Court Opinion

ID: 3478619
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:52:56.053404+00
Date Added: 2024-06-11T14:04:58.169752
License: Public Domain

The question presented is simply this: Is a chattel mortgage on an automobile executed in the State of Missouri and there recorded in full compliance with Missouri law enforcible in Louisiana as against an innocent third party, notwithstanding the chattel mortgage has not been recorded in Louisiana.
It must be conceded that, in an overwhelming majority of American jurisdictions, it is well settled that "the interest of the mortgagee is not divested by any dealings with the chattel in the second state whether such dealings consist of a sale by the mortgagor to a purchaser for value and without notice, or of an attachment or execution levied by a creditor of the mortgagor. It is immaterial that the mortgage has not been recorded in the second state". Restatement of the Law-Conflict of Laws, § 268, page 354.
In Corpus Juris Secundum, Vol. 14, Chattel Mortgages, § 15, it is said that:
"By weight of authority a mortgage, if valid and properly executed and recorded according to the law of the state where the mortgage is executed and the property at the time is located, will be held valid even as against bona fide creditors and purchasers in another state to which the property is removed by the mortgagor, unless it contravenes the statute or settled law or policy of the forum."
I must concede, however, that it is generally agreed that Louisiana is among the very small minority — with Michigan, Pennsylvania and Texas — in which the contrary doctrine is established. But I do not find as a fact that that minority view has been expressed here since the enactment of Act No. 178 of 1936, which statute gives the impression of an intended change in public policy. Of course I realize that the Act of 1936 has no application to the case at bar, for it is concerned only with the effect of chattel mortgages executed in Louisiana. But it evidences a definite change in public policy toward the effect of a chattel mortgage in a jurisdiction other than that in which it is recorded, because, whereas formerly such a mortgage was effective only where recorded, by that statute it was made effective against third persons anywhere within the State of Louisiana if recorded in the parish in which it was executed and in the parish of the domicile of the mortgagor. The act declares that, in order to affect third persons without notice, both in the parish where recorded and outside the parish where recorded, but within the State of Louisiana, the mortgage shall be recorded in the office of the recorder of mortgages in the parish in which the act of mortgage is executed and also in the parish in which the mortgagor is domiciled. Thus, by this act, the legislature has declared a policy in favor of the recognition of chattel mortgages without the necessity of recordation in the place to which the chattel is removed.
It is true that there is a declaration in this statute limiting its effect to persons within the State of Louisiana, but that declaration merely evidences a realization that such an enactment cannot have statutory effect except within the state, and that each state in which such a Louisiana mortgage may be presented for enforcement must necessarily have the right to determine whether its own public policy shall prevent the enforcement of such a mortgage. If the Missouri mortgage with which we are concerned cannot be made effective here as against third persons unless recorded, then under what law can it be made effective even if recorded. The very statute which *Page 257 
I have just discussed provides that the chattel mortgage shall have effect in other parishes only if recorded where executed, and also if recorded at the domicile of the mortgagor. Since the mortgagor in such case is never domiciled in the state in which it is sought to enforce the mortgage, there could never be in this state a recordation which would comply with the requirements of that particular act.
Two cases are cited as authority for the view that Louisiana is definitely with the minority on the question under consideration.
The first of these is Brock v. Cupples (on rehearing), decided in 1916 by the Court of Appeal for the Second Circuit (No. 931 of their docket, unreported), before the enactment of the Act of 1936, and in which the Supreme Court refused a writ. A study of the record in that case will show that there were technical reasons for which that writ might have been refused. At that time the Supreme Court was not required to state reasons for the refusal of such writs, and it is obvious that the applicant for the writ omitted many documents required by law and later furnished them with a substantial apology for their original omission. In fact, opposition to the granting of the writ was filed and in it attention was called to these irregularities and omissions. The writ may have been refused on that ground. At any rate, however, at that time the Louisiana public policy definitely required a recordation in each jurisdiction in which it might be sought to enforce the mortgage.
The other case, which is frequently pointed to, is Devant v. Pecou, 13 La.App. 594, 128 So. 700, but that case also was decided long before the enactment of the statute of 1936.
I am concerned with the effect of the establishment in Louisiana of the minority doctrine. Let it not be believed that I am concerned with the possible effect on investment corporations which may lend money on such mortgages. It is quite true that such a minority doctrine will seriously discourage such corporations from the lending of money in such minority jurisdictions. But the real effect will be felt by those persons who desire to make use of the facilities furnished by such lending corporations. It is well known that an overwhelming majority of automobiles, radios, washing machines, and such other similar modern conveniences and necessities, are purchased with funds resulting from the execution of chattel mortgages, and, if such funds are to be curtailed as the result of the definite establishment of this minority doctrine, it is the people of the state who will ultimately feel the effects. If we are to make use of chattel mortgages in Louisiana, there should be a realization that chattel mortgage laws should be classed among those statutes which should be uniformly interpreted all over the United States.
Since I believe that there is in our jurisprudence at this time no case which definitely requires the establishment of this doctrine and since I see, in Act No. 178 of 1936, a declaration of a change in public policy, I respectfully dissent. *Page 379