Title: Memphis Bank & Trust Co. v. Pate

State: mississippi

Issuer: Mississippi Supreme Court

Document:

362 So. 2d 1245 (1978) MEMPHIS BANK & TRUST COMPANY v. Leland D. PATE. No. 50578. Supreme Court of Mississippi. September 20, 1978. *1246 Yancy & Easley, Cliff R. Easley, Jr., Bruce, Gary L. Jewel, Memphis, Tenn., for appellant. Meek & Meek, Buchanan Meek, Jr., Eupora, for appellee. Before PATTERSON, C.J., and BROOM and LEE, JJ. LEE, Justice, for the Court: Memphis Bank & Trust Company filed suit in the Circuit Court of Webster County against Leland D. Pate, seeking possession of an automobile. Judgment was entered in favor of Pate and Memphis Bank & Trust Company has appealed, assigning the following errors in the trial below: (1) The execution sale was void, therefore, Springer received no title to the subject vehicle at that sale and cannot convey more than he received. (2) The lien of the appellant is valid in Mississippi and superior to the interests of Springer and Pate. (3) The procedure described by the Motor Vehicle Act is exclusive for protecting security interests, therefore, even if Mississippi Code Annotated Section 75-9-307 (2) (1972) applies, appellant has a recorded security interest. (4) The judge erred in his determination that Subsection (2) of Mississippi Code Annotated Section 75-9-307 (1972) allowed Pate to take free and clear the security interest of appellant. The appellant is a state banking institution chartered under the laws of the State of Tennessee with its principal place of business in Memphis. On February 6, 1976, one Lester Eugene Tuck, a resident of Memphis, purchased a 1976 Datsun station wagon from Pat Patterson Motor Sales, Inc., (in Memphis) and executed an installment sales contract and security agreement. This security agreement was assigned to appellant on the same date and the lien of appellant on the station wagon was perfected March 1, 1976, when the bank's lien was shown on the Tennessee certificate of title. Tuck became delinquent in his monthly payments on the contract. He was contacted by the bank on September 28, 1976, at which time he advised that the station wagon had been attached. The bank notified *1247 its attorney, but the automobile was sold at a sheriff's execution sale in Memphis on October 5, 1976. The vehicle was purchased at the sale by T.J. Springer, manager of Springer Motor Company in Mantee, Mississippi. He listed his address as being in Memphis. Springer paid four hundred seventy-five ($475.00) for the vehicle and it was subsequently sold by him (Springer Motor Company) to the appellee for the sum of thirty-one hundred dollars ($3,100.00). Pate purchased the vehicle for family purposes. Appellant was unable to locate Springer in Memphis, and finally, through the Motor Vehicle Comptroller's Office in Mississippi, ascertained that a tag had been obtained by appellee and also determined that Springer had sold the vehicle to him. Appellee did not know about the lien until he was notified in 1977. He had purchased the vehicle to be used as a family vehicle and for personal use. Was the execution sale void preventing T.J. Springer from conveying title to Leland D. Pate? Appellant argues that regardless of whether the execution sale was void, as it contends pursuant to Chumbley v. Carrick, 194 Tenn. 612, 254 S.W.2d 732 (1953); Franklin Savings & Loan Corporation v. Snapp, 179 Tenn. 151, 163 S.W.2d 332 (1942); Tibbs v. Zimmerman, 26 Tenn. App. 321, 171 S.W.2d 832 (1941); and Evans v. Belmont Land Company, 92 Tenn. 348, 21 S.W. 670 (1893); the sale was ineffective to vest title in Springer and did not terminate or supersede appellant's perfected security interest, and was subject to that interest. Mississippi Code Annotated Section 75-9-202 (1972) provides: "Each provision of this chapter with regard to rights, obligations and remedies applies whether title to collateral is in the secured party or in the debtor." 79 C.J.S. Supplement Secured Transactions § 61, at 66 (1974) provides: In Allstate Insurance v. Estes, 345 So. 2d 265 (Miss. 1977), this Court held that a purchaser can acquire only that interest which the seller had. Powell v. Whirlpool Emp. Federal Credit Union, 42 Mich. App. 228, 201 N.W.2d 683 (1972), holds that an execution sale passes only the interest held by the debtor and any purchaser takes subject to a validly perfected security interest. In Tennessee, a security interest in an automobile is perfected by noting on the certificate of title the lien and the name of the lienholder [Tenn. Code Ann. § 59-327]. Appellant claims that the sale was void. The Tennessee statute was complied with in the present case, and we are of the opinion that the sheriff's sale, if not void under Tennessee decisions, was subject to appellant's interest. Was appellant's lien on the vehicle still valid in Mississippi? Is the procedure prescribed by the Motor Vehicle Title Law the exclusive means for protecting the security interest in question? Mississippi Code Annotated Section 75-9-103 (1972) read in part as follows: Mississippi Code Annotated Section 75-9-203 (1972) provided: "... [I]n the case of conflict between the provisions of this chapter and any such statute, the provisions of such statute control. Failure to comply with any applicable statute has only the effect which is specified therein." If the Mississippi Code section relating to Uniform Commercial transactions applied to the present case, under those sections and the facts here, appellant still would hold a valid perfected security interest which is superior to any interest acquired by Springer and appellee. However, we are of the opinion that the provisions of the Mississippi statute dealing with motor vehicle titles control. Mississippi Code Annotated Section 63-21-43 (1972) provided: The above section is exclusive as set forth by Mississippi Annotated Section 63-21-55 (1972), as follows: Where the name of the lienholder appears on the face of the title, which is the situation here, the perfection of the security interest continues. There has been no issuance *1249 of a title certificate in Mississippi, and we are of the opinion that the perfected security interest in Tennessee is valid in Mississippi. Did the trial judge err in determining that Subsection (2) of Mississippi Code Annotated Section 79-9-307 (1972) permitted appellee to take free and clear of the security interest of appellant? We have held, supra, that the Mississippi Vehicle Title Law controls in this case rather than Mississippi Commercial Code. However, the trial judge based his decision on Section 75-9-307 (2) holding that the subject vehicle constituted consumer goods and the section merits some discussion here. It provided: The evidence indicates that appellee (1) bought without knowledge of the security interest, (2) for value and (3) for his own personal family or household purposes. The definition of consumer goods is stated in Mississippi Code Annotated Section 75-9-109 (1972): Consumer goods are defined as goods in the hands of the seller as well as the buyer, otherwise, the goods would constitute a part of the seller's inventory. The seller must hold the property for personal, family or household purposes at the time of the sale and the buyer likewise must buy and use the property for those purposes. White & Summers, Handbook of the Law Under the Uniform Commercial Code, § 25-14, at 943-944 (1972) gives the following discussion on this question: 79 C.J.S. Supplement Secured Transactions § 63, at 69 (1974), states the rule as follows: For decisions from other jurisdictions answering the question, see New England Merchants National Bank of Boston v. Auto Owners Finance Company, Inc., 355 Mass. 487, 245 N.E.2d 437 (1969); Everett National Bank v. Deschuiteneer, 109 N.H. 112, 244 A.2d 196 (1968); National Shawmut Bank of Boston v. Jones, 108 N.H. 386, 236 A.2d 484 (1967); Muir v. Jefferson Credit Corporation, 108 N.J. Super. 586, 262 A.2d 33 (1970). In the present case, Springer Motor Company did not acquire and hold the vehicle primarily for personal, family or household purposes, but for retail sale, and the vehicle constituted a part of the inventory of said company. Therefore, even if the Mississippi Commercial Code governed in this case, Section 75-9-307 would not be applicable. May the defense of estoppel be raised for the first time on appeal? Appellee argues that appellant knew for approximately one week that the vehicle had been attached and would be sold, yet, did nothing to protect its security interest. He contends that appellant is estopped from now asserting that interest. No answer or affirmative matter set up the defense of estoppel. Appellee says, however, that the defense developed during the trial and that he should be able to rely on it here. Appellee did not request permission to amend the declaration in order to state the defense of estoppel or to conform his answer and pleading to the evidence. He cannot raise the defense of estoppel for the first time on appeal. In addition, appellant had perfected its security interest and was under no duty to act in connection with the sheriff's sale. For the reasons stated, the judgment of the trial court is reversed and judgment is rendered here in favor of appellant granting unto it possession of the vehicle. REVERSED AND RENDERED. PATTERSON, C.J., SMITH and ROBERTSON, P. JJ., and SUGG, WALKER, BROOM, BOWLING and COFER, JJ., concur.