Court Opinion

ID: 5011298
Source: CourtListenerOpinion
Date Created: 2021-10-01 02:49:23.205287+00
Date Added: 2024-06-11T08:17:26.468159
License: Public Domain

YOUNG, Justice
(dissenting).
I disagree with the majority holding that under Article 1436 — 1, P.C. (Motors Vehicle Act), a municipality purchasing a motor vehicle in total disregard of the Act, acquires superior rights over a subsequent mortgagee who has fully complied with the Act in fixing his lien. As stated by Chief Justice BOND,' the record facts are undisputed; however, a further detail thereof is necessary: On March 6, 1940, the truck chassis in question (which R. M. Hedrick later assembled into a fire truck and made the subject of contract with Knox City) was sold by Ford Motor Company to Boling-Duggan, local automobile dealer, by issuance of manufacturer’s certificate, worded in form prescribed by the State Highway Department. The vehicle was on March 7th sold to Hedrick by Bol-ing-Duggan, on credit, evidenced by chattel mortgage and note for $770. Boling-Duggan did not at this time transfer title to Hedrick by use of form attached to the original manufacturer’s certificate, but merely “delivered” said certificate to its vendee, not noting thereon above lien. On July 17, 1940, Hedrick, doing business as Simplex Fire Apparatus Company, applied to J. Earl Presley (assignor of ap-pellee Motor Investment Company) for cash to take up balance of aforesaid debt; representing that Interstate Securities Company, then owner of the note and lien, held manufacturer’s certificate to the mortgaged property; at the same time representing to Boling-Duggan that he (Hed-rick) had lost his first manufacturer’s certificate, and requested a duplicate be issued to complete the Presley loan. Boling-Duggan at once wrote Ford Motor Company for another certificate covering the vehicle, which was furnished after notifying State Highway Department of the transaction. Boling-Duggan then executed the form of assignment attached to this manufacturer’s certificate, together with sworn affidavit, to Hedrick, d/b/a Simplex Fire Apparatus Company, assignee, still failing to note thereon the debt just mentioned. However, Hedrick delivered all papers to Presley, who issued check for $650 to Interstate Securities Company and retained possession of the manufacturer’s certificate, after marginal notation of his mortgage.
In the meantime (April 28), Hedrick appeared in Knox City, Texas, and made written proposal to the City officials for sale of the Ford chassis (then assembled into a fire truck), exhibiting the original manufacturer’s certificate as evidence of ownership. The deal was completed by the City’s acceptance of the written offer, authorizing $2,250 in warrants and delivery of same to Hedrick, who at once cashed the paper at a local bank. Appellant City admits noncompliance with Art. 1436 — 1, P.C. in the transaction, claiming exemption from the terms thereof under §§ 4, 11 and 60; resting its title to the truck solely upon Hed-rick’s representations, the contract of sale, and the consummation thereof by payment and possession.
The trial court established appellee’s mortgage as superior to the claim of Knox City; and this judgment, the majority reverses and renders on grounds stated in opinion on file. I respectfully suggest error in the majority reasoning and construction of Art. 1436 — 1, P.C., at least in the following particulars: First, in holding that the dealer, Boling-Duggan, passed no title to Hedrick which he could mortgage, because of their failure to procure and furnish a certificate of title, in face of plain terms of § 27 and Art. 6675a — 2, limiting the requirements of registration and license (i.e., securing certificate of title) to owners of vehicles “used or to be used upon the public highways of this State”; § 4 of the Act excludes a dealer from the definition of owner; § 22 further authorizing dealers, such as Boling-Duggan, to transfer a motor vehicle in any first sale and before same is subject to registration and license, by original manufacturer’s certificate. By this method, on July 17, Boling-Duggan lawfully assigned all right, title and interest in the truck to Hedrick, who, in turn, by virtue of § 41, was free to fix a valid lien thereon by noting on the certificate the date, name and address of the mortgagee.
*249Second, the majority has erred, in my opinion, in designating all transfers of the truck, after purchase from Ford Motor Company, as subsequent sales, impliedly concluding thereby that motor vehicles are susceptible of only one first sale. Here, it is apparent that the Legislature has dealt with automobiles in two phases, (a) before same are subject to registration and license, and (b) after such time, when Art. 6675a — 1, et seq. becomes equally applicable to cars used or to be used by owners upon the public highway. All dealings under the first classification just noted are evidenced by manufacturer’s certificates and are deemed “first sales” (§ 7) ; as the Department prescribes forms attached thereto, indicating “each subsequent transfer between distributor and dealer, dealer and dealer, and dealer to owner.” (§ 22). The manfacturer’s certificate in this record has three such assignment forms for legal transfer of a vehicle that has not been previously registered or licensed. A certificate of title is not required upon cars until after they become, subject to registration and license (Art. 6675a — 2) in transactions constituting “subsequent sales.” It follows that there may be numerous first sales of motor vehicles, as well as subsequent sales; and the majority has mistakenly characterized the assignment from Boling-Duggan to Hedrick by manufacturer’s certificate as void and violative of the Motors Vehicle Act. Under the majority interpretation, all cars in showrooms of dealers become “used cars” under § 10, as motor vehicles that have become the subject of a first sale; thus compelling dealers to register and license their merchandise (procuring certificates of title) before selling at retail. To the contrary, I find that § 27 of the Act and Art. 6686, R.S., Vernon’s Ann.Civ.St. Art. 6686, exclude dealers from the certificate -of title requirement even as to motor vehicles subject to registration; the latter article providing that any dealer “may, instead of registering each vehicle * * * apply for registration and secure a general distinguishing number * * * ”; and § 28 expressly enabling a dealer to convey by manufacturer’s certificate, thereby marking the transaction a first sale.
Third, no title whatever passed to Knox City; for, aside from the City’s claim of exemption under §§ 4, 11 and 60, of the Act, Hedrick’s written proposal was wholly inoperative as a transfer. It did not describe the assembled truck by motor or serial number; and, in the transaction, appellant City even permitted Hedrick to retain indicia of ownership sufficient, under the Act, to negotiate a subsequent mortgage. Article 1436 — 1, P.C., seems to be the sole method set up in this state whereby motor vehicles may be legally dealt with by anyone. This would certainly include municipalities in the purchase of such property. And the provisions of § 53, that all sales of motor vehicles shall be void without compliance with the Act is plainly applicable to vendor, Hedrick. It is unnecessary to discuss the exempt sections just noted, for their effect as a whole seems merely to relieve a municipality from title certificate requirements, unless the city vehicle be sold to one otherwise amenable to the Act. § 60. It is my opinion that, to secure valid title to their motor vehicles, the exempted class (such as municipalities) must not only comply with applicable provisions of Art. 1436 — 1, P.C., but also, under 6675a — 3, Vernon’s Statutes, must register same with the State Highway Department and receive a designated license plate, though without payment of fee. Ap-pellee’s claim of injury is directly referable to the failure of appellant City in this regard.
Nor does appellant possess rights superior to appellee’s, of which it can require adjustment in equity. As to the mortgagee, the possession of Knox City was illegal. Elder Chevrolet Co. v. Bailey County Motor Co., Tex.Civ.App., 151 S.W.2d 938; it having purchased the truck regardless of the statute, and the subsequent lien having validly attached.
It may well be assumed that neither party hereto has intentionally been at fault; but the trial court was amply warranted, under the facts and circumstances of this case, in applying the following general rule: “Our courts have uniformly held that where one of two persons, equally entitled to consideration, as far as their purposes are concerned, must suffer from the delinquency of a third, the loss more properly falls upon him, who, having readily at hand the means of protection, has failed to avail himself of them. Parma v. First Nat’l Bank of Cameron, Tex.Com.App., 63 S.W.2d 692.” Sackenreuther v. Winston, Tex.Civ.App., 137 S.W.2d 93, 97.
I think the majority erred in holding that lack of possession in the mortgagor *250Hedrick rendered appellee s mortgage “void ab initio.” It has already been shown that title to the truck remained in Hedrick perforce of appellant’s noncompliance with the Act and related provisions of our civil statutes. Thus, appellee’s lien must prevail over the nonexistent rights of the possessor, Knox City, and it is not essential to the validity of a mortgage that the chattel be in actual possession of the mortgagor. 9 T.J., Chattel Mortgages, § 34, p. 120; 14 C.J.S., Chattel Mortgages, § 27, p. 634; Yeager v. Laredo Nat. Bank, Tex.Civ.App. 146 S.W.2d 796. The rule just cited bears particularly upon Art. 1436—1, which is expressly given a liberal interpretation, so that the operation thereof may “materially safeguard dealings in motor vehicles and using the same as security * * *.”
The instant situation is quite analogous ,to Commercial Credit Co. v. American Mfg. Co., Tex.Civ.App., 155 S.W.2d 834, 840; appellant there being in the same position as Presley and Motor Investment Company here. The language of Judge Speer is very pertinent: “As harsh as it may seem, when appellant has neglected no duty encumbent upon it, and defendants have acquired a car from one who had title only subject to appellant’s rights, if either must lose it should be the one who, though without intention of doing a wrong, accepted a doubtful title.”
The trial court’s judgment should have been, in'all respects, affirmed.