Court Opinion

ID: 9634416
Source: CourtListenerOpinion
Date Created: 2023-08-22 13:11:11.121431+00
Date Added: 2024-06-11T18:09:02.469749
License: Public Domain

*30Henderson, J.,
filed the following dissenting opinion.
I do not agree with the construction placed upon Code (1957), Art. 21, sec. 66 by a majority of the Court, and think the matter of sufficient importance to state my reasons.
We held in Auto. Accep. Corp. v. Univer. Corp., 216 Md. 344, 353, that the holder of a contract of conditional sale was an “incumbrancer” within the meaning of the statute, (see note 19 Md. L. Rev. 157, on this point) and assumed (p. 359) that the statute operates as a bar only in favor of “subsequent” incumbrancers. The dissent in that case was based on two contentions, that the statute was designed to protect only those who dealt with the chattel sold in reliance on the possession of the buyer, and that a conditional vendor is an owner, not a lienor. Both opinions cited with approval, Tatelbaum v. Nat’l Store Etc. Co., 196 Md. 599. Chief Judge Brune, for the majority in the Auto. Accep. case (p. 356) quoted Judge Markell’s statement in Tatelbaum as follows:
“In most states recording laws effect a sort of race of diligence in which holders of instruments recorded late and purchasers and lien creditors rank in order of time of recording or acquiring a lien by judicial proceedings. In Maryland the recording laws early proceeded on a different principle, viz., of protecting purchasers and creditors ‘who may trust such party after the date of the said deed’ * * * or ‘creditors who have become so before the recording of such deed or conveyance, and without notice of the existence thereof’ * * *. By the Act of 1949 the conditional sale act of 1916 seems to have been so changed as to follow the plan of recording laws in other states and to depart from the peculiar principle of Maryland recording laws. Until 1949 the conditional sale act of 1916 followed the Maryland principle; ‘third parties’ included creditors who ‘trusted’ the conditional vendee after delivery of the chattels and before recording of the contract * *
Since Judge Marked was dealing with a case that arose under the law as it stood prior to 1949, although the decision was *31handed down in January, 1951, his comment for the Court has been characterized as dictum, (see note 21 Md. L. Rev. 160, 163) but it is a clear and elaborate one, not lightly to be disregarded or ignored. Moreover, by Ch. 577 of the Acts of 1951, presumably with knowledge of this Court’s decision and the interpretation placed upon the Act of 1949, the Legislature repealed and re-enacted sec. 66 without substantial change, except to insert the words “without notice” after the word “acquired.” By established cannons of construction this was in effect an adoption of the gloss placed upon the statute by this Court.
Judge Hammond in his dissent in the Auto. Accep. case, (p. 361) said this: “Maryland passed its first recording act as to conditional sales agreements in 1916. Unless recorded, the seller’s reservation of title was ineffective against ‘third persons without notice.’ Third persons were construed to mean all who trusted the conditional vendee after he had obtained possession, whose financial position would be worsened if the reservation of title was effective, including general creditors. * * * This statutory protection for all who actually or presumptively relied on the vendee’s possession was far more liberal than the protection given by the Uniform Conditional Sales Act or the laws of most of the States. The Uniform Act protects ‘any purchaser from or creditor of the buyer, who, without notice’ * * * purchases the goods, or acquires a lien on them by attachment or levy. Generally only purchasers from, or judicial lien creditors of, the conditional vendee take precedence over the reserved title of the vendor under an unrecorded contract. In 1949 at the instance of the large credit companies who finance most of the conditional sales, the Maryland Legislature expressed the purpose * * * to protect only purchasers and lienors for it eliminated the words ‘third persons without notice’ and in their place put ‘subsequent purchasers, mortgagees, incumbrancers, landlords with liens, pledgees, receivers, and creditors who acquired a lien by judicial proceedings on such goods and chattels * * *.’ As Judge Markell said for the Court in the National Store Fixture Sales case * * *: ‘By the Act of 1949 the conditional sale act of *321916 seems to have been so changed as to follow the plan of recording laws in other states and to depart from the peculiar principle of Maryland recording laws.’ ”
I take it that everyone was in agreement in the Auto. Accep. case that the Act of 1949 adopted the concept of a “race of diligence,” although Judge Hammond went on to discuss the point of reliance on possession, there material. There can be little doubt that creditors who obtain a lien by attachment or execution without notice, are preferred under sec. 5 of the Uniform Conditional Sales Act, whether the debt is antecedent or subsequent. See 3 Jones, Chattel Mortgages and Conditional Sales, § 1434, and cases cited. The same result has been reached in other states under Acts similar to ours. See Commercial Credit Corp. v. Smith, 148 Atl. 756 (N. J.), Miller v. Raile & Morrison, 39 N. E. 2d 172 (Ohio) and Baker v. Hull, 166 N. E. 175 (N.Y.). The “race of diligence” concept seems to be implicit also in the Uniform Commercial Code (1958 text), secs. 9-301 and 9-312.
The Maryland cases since the Auto. Accep. case (supra) throw little light on the problem. In Rupp, Trustee v. Johnston Co., 226 Md. 181, 187, we distinguished Tatelbaum v. Pantex Mfg. Corp., 204 Md. 360, where it was held that because a “trustee”, as distinguished from a “receiver”, was not covered by the act, the act was not thereby rendered unconstitutional. In answer to a contention that the appellant was not a subsequent incumbrancer, we held in Rupp that he was, because it was shown that the advances had been made subsequent to the delivery of the chattels in question, and in reliance thereon. It was assumed that such a showing was necessary to allow recovery.
Aside from the apparent state of the authorities, however, I cannot agree with the Court’s construction in the case at bar. Assuming that the word “subsequent” modified not only “purchasers” but also “mortgagees”, and “incumbrancers”, we run into difficulties when we reach the classes next specified. I take it that the phrase “landlords with liens” cannot fairly be limited to only those landlords who become landlords after the delivery of the chattel. Evidently what is meant is the com*33pletion of the lien by distraint. Cf. Code (1957), Art. 53, sec. 18, which prefers the holder of a recorded conditional sales agreement to a distraining landlord. “Pledgees” obtain a lien only by delivery of the particular chattel, so to speak of a “subsequent” pledgee is meaningless. A “receiver” represents all creditors, whether prior or subsequent to the delivery of the chattel in question. I find nothing in the words quoted to import a severance between the classes served by the receiver. To my mind, the crucial time delineated in the phrase “creditors who acquired without notice a lien by judicial proceedings on such goods and chattels,” is the date of actual levy, which in the case at bar, preceded the recordation of the conditional sales contract by six days. For the reasons stated I would reverse the judgment.