Case ID: ohio-np-ns_22/html/0193-01.html
Source: Caselaw Access Project
Author: {"author": "Snediker, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

PRIORITY AS BETWEEN LIENS.
    Common Pleas Court of Montgomery County.
    The Bankers Commercial Securityy Company v. S. K. Coffman, W. T. Strickler and The Gramm-Bernstein Motor Company.
    Decided, October 17, 1919.
    
      Lien for Repairs — Prior to that of a Chattel Mortgage — Corporation as a Lienholder has Same Rights as an Individual.
    
    A lien for labor and materials expended in tbe repair of a machine is superior to the lien -of a chattel mortgage, but the priority of such a lien does not extend to such items as storage and the cost of material used in the operation of the machine.
   Snediker, J.

This action was brought by the. plaintiff corporation for the recovery of $1,566.60, with interest, on seven promissory notes ma,de by the defendant, S. K. Coffman, payable to W. T. Strickler, and endorsed by the payee to this plaintiff. To secure these notes there was given to Strickler a chattel mortgage upon one Model 5, six-ton Gramm-Bernstein truck, 1917 model. The mortgage and notes bore date of June 18, 1917. The mortgage was filed on that day at the office of the recorder of Montgomery county, Ohio. Subsequent to the delivery of the truck to .Coffman, and after the giving of the notes and mortgage referred to, and on or about June 17, 1918, this truck was brought to Lima, Ohio, and delivered to the factory of the defendant, the GrammBernstein Motor. Truck Company. Thereupon this company, without knowledge of the plaintiff’s mortgage lien, did' certain work and furnished materials, labor and new parts for and upon the truck, repairing and overhauling it and putting it in good condition in accordance with orders and instructions received at the time the truck was so delivered. The total amount of the labor, parts and material done and furnished was of the value of $530.2Q. The work was completed and the truck ready for redelivery on June 28th, 1918. Neither Coffman nor Strickler, when notified of this fact, removed the truck, and it remained in the possession of this defendant corporation until the plaintiff, on August 25th, 1919, secured a judgment in this court for the amount of its claim, an order of foreclosure and sale, and it was sold under the order of sale so issued by the court. A return of that order of sale shows that the truck was appraised for $1,800, and sold for $1,860, plus the costs made on the sale. The fund so realized from the sale is now in the hands of the clerk of this court for distribution.

We are called upon to determine as to the priorities of the respective parties plaintiff and defendants, the one by reason of its judgment on account of the chattel mortgage, the other by reason of its lien for work, labor and materials furnished in the repair of the truck.

Counsel for these parties have submitted an agreed statement of facts in which all of the matters and things heretofore recited are agreed to be true.

The lien claimed by the Gramm-Bernstein Motor Truck Company is one which has long been recognized at common law, and, in some of the states, has been made the subject of legislation. In our own state it has not. The fact that this company is a corporation does not to our mind make any difference as to its right to such a lien. It is, of course, true that at the time that this lien was first recognized, corporations for business purposes had not come into existence, and that originally the right to the lien must have been accorded only to individuals and to companies composed of individuals. But when a corporation is formed it possesses an individuality of its own. It has an entity, and is entitled under the law, unless excluded specifically, to all the rights - in business transactions which are possessed by a sole person conducting a like business.

The first epnsideration in the determination of the question before us suggests tbe question as to where the title to this truck was after the giving of the mortgage by the purchaser. Under the law of Ohio, which differs from some of the other states, the interest of ¿ mortgagee under a chattel mortgage is that of a general owner of the property mortgaged. 26 O. S., page 659. As such general owner the title to the truck was in the mortgagee. If the title to the truck was in the mortgagee, had Coffman and Strickler, by their possession of it and by their delivery of it to the defendant corporation for repairs, such a relation to the truck as would give this defendant corporation, having made the repairs and having retained possession of the truck after such repairs, a right to a lien on account thereof, which was superior to prior existing liens on the property?

Generally stated, the rule is:

“A mechanic at common law has a lien on all personal property for repairs (persons having by common law the right to retain goods on which they have bestowed labor, until the reasonable charges therefor are paid. 2 Kent’s Commentaries, ■635). In the absence of specific agreement, if a party has bestowed labor and skill on a chattel bailed to him for such purpose, and thereby improved it, he has by general law a lien on it for the reasonable value of his labor or the right to retain it until paid for such skill and labor.”

In the case of Hammond v. Danielson and another, 126 Mass., page 294, the Supreme Court say:

“A lien on personal property can not, indeed, be created without authority of the owner. But in the present case such an authority must be implied from the facts agreed. The subject of the mortgage is a hack, that is to say, a carriage let for hire; described in the mortgage as ‘now in use’ at certain stables; and which, as the parties have agreed in the case stated, the mortgagor retained possession of and used agreeable to the terms of the mortgage. It was the manifest intention of the parties that the hack should continue to be driven for hire, and should be kept in a proper state of repair for that purpose, not merely for the benefit of the mortgagee, but for that of the mortgagor also, by preserving the value of the security and affording a means of earning wherewithal to pay off the mortgage debt. The ease is analogous to those in which courts of common law, as well as of admiralty, have held, upon general principles, independently of any provisions of statute, that liens for repairs made by mechanics upon vessels in their possession take precedence to prior mortgages.”

In the case at bar there is no agreement that the phrase “now in use,” or any similar phrase, is contained in the mortgage, but it does appear from the pleadings, the allegations of which are admitted to be true, that in the case before us, the truck was in the lawful possession of those defendants who left it with the Gramm-Bernstein Motor Truck Company for repairs. The same state of facts existed in the case of Broom & Sons v. Dale & Sons, 67 Southern Reporter, 660, where the Supreme Court of Mississippi say:

“In this case the automobile was intrusted by the party who had the lawful possession of it to the appellants to be repaired. By virtue. of the labor done by appellants and the material used by them in making the repairs, they had the right under the common law, as well as under the statute (of Mississippi) to retain possession thereon until they were paid their charges.”

This case was one where the vendor sold the machine, transferred the'possession, but reservéd the title to secure payment, which would place him in the same position with reference to the general ownership of the property as this plaintiff occupies under the law of Ohio. Further discussing this case the Supreme Court of Mississippi say:

“From the agreed facts in the case we understand that the repairs were such as were necessary to preserve the automobile .and keep it in proper condition for its use. Repair means to restore, renovate, or mend an article; to keep it in good or sound condition. Repairs, in the ordinary sense, are made to prevent deterioration in an article, and to keep it up in its value and preserve it for the use intended. It was clearly the intention of the parties that Mr. Folk, the mortgagor, should continue in the ordinary use of the automobile. While being so used it was necessary to keep it in a sufficient state of repair, This would be not only to the benefit of the user, Mr. Polk, but by preserving tbe value of tbe property was also for tbe benefit of appellees as mortgagees.”

The effect of the agreed statement of facts in the case at bar is an admission of the necessity of the repairs made by the defendant corporation, on an inspection of the items of which the court finds that they were of a character necessary to preserve the truck and to keep it in proper condition for use. From 'the first item, “port plug gaskets” to “bolts, washers, nuts, gaskets, etc.,” we find all of the different repairs made to be of a kind which are essential to the operation of the machine. For instance, among others are a governor rod, a crank-shaft, a' crank-shaft gear, valves, discs, connecting-rod bearings, priming cups, an oil gauge glass, a fan pulley, a clutch shaft, a transmission lock, an exhaust pipe, and copper tubing. It is unthinkable that the plaintiff company, who under the law of Ohio, unless there was a reservation of right of. possession in the mortgagor, is entitled to possession, would expect the purchaser to retain the truck without use. The use of an article of this character contemplates not only wear and tear, but depreciation incident to accident, and whether these repairs became necessary on account of wear and tear or on account of accident, the permitted use of the truck brought them into contemplation.

Another case which is enlightening is that of Watts v. Sweeney, 127 Indiana, page 116, where is was held that a mechanic who made repairs on a locomotive and tender had a lien which took precedence to that of the mortgagee where the property was permitted to remain in the possession and use of the mortgagor and through such use it became necessary to repair it. In the opinion the Indiana Court say:

“When the mortgagee intrusts machinery of the character in 'controversy to the custody of the mortgagor for a long period of time, to be used by the mortgagor in operating the railroad, it will be presumed against the mortgagee that all the necessary repairs were contemplated, and the mortgagor was, in case of needed repairs, constituted the agent of the mortgagee in procuring such repairs, and in such case equity gives the mechanic a lien for his services and materials. The repairs add to the value of the property, and they are for the benefit of the mortgagee as well as the mortgagor.
“Where the property is to be retained and used by the mortgagor for a long period of time, it will be presumed to have been the intention of the parties to the mortgage, where it is property» liable to such repairs, that it is to be kept in repair, and when the property is machinery, or property of a character which renders it necessary to intrust it to a mechanic or machinist to make such repairs, the mortgagor in possession will be constituted the agent of the mortgagee to procure the repairs to be made, and as such necessary repairs are for the betterment of the property, and add to its value to the gain of the mortgagee, the common law lien in favor of the mechanic for the value of the repairs is paramount and superior to the lien of the mortgagee. The mortgagee is presumed in such ease to have contracted with a knowledge of the law giving to a mechanic a lien. ’ ’

As said by the Supreme Court of Maryland, in 8 Gill, page 214:

“The doctrine of lien is more favored now than formerly; and it is now recognized as a general principle, that wherever the party has, by his labor or skill, etc., improved the value of the property placed in his possession, he has a lien upon it until paid. And liens have been implied when, from the nature of the transaction, the owner of the property is assumed as having designated to create them, or when it can be fairly inferred, from the circumstances, that it was the understanding of the parties that they should exist. The existence of liens has also been sustained where they contributed to promote public policy and convenience.”

In the 43 Missouri Court of Appeals, page 144, in the body of the opinion, the Court say, pages 148, 149 and 150:

Has this lien a preference over the antecedent mortgage, the debts secured therein being overdue ? It must be conceded that the labor performed by the artisan must be at the request of, or by consent of, the owner. A servant of the owner of a carriage broke it, without the master’s knowledge, and, without his knowledge, took it to a coach-maker for repairs. It was held that there was no lien. 4 Esp., 174. It is from this principle of the lien law, that plaintiff built much of his contention. He insists that, as in this state, a mortgagee, at least after condition broken, as in this case, is the owner of the mortgaged chattels, and as he did not consent to, or order, the repairs, that no lien exists. It is true that, after condition broken, the mortgagee of chattels becomes the owner. But this proposition, from the nature of the relation 'of the parties, after condition broken, is subject to qualification, or, at least, explanation. The mortgagor has, nevertheless, a right of redemption, and, frequently, as was done here, he is permitted to retain the possession and use of the chattel, as though his own. The consent of the owner need not be express. It may be implied from the circumstances. And it has been expressly held that the consent need not be given with such formality as to render the owner personally liable for the charges. 44 N. J. L., 105. That case was where the wife was the owner of a wagon, which she permitted her husband to use in his business carried on for the support of the family. The husband having had it repaired, the against him by the wife. It was held that it was in the con-artisan was held entitled to a lien in an action of trover brought temptation of the parties that the wagon could only be useful for the purpose for which it was used, by being kept in repair.
‘ ‘ Now, in the case at bar, the plaintiff permitted the mortgagor to remain in the possession and use of the chattels, as if they were owners. The nature and character of the property suggests that this permission must have been given for the purpose of such use of the articles as would be of value to those who used them. This, as was said in Williams v. Allsup, 10 C. B. (N.S.), 417, by implication, entitled the mortgagor to that which is necessary to keep the property in a reasonably efficient condition for the purposes of the use. The case of Scott v. Delahunt, 5 Lans., 3; S. C., 65 N. Y., 128, was where a mortgagor was permitted to remain in the possession and use of a canal boat, after condition broken, and it was held there was implied authority in the mortgagor, to keep her in repair so as to create a lien in favor of the shipwright, superior to the mortgage. * * * So I conclude, that notwithstanding the ownership, with which the law in this state clothes a mortgagee after condition broken, if the property is of such character as suggests use, and that repairs will become necessary for its proper use or preservation, that it must be held to be in the contemplation of the mortgagee that -it will be so repaired, and the enhancement of value thereby added will create a lien in favor of the workman superior to the mortgage.”

In Ariew of the foregoing authorities, it is our opinion that in this ease the Gramm-Bernstein Motor Truck Company, to the extent of its claims as we shall specify, is entitled to priority over the plaintiff company out of the proceeds of the sale of the truck in question. We limit the lien of the motor truck company to such items of its áccount as are found between the first item, “8 B-43 Port plug gaskets, .10 .80” and “Misc. bolts, washers, nuts, gaskets, etc. 7.00,” inclusive. It ought not to be allowed a priority on account of motor oil, gasoline, transmission grease and the ten months storage. To the items already specified Avith respect to which we give it priority, may be added 175 hours of labor $1.00), $175. A computation on the part of counsel will give the exact amount with respect to which priority is allowed over the claim of the plaintiff company. On the state of the case the Gramm-Bernstein Motor Truck Company is entitled to a judgment for the whole amount of its claim. We do not find an entry of such judgment upon the record. This entry should be made, including the finding as to priorities.