Case ID: pa-d-c2d_24/html/0755-01.html
Source: Caselaw Access Project
Author: {"author": "Taxis, P. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Mertz Estate
    
      
      Smith, Cahall <& Aker, for petitioner.
    
      Prince, Prince & Leiby, for respondent.
    April 24, 1961.
   Taxis, P. J.,

This matter comes before the court on petition filed by the administrator for a citation directed to J. Robert Chittick to show cause why he should not deliver to petitioner a certificate of title to a certain 1950 Dodge truck with the encumbrance noted thereon in favor of J. Robert Chit-tick marked cancelled. The facts are not in dispute. Decedent in his lifetime executed a judgment note in favor of J. Robert Chittick entered of record in Montgomery County. As part of the same transaction, the aforementioned certificate of title was given to J. Robert Chittick and an encumbrance was noted upon the face thereof in his favor.

The administrator contends that there is no enforceable security interest in the vehicle because no written security agreement was executed, and cites section 9-302 of the Uniform Commercial Code as the applicable law. This section provides that if a secured party does not have possession of the collateral, the debtor must sign a security agreement which contains a description of the collateral before the security interest is enforceable against the debtor or third parties.

J. Robert Chittick, respondent, contends, however, that such a written security agreement is unnecessary and points to section 9-302 of the Uniform Commercial Code of April 6, 1953, P. L. 3, which provides that if a statute requires that a lien or encumbrance be noted on a certificate of title, then filing of a financing statement is not required to perfect a security interest.

The Vehicle Code of May 1, 1929, P. L. 905, as amended, section 203, provides:

“(a.) A certificate of title shall contain such description and other evidence of identification of the motor vehicle, trailer or semi-trailer for which it is issued as the secretary may deem necessary, together with a statement of any liens or encumbrances which the applicant may show to be thereon, together with the names and addresses of the holder or holders of any such liens or encumbrances.”

Section 203(b) of The Vehicle Code provides, inter alia, that such notations of a lien or encumbrance on the certificate of title shall be adequate notice to creditors.

Section 203 of The Vehicle Code establishes a method of creating liens on motor vehicles without the necessity of transferring possession: Friedman v. Steibel, 185 Pa. Superior Ct. 100. Although section 9-203 of the Uniform Commercial Code, cited above, requires a signed security agreement containing a description of the collateral, the Uniform Commercial Code Comment, 12A PS page 375, states:

“The only requirements in cases not involving land are (a) a writing; (b) the debtor’s signature; and (c) a description of the collateral or kinds of collateral”: Girard Trust Corn Exchange Bank v. Warren Lepley Ford, Inc. (No. 2), 13 D. & C. 2d 119.

The same comment indicates that the formal requisites stated in the section are in the nature of a Statute of Frauds and are imposed to prevent the creditors who have neglected the simple formality of obtaining a signed writing to establish by parol evidence a secured status. In the present case, there is written evidence of the security agreement and parol evidence of the security agreement is unnecessary. The certificate of title with the encumbrance noted thereon is itself evidence of the security agreement. Debtor must have contemplated a security interest when he permitted the certificate of title to be marked with an encumbrance. It seems inequitable to conclude that under these circumstances no security exists. For these reasons, and in accordance with the language of Friedman v. Steibel, supra, to the effect that The Vehicle Code establishes a method of creating liens, this court decides that there is a valid, enforceable security interest in the 1950 Dodge truck in favor of J. Robert Chittick.

And now, April 24, 1961, the petition for citation directed to J. Robert Chittick to show cause why order should not be entered directing that he deliver to petitioner the certificate of title to a certain motor vehicle with the encumbrance noted thereon be marked can-celled is dismissed.