car to Clay, was reasonable time. Id. The court stated that it would be unreasonable to ask the Appellee to wait for more than 20 days post purchase to receive the certificate of title.  The Appellate court upheld the trial court’s decision. Id.
 
The court further found that, pursuant to the provisions of the Commercial Code, a buyer can revoke acceptance of an article the nonconformity of which substantially impairs the article's value if the buyer accepted the nonconforming item on the reasonable assumption that its nonconformity would be cured and it was not timely cured. Id. at 481. Ill.Rev.Stat.1989, ch. 26, par. 2-608(1)(a). In the instant case, the Appellee accepted the car without the properly executed certificate of title. Id. It was reasonable for him to assume, based on the auctioneer's representation, the nonconformity would be timely cured. This, however, did not occur. Id.

Therefore, the trial court reasonably viewed the parties' oral contract as including the implied condition that the Appellant would provide the certificate of title to Appellee when he was given possession of the car or within a reasonable time after. Id.