BTC Leasing, Inc. v. Martin

• Decision Date: 20 April 1984
• Docket Number: No. 83-CA-650-MR,83-CA-650-MR
• Citation: 685 S.W.2d 191
• Parties: BTC LEASING, INC., a/k/a Bulk Transit Leasing Corp., Inc., Appellant, v. Billy R. MARTIN, Appellee.
• Court: Kentucky Court of Appeals

Page 191

685 S.W.2d 191

BTC LEASING, INC., a/k/a Bulk Transit Leasing Corp., Inc., Appellant, v. Billy R. MARTIN, Appellee.

No. 83-CA-650-MR

Court of Appeals of Kentucky.

April 20, 1984.

As Modified On Rehearing

Aug. 24, 1984.

M. Gail Wilson, Bertram & Wilson, Jamestown, for appellant.

James Frazer, Frazer & Jones, Monticello, for appellee.

Before McDONALD, REYNOLDS and WHITE, JJ.

McDONALD, Judge:

This appeal is about a houseboat subjected to a mechanics' or materialmen's lien and appellee Billy R. Martin's attempt to enforce that lien against the appellant, BTC Leasing, Inc., a/k/a Bulk Transit Leasing Corporation, Inc., a purchaser later in time to its creation. In examining the various statutes purportedly granting such a lien interest in the boat, we have concluded that Martin failed to assert his rights under the proper statute. It follows that BTC cannot, therefore, be charged with constructive notice of the lien. Accordingly, we reverse the judgment of the Russell Circuit Court.

Billy R. Martin acquired his interest in the houseboat, a craft sixty feet in length and equipped with a 135 horsepower Chrysler outboard motor, on or about December 1, 1978, when he filed a lien statement with the Wayne County Clerk. The basis of Martin's lien was for substantial repair and remodeling work done on the boat from November, 1977, to July, 1978, for which he had not been paid by its then owner, William Burkett. K.R.S. 376.270 and K.R.S. 376.360 were alternately cited in the lien statement as the statutory provisions creating the lien in Martin's favor. At this time, the houseboat, while located in Wayne County at the Conley Bottom Resort boat dock, was registered in Pulaski County. No notice of the lien was ever indicated on the registration statement, however, as those documents are generally not utilized for such purposes.

Within days of the initial filing of the lien, Martin sought to enforce the lien by intervening in an action concerning title to the houseboat pending against William Burkett in Wayne Circuit Court. (78-CI-199: Cedar Lakes Foods of Tennessee, Inc. v. William Burkett ). By the time that dispute went to trial, the original plaintiff had withdrawn from the litigation to be replaced by Martin. This proceeding was vigorously contested by Burkett as the first trial resulted in a deadlocked jury. A second trial held on August 24, 1982, reached a much different conclusion because Burkett chose not to defend the action. Consequently, the Wayne Circuit Court, on September 8, 1982, entered judgment against Burkett and specifically found that he was indebted to the appellee to the amount of $17,000, and that the lien against the houseboat was valid and enforceable through a sale by the Master Commissioner for Wayne County.

The most plausible explanation for Burkett's decision to discontinue his defense of the action in Wayne Circuit Court is that in the intervening two years between the first and second trials, he had completely divested himself of any interest in the houseboat in favor of his ex-wife, Carolyn Burkett Lynch. This was accomplished by a property division in a divorce action between them. The actual transfer of title to Carolyn Lynch apparently took place sometime in the latter half of 1980 or the early months of 1981 as her name was listed as the owner of record on a certificate of registration for the houseboat issued by the circuit court clerk of Pulaski County on March 3, 1981.

Shortly after acquiring title, Carolyn Lynch, despite the pendency of Martin's claim, removed the boat from Wayne County to Russell County where it was moored at Alligator Boat Dock Number 2 on Lake Cumberland. In the ensuing months, she then entered into negotiations with BTC Leasing, Inc., for the sale of the boat. As a preliminary to the final purchase, BTC tried to discover the existence of any liens or other encumbrances upon the houseboat. Unaware of its earlier history in Wayne County, BTC logically made no inspection of the records in that county. BTC did, however, research the clerk's records in both Russell and Pulaski Counties and got assurances of good title from Carolyn Lynch herself. When these efforts produced no evidence of any cloud upon her title, BTC proceeded to buy the boat at a price of $27,000 on October 28, 1981.

BTC's possession of the boat remained undisturbed until early September, 1982. Then Martin received a favorable jury verdict in the suit to enforce the lien in Wayne County and was awaiting the actual entry of judgment. Realizing that the removal of the houseboat from Wayne County would render meaningless any forthcoming order for a commissioner's sale, Martin instituted this action before the Russell Circuit Court. Along with seeking a judicial sale in Russell Circuit Court, Martin requested and was granted a temporary restraining order, and later an injunction, prohibiting BTC from moving the boat from its dock on Lake Cumberland. Whether BTC could qualify as a bona fide purchaser which took without notice of the outstanding lien was identified as the one true issue which would be determinative of Martin's claim. Both parties moved for summary judgment. The Russell Circuit Court granted Martin's motion, concluding specifically that Martin's lien was properly filed with the Wayne County Clerk according to K.R.S. 376.270. As a result, BTC was charged with constructive notice of the lien and could not claim the status of a bona fide purchaser. A commissioner's sale in Russell County was ordered, but BTC promptly sought this appeal before the execution of that order.

BTC'S FIRST ASSIGNMENT OF ERROR CONTENDS THAT THE ENTRY OF SUMMARY JUDGMENT WAS IMPROPER DUE TO THE EXISTENCE OF A GENUINE ISSUE OF FACT.

This position is indeed odd in light of the fact that BTC also moved the trial court to utilize a summary judgment on its own behalf. Having taken the stance by summary judgment motion that there was no genuine issue of fact, we feel that BTC should not now be permitted to assume a completely inconsistent posture to defeat the decision of the trial court by claiming there was a genuine issue of fact. Additionally, the circumstances of this case clearly demonstrate that this is a dispute ideally suited to resolution by summary judgment proceeding. While BTC's brief makes vague references to unknown facts concerning the manner in which Carolyn Burkett Lynch acquired title to the houseboat, those facts, even if admitted, bear no relation to the real issue, namely, whether BTC bought the boat without notice of Martin's lien, thus qualifying as a bona fide purchaser. This being essentially a question of law, and as the facts surrounding BTC's acquisition of the boat are undisputed, the trial court properly considered the case on a motion for summary judgment. Bell v. Harmon, Ky., 284 S.W.2d 812 (1955), and Bonded Elevator, Inc. v. First National Bank of Louisville, Ky., 680 S.W.2d 124 (1983).

NEXT, BTC ASSERTS THAT THE TRIAL COURT ERRED IN ITS APPLICATION OF THE LAW REGARDING STATUTORY LIENS SO AS TO CHARGE BTC WITH CONSTRUCTIVE NOTICE OF MARTIN'S CLAIM TO THE HOUSEBOAT.

A survey of the numerous statutes creating such interests indicates that three separate types of liens are at least superficially applicable to the case now before the Court.

K.R.S. 376.270, lien on motor vehicle for repairs, storage, or accessories--filing of statement with county clerk, contains the first of these statutory grants. The statute generally makes provision for a lien on motor vehicles upon which the lienor has done repairs or furnished supplies. It should be noted that this is the statute relied upon by the Russell Circuit Court in granting Martin's request for a forced sale. As an alternative to K.R.S. 376.270, Martin in his lien statement also asserted an interest in the houseboat under K.R.S. 376.360(2) which also bestows a lien upon those who have performed repairs or given supplies to certain specified watercraft. Finally, K.R.S. 376.280, which authorizes the public sale of both motor vehicles and boats by those who are still owed for the provision of similar services, is also relevant. While there is a scarcity of case law and other interpretive materials concerning these enactments, what little does exist, when supplemented by the plain language of the statutes and common sense, reveals that only the last, K.R.S. 376.280, is applicable to the present situation. We conclude, however, for reasons hereinafter stated, that Martin failed to assert his interest under that statute and that BTC cannot be charged with constructive notice of the purported lien and therefore stands as a bona fide purchaser. Consequently, we reverse the judgment of the Russell Circuit Court.

Our determination that the trial court improperly utilized K.R.S. 376.270 to support Martin's claim on the houseboat is founded upon the simple proposition that such a vessel is not a motor vehicle as required by that statute. The lien granted in K.R.S. 376.270 is, by its clear and simple terms, available only to those individuals "engaged in the business of selling, repairing or furnishing accessories or supplies for motor vehicles " (emphasis added), and covers only "the reasonable or agreed charges for repairs, work done on accessories or supplies furnished for the vehicle, and for storing or keeping the vehicle...." (Emphasis added.) Under this statute possession of the vehicle is not a prerequisite for the existence of the lien which may be perfected and preserved by following the procedures set out in K.R.S. 376.010 and K.R.S. 376.080, the statutory guidelines for the creation and maintenance of mechanics' and materialmen's liens. While we must concede that Martin has indeed satisfied all these procedural requirements, we still cannot bestow upon him the protection of a lien under K.R.S. 376.270 as the houseboat involved in this dispute does not qualify as a "motor vehicle." Traditionally, Kentucky law has never...