Case ID: ohio-st_117/html/0069-01.html
Source: Caselaw Access Project
Author: {"author": "Marshall, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Metropolitan Securities Co. v. The Warren State Bank.
    
      Chattel mortgage’s—Requirements for filing with county recorder apply to motor vehicles, when—Section 8560, General Code—Registration and sales act enacted to prevent traffic in stolen automobiles-—Section 6310-3 et seq., General Code—Compliance therewith not constructive notice to subsequent mortgagee, when—Bill of sale, securing loan, to be filed with recorder—Chattel mortgage prior lien over bill of sale, when.
    
    1. Section 8560, General Code, has application to every mortgage or conveyance intended to operate as a mortgage of goods and chattels including motor vehicles where such mortgage or conveyance is' not accompanied by an immediate delivery and followed by an actual and continued change of possession.
    2. Sections 6310-3 to 6310-14, General Code, were enacted to prevent traffic in stolen cars, to require registration, and a bill of sale to be given in the event of sale or change of ownership of motor vehicles, and compliance with those sections by the holder of a mortgage or conveyance intended to operate as a mortgage upon a motor vehicle does not operate as constructive notice to a person subsequently acquiring a mortgage upon such motor vehicle without actual notice or knowledge of such prior mortgage.
    3. A bill of sale of a motor vehicle containing no defeasance clause but in fact executed and delivered as collateral security for a sum of money loaned concurrently with the execution of such bill of sale is a conveyance intended to operate as a mortgage upon such motor vehicle and therefore becomes subject to the provisions of Section 8560, General Code.
    4. Such bill of sale of a motor vehicle thus filed is valid between the parties to the instrument and creates a valid lien as against subsequent mortgagees of such motor vehicle with actual notice or knowledge thereof, but the mere filing of such bill of sale in the office of the clerk of courts gives no priority of lien upon such motor vehicle over a subsequent mortgagee of such motor vehicle without actual notice or knowledge thereof who files a valid chattel mortgage with the county recorder in full compliance with Sections 8560 to 8564, General Code.
    (No. 20194
    Decided June 15, 1927.)
    Error: Court of Appeals for Trumbull county.
    In this court this cause involves a question of priority between lien claimants upon three automobiles. The cause originated in the common pleas court of Trumbull county, where a larger number of automobiles was involved, but in this court the inquiry has been narrowed to only three.
    One Snyder was a dealer in automobiles in Warren, Ohio, on and prior to March 26, 1924. On that date he executed three bills of sale to the Warren State Bank upon the three automobiles which are the subject of the present inquiry. None of these bills of sale contained any defeasance clause, but they were in fact executed and delivered to the Warren State Bank as security for a sum of money then loaned Mr. Snyder. One of these bills of sale, covering Durant No. 33029, was filed with the clerk of courts of Trumbull county, and not in the office of the county recorder of that county, on March 28, 1924. The other two, covering Durant No. 100033 and Star No. 218720, were filed in the clerk’s office, but not in the recorder’s office, on March 31, 1924.
    On the same day, to wit, March 26, 1924, Snyder borrowed money from the Metropolitan Securities Company, and gave as security therefor chattel mortgages upon each of said automobiles, and the securities company filed the chattel mortgages covering Durant No. 33029 and Star No. 218720, in the office of the county recorder of Trumbull county, on March 27, 1924, and filed the mortgage Durant No. 100033 in the office of the county recorder on April 1, 1924.
    The securities company complied with all of the provisions of Sections 8560 to 8564, both inclusive, G-eneral Code. The bank complied with all of the provisions of Sections 6310-3 to 6310-14, both inclusive. It will be seen, therefore, that the securities company, depending upon Section 8560, was first to file instruments, covering Durant No. 33029 and Star No. 218720, and that the bank, relying on Section 6310-10, was first to file instrument covering Durant No. 100033.
    Snyder became in default upon both loans, and thereupon the securities company took possession of all three cars, sold the same, and applied the proceeds upon its loans. The bank sued the securities company to recover damages for conversion of the cars, and recovered judgment for the value of the three cars which are the subject-matter of this error proceeding. The Court of Appeals affirmed that judgment, and error has been prosecuted to this court by the securities company.
    
      Messrs. Wilkin, Cross & Daoust, for plaintiff in error.
    
      Messrs. Guarnieri & McVicker, for defendant in error.
   Marshall, C. J.

It is insisted by the securities company that the bank being in fact a lender, and the bills of sale taken by it being in fact intended as collateral security for a loan, the duty devolved upon it to file its bills of sale with the county recorder, and that its action in filing the instruments with the county clerk will not avail as against the securities company, which is likewise a lender and did comply with Section 8560 and other related sections. It is insisted, on the other hand, by the bank, that Snyder having executed bills of sale to the three cars in question the complete legal title to those cars passed to the bank, which title became complete upon filing those instruments with the county clerk, and that Snyder was thereafter powerless to either convey or incumber the cars covered by those bills of sale. The plaintiff having • relied upon and having fully complied with one statute, and the defendant having relied upon and having completely complied with the other statute, and neither plaintiff nor defendant having complied with both statutes, this controversy involves not only the interpretation of each of the statutes, but also involves the relation of each of those statutes to the other.

Section 8560 is the older statute, having been in existence many years, and having been enacted a half century before automobiles were invented. That statute renders any chattel mortgage void as to creditors, subsequent purchasers, and mortgagees in good faith, unless the mortgage or a true copy thereof be forthwith deposited as directed, or other conditions of the statutes complied with. It has been repeatedly held that a mortgagee, who has failed to file the instrument as required, is nevertheless protected as against subsequent purchasers and mortgagees who had actual knowledge of its existence. The securities company did not have actual knowledge of the bills of sale given to the bank, and it has never been declared by any court in Ohio in any reported case that any notice or knowledge less than actual knowledge would be sufficient.

Sections 6310-3 to 6310-14 became effective August 16, 1921 (109 Ohio Laws, 330), and the purpose of their enactment, as expressed in the title, is to prevent traffic in stolen cars. As a means of preventing such traffic, registration and bill of sale are required to be given in the event of each sale or change of ownership of a motor vehicle, and Section 6310-10, which requires bills of sale to be filed in the office of the clerk of courts, contains the following language:

“Each corporation, partnership, association, or person to whom title has in any manner been passed to a motor vehicle or a ‘used motor vehicle’ shall file one of the copies of the duplicate bill of sale with the clerk of courts of the county in which the sale, transfer, conveyance, gift or passage of title is consummated within three days immediately thereafter.”

It is apparent that a bilhof sale given as security for a debt, even though it does not contain in its terms any defeasance clause, is nevertheless a passing of title in some manner. If it be held that the sweeping language of Section 6310-10, above quoted, should be limited in its application only to a transfer of the naked legal title, then no duty devolved upon the securities company to deposit its chattel mortgages with the clerk of the courts, and by the same token the filing of the bills of sale by the bank with the clerk of the courts was futile, because its bills of sale were in fact security for a debt and not the conveyance of the complete legal title.

When Sections 6310-3 to 6310-14, inclusive, were enacted there was no reference to Section 8560, and there was no express repeal either in whole or in part. If the later enactments were in irreconcilable conflict with the earlier, it would necessarily have to be decided that the later enactment repealed the earlier. There being no such conflict, but, on the other hand, it being clear that both may be enforced concurrently, there is no implication of repeal.

The problem in the instant case may not be solved by deciding what would be the easiest and simplest and best thing to do, but, on the other hand, this court is confronted with the duty of making both statutes operative in all points where no irreconcilable conflict appears.

Section 8560, enacted approximately 80 years ago, as expressed by its title, was for the purpose of requiring mortgages or bills of sale of personal property to be deposited, and thereby made a matter of public record, to serve as notice of the rights of the holder thereof to persons having subsequent dealings with the owner. As originally enacted, and as still existing, that law applies to every “mortgage, or conveyance intended to operate as a mortgage, of goods and chattels, which is not accompanied by an immediate delivery, and followed by an actual and continued change, of possession.” Sections 6310-3 to 6310-14, as expressed in the title of the bill, as shown in 109 Ohio Laws, 330, were enacted with the purpose “to prevent traffic in stolen cars, require registration and bill of sale to be given in event of sale or change in ownership of motor vehicles.” In Section 6310-6 the act is made to apply to “each buyer, purchaser, transferee or person receiving or obtaining a ‘motor vehicle.’ ” The requirement as to filing, as stated in 6310-10, as amended in 1923, 110 Ohio Laws, 399, is that “each corporation, partnership, association, or person to whom title has in any manner been passed to a motor vehicle shall present to the clerk of courts,” etc.

It is obvious that the two statutes, enacted at widely different dates, refer to different subjects, to widely different persons, make different requirements, and were designed to effect different purposes. The earlier statute is purely civil in its nature, designed to regulate the manner of creating and perfecting liens. The later is a penal enactment, primarily designed to prevent and detect crime. Section 6310-10, if strictly and literally, construed, in the absence of and without regard to Section 8560, would require that any instrument passing title in any manner to a motor vehicle would be required to be filed in the office of the clerk of courts. An instrument whereby “title has in any manner been passed to a motor vehicle” would naturally include a chattel mortgage.

If, on the other hand, it is determined to reconcile this provision with Section 8560, and not to regard the same as an implied repeal thereof, and if it is intended to give effect to both, the conclusion is irresistible that all chattel mortgages, whether covering motor vehicles or any other kind and character of personal property, or any instrument intended to operate as a mortgage of goods and chattels, including motor vehicles, must be filed with the county recorder, as required by Section 8560, and that any instrument which creates the holder thereof a “buyer, purchaser, transferee or person receiving or obtaining a ‘motor vehicle’ ” must be filed in the office of the clerk of courts.

It is difficult to fathom the legislative intent in requiring buyers, purchasers, and transferees of title to a motor vehicle to file the same in the office of the clerk of courts, and to require mortgagees of all kinds of personal property, including motor vehicles, to file the same in the office of the county recorder, but inasmuch as the Legislature in the later enactment made no reference to the earlier it will not be presumed that the later act was intended to apply to such instruments as are described in Section 8560. There is no point in requiring a chattel mortgage covering a motor vehicle to be filed in both the office of the county recorder and the office of the clerk of courts. If the Legislature, in 1923, had intended to require all chattel mortgages, and conveyances intended to operate as mortgages of motor vehicles, to be filed in the office of the clerk of courts, it would have been just as easy and simple to have employed the same language as the Legislature had theretofore adopted in Section 8560. Having used certain language in the one instance and wholly different language in the other, it will rather be presumed that different results were intended.

The presumption of intention of a wholly different purpose is further strengthened by all of the other differences hereinbefore referred to. It is, of course, not possible to accurately gauge or determine the legislative intent, but it is more reasonable to so construe these statutes as to require all mortgages and conveyances intended to operate as mortgages of personal property, including motor vehicles, to be filed in the office of the county recorder, and all instruments intended to operate as a conveyance or sale of motor vehicles, without defeasance, in the office of the clerk of courts.

It is quite clear from this record, as shown by the agreed statement of facts, that the bills of sale given to the bank were given as security for a debt, and that they are therefore “conveyances intended to operate as a mortgage,” and therefore proper subject for filing in the office of the county recorder.

As between the parties to this action, the securities company having fully complied with Section 8560, and the bank not having complied therewith, the claims of the securities company must prevail.

The judgment of the Court of Appeals in the instant case will therefore be reversed, and judgment rendered upon the admitted facts in favor of the plaintiff in error.

Judgment reversed and judgment for plaintiff in error.

Allen, Kinkade, Robinson and Matthias, JJ., concur.