Case Name: PIEDMONT LAND AND DEVELOPMENT COMPANY v. CARNEY, et al.
Court: Court of Appeals of Maryland
Jurisdiction: Maryland
Decision Date: 1963-06-17
Citations: 232 Md. 21
Docket Number: No. 259
Parties: PIEDMONT LAND AND DEVELOPMENT COMPANY v. CARNEY, et al.
Judges: 
Reporter: Maryland Reports
Volume: 232
Pages: 21–33

Head Matter:
PIEDMONT LAND AND DEVELOPMENT COMPANY v. CARNEY, et al.
[No. 259,
September Term, 1962.]
Decided June 17, 1963.
The cause was argued before Brune, C. J., and Henderson, Prescott, Horney and Sybert, JJ.
Nicholas J. Fotos for appellant.
Bill L. Yoho, with whom were Robert S. Hoyert, Roy W. Hooten and Hoyert & Yoho on the brief, for appellees.

Opinion:
Prescott, J.,
delivered the opinion of the Court.
This appeal is from an order directing the sheriff to turn over the proceeds of sale of a 1962 Thunderbird motor car to one of the appellees. The facts are not in dispute. Carney was indebted to Piedmont on a note dated February 5, 1962, and judgment by confession was entered thereon on March 20, 1962. On March 26, 1962, Carney purchased the automobile in question subject to a conditional sales contract which was assigned to Universal C. I. T. Credit Corporation. On April 2, 1962, the Department of Motor Vehicles issued a title certificate on the car, listing thereon a lien in favor of C. I. T. On April 10, 1962, Piedmont obtained and had placed in the hands of the sheriff, a fi.fa. on its judgment, and the sheriff levied on April 12, 1962. The conditional sales contract was recorded on April 18, 1962. C. I. T. intervened on June 27, 1962, and claimed the proceeds of the sheriff's sale. The trial judge sustained C. I. T.'s claim.
C. I. T. contends that Piedmont had actual notice of the conditional sales contract prior to April 10, 1962, by information obtained through the Department of Motor Vehicles, and is therefore not entitled to any assistance from Article 21, Section 66, quoted below. We find nothing in the record to support the contention. The Department is not a record office hence it does not afford constructive notice. The petition filed by C. I. T. indicates, and the trial court stated in his opinion, that actual notice was not received by Piedmont until after the sheriff's levy. If C. I. T. relied upon actual notice it should have alleged and proved the same.
The appellant contends that since it acquired a lien prior to the recordation of the conditional sales contract, although subsequent to the delivery of possession of the automobile to the buyer, it should prevail. C. I. T. contends that since Piedmont was an antecedent creditor it is not entitled to preference on a lien acquired subsequent to the transfer of possession subject to the conditional sales contract. The answer depends upon the proper construction of Code (1957), Art. 21, Sec. 66, which reads in part:
"Every contract for the sale of goods and chattels wherein the title thereto is reserved until the same be paid in whole or in part, or the transfer of title is made to depend upon any condition therein expressed and possession is to be delivered to the vendee, shall in respect to such reservation and condition, be void as to subsequent purchasers, mortgagees, incumbrancers, landlords with liens, pledges [pledgees], receivers, and creditors who acquired without notice a lien by judicial proceedings on such goods and chattels, until such note, sale or contract be in writing, signed by the vendee and be recorded, as provided in this section (Italics added.)
It seems clear that Piedmont falls into the category of a creditor "who acquired without notice a lien by judicial proceedings" on the automobile, and the only controversy is whether the word "subsequent" modifies the word "creditors." In determining this question, it will be helpful to outline the history of the statute, and to examine the prior decisions of this Court dealing with it and similarly worded statutes. Section 66 was first enacted into law in 1916. It provided that conditional sales contracts, wherein possession was to be delivered to the vendee, would be void "as to third persons without notice" until in writing, signed by the vendee and recorded. During the period of time that the above quoted language remained in the statute (1916 to 1949), this Court and the Federal Courts had occasion to deal with and comment thereon. This Court defined the meaning of "third persons without notice." They were defined as purchasers, lienors and subsequent general creditors of the conditional vendee, i.e., creditors who became such after the delivery of the property and before the recording of the contract. Roberts & Co. v. Robinson, 141 Md. 37, 118 A. 198; Meyer Motor Car Co. v. First Nat. Bank, 154 Md. 77, 140 A. 34; Gunby v. Motor Truck Corp., 156 Md. 19, 142 A. 596; Enterprise Fuel Co. v. Jones, 99 F. 2d 928; In Re Shipley, 24 F. 2d 991.
In Stieff v. Wilson, 151 Md. 597, 135 A. 407, this Court stated that the Act of 1916 "does not intend any departure from the well-known American theory and purpose of recording claim to title, that is, to protect persons who might subsequently deal with the property and part with value for it without notice of the earlier conveyance." (Emphasis added.) This statement was quoted with approval in 1954 (after the amendment of 1949, which will be mentioned shortly) in Tatelbaum v. Pantex Mfg. Corp., 204 Md. 360, 104 A. 2d 813.
In Gunby, supra, a case before the amendment of 1949, the precise question presented here was decided to the effect that the Act of 1916 did not apply in favor of creditors whose claims arose out of transactions prior to the date of the delivery of property covered by a conditional sales contract, even though judgment was obtained thereon afterwards. In this case, the Court quoted from the earlier case of Davis v. Harlow, 130 Md. 165, 100 A. 102, as follows: "'These sections [of the Code relating to the recording of mortgages] have been passed upon in a long line of decisions in this state and we must give them the force and effect they have long been held to be entitled to, that is, that they are for the protection of creditors becoming such after the date of the mortgages, either unrecorded or defectively executed [italics added].' " The Court then added: "We see no reason why the sections relating to conditional sales contracts should be differently construed in principle."
Thus, it is seen that prior to the amendment of 1949 the decisions of the Court of Appeals had made it plain that the purpose of the Act of 1916 was not to protect antecedent creditors of the conditional vendee, but to protect purchasers, subsequent lienors, and subsequent general creditors.
In 1949 and 1951, the Legislature amended Section 66. As pertinent here, the words "third persons without notice" were eliminated, and conditional sales contracts, under certain cir cumstances, were rendered void as to "subsequent purchasers, mortgagees, incumbrancers, landlords with liens, pledgees, receivers, and creditors who acquired without notice [the words "without notice" were inserted by the 1951 amendment] a lien by judicial proceedings on such goods and chattels." It will be noted that we have the adjective "subsequent" followed by seven nouns. Our inquiry, as pointed out above, is whether "subsequent" modifies the word "creditors." Under all rules of construction, "subsequent" modifies the word "purchasers," the noun immediately following it. We have held that "subsequent" also modifies the words "mortgagees" and "incumbrancers" (the only others of the seven nouns so far passed upon), and, in so doing, we commented upon the objectives of the statute, after the 1949 amendment.
In Mohr v. Sands, 213 Md. 206, 131 A. 2d 732, Chief Judge Brune, for the Court said:
"If we approach the matter from the point of view of the purpose of the recording statutes involved, we find that they serve primarily to give protection against the consequences of false or misleading appearances of ownership based upon the possession of the chattels. . The requirements of Section 74 [now 66] of Article 21, that a conditional contract of sale must be recorded at the place of residence of an individual vendee emphasize the view that the statute is concerned primarily with appearances based upon the vendee's possession of the chattel . Eikewise, under Section 49 [now 48] et seq. of Article 21, it is the danger of appearances from the possession of the vendor or mortgagor, which continues despite a change of ownership or the creation of a lien, with which the statute is concerned."
Again, in Auto. Accep. Corp. v. Univer. Corp., 216 Md. 344, 139 A. 2d 683, we emphasized that the objective of the recording statute was to protect against secret liens upon personal property where persons had parted with value upon the misleading appearances created by possession in the condiditional vendee. Chief Judge Bruñe, writing the majority opinion, quoted from the opinion in Tatelbaum v. Nat'l Store Etc. Co., 196 Md. 599, 78 A. 2d 228, as follows: " ' the purpose of recording is to protect against secret liens created by retention of title after delivery of possession, " Judge Brune continued: "The secret lien which the recording statute invalidates as against subsequent 'incumbrancers' is not validated against them merely by being assigned *.***. Per contra, and under the explicit language of the recording statute, the reservation of title under the first contract of conditional sale is void as against subsequent [italics added] incumbrancers until recorded. The critical time under the rule is the time of the delivery of the automobile . . Since the statute [Section 66] operates as a bar only in favor of subsequent [italics again added] incumbrancers, Although there was a split in the Court in the above case, it was not concerning the purpose of the recording statute, Section 66, in protecting against secret liens, or the fact that the persons protected were those dealing with the property after delivery thereof, but before the recording of the contract of sale. The dissent quoted from Mohr as we did above. It also stated:
"[T]he statute's [Section 66's] design is to protect only those of the classes of third persons expressly therein designated who may subsequently deal with the chattel sold in reliance on the possession of the buyer, . In 1949 the Maryland Legislature expressed the purpose mentioned in the Roberts case [supra] to protect only purchasers and lienors [it would seem that "receivers" should be here added] for it eliminated the words "third persons without notice" and in their place put [the words of the statute]. . It seems clear that at least since 1949 Maryland agrees that the purpose of [Section 66] is to protect against nonrecorded contracts only those designated in the statute who may subsequently deal with the buyer as to the chattel in his possession (Emphasis added.)
In Rupp, Trustee v. Johnston Co., 226 Md. 181, 172 A. 2d 875, we held that a trustee under a deed of trust, who advanced money subsequent to the delivery of certain chattels, was a "subsequent" incumbrancer, if not a "subsequent" mortgagee, and as such was protected by Section 66 against an unrecorded (or improperly recorded) conditional sales contract. Had the appellants in that case been antecedent incumbrancers, instead of "subsequent" ones, they could not have prevailed.
From the above, it is seen that this Court, both before and after 1949, has stated that the principal purpose of Section 66 is to protect against secret liens, which, at one time, were permitted. This was stated in the preamble to be the primary objective of Section 41, the first Maryland statute requiring the recordation of chattel mortgages, in 1729. Laws of 1729, Ch. 8, Sec. 5. Likewise, this Court has stated, both before and after 1949, that the persons protected by the Statute are those who deal with the property subsequent to its delivery and before the recording of conditional contract of sale. These statements of the Court of Appeals were, and are, correct, we think. We, therefore, reaffirm the statements, and hold that the word "subsequent" in the statute modifies the word "creditors." We agree with Judge Hammond's observation in the dissent in Auto. Accep. Corp., supra, to the effect that the result of the 1949 amendment was to substitute certain named subsequent lienors [and receivers] for subsequent general creditors. Compare Plaza Corp. v. Alban, 219 Md. 570, 151 A. 2d 170. This means, of course, that the trial court was correct in its ruling.
Order affirmed, with costs.
. A comprehensive history of the statute is contained in the opinion of the Court in Tatelbaum v. Pantex Mfg. Corp. 204 Md. 360, 104 A. 2d 813.
. Also in 1949, Section 41 of Article 21 (relating to chattel mortgages) was amended so as to read almost identically the same as Section 66. For a case involving that Section after the amendment, see Plaza Corp. v. Alban, 219 Md. 570, 151 A. 2d 170.
. Compare the above language with the dictum in Tatelbaum v. Nat'l Store Etc. Co., supra.