Associates Financial Services Co., Inc. v. O'Dell
| Decision Date | 03 July 1980 |
| Parties | , 29 UCC Rep.Serv. 1422 ASSOCIATES FINANCIAL SERVICES COMPANY, INC. v. William F. O'DELL and Mary E. O'Dell, his wife, and A. G. Turley, Individually and t/d/b/a A. G. Service, Appellants. |
| Court | Pennsylvania Supreme Court |
Armand R. Cingolani, Jr., Cingolani & Cingolani, Butler, for appellants.
Reed J. Davis, Pittsburgh, for appellee.
Before EAGEN, C. J., and O'BRIEN, ROBERTS, NIX, LARSEN, FLAHERTY and KAUFFMAN, JJ.
This case involves the common law doctrine of possessory liens. 1 On March 25, 1975, appellants William F. and Mary E. O'Dell purchased a tractor from Anderson Sales Service, Inc. under an installment sales contract and security agreement. The contract and agreement were then assigned to appellee Associates Financial Services Company, Inc. In February 1976, William O'Dell drove the tractor in the course of business to Texarkana, Texas where it became disabled. O'Dell requested appellant A. G. Turley, whose business in Zelienople, Pennsylvania included truck towing, repairs, and storage, to drive to Texas and haul the tractor back to Pennsylvania. Turley complied with this request, incurring expenses of $2,772.
Meanwhile the O'Dells defaulted on the payments owed Associates under the installment sales contract. Associates, finding the tractor in Turley's possession, brought this action in replevin against Turley and the O'Dells. Turley counterclaimed that he was entitled to a possessory lien on the tractor for expenses incurred in hauling and storing the tractor. The trial court awarded Associates possession of the tractor, but granted Turley a possessory lien on the tractor for the claimed expenses of $2,772. The Superior Court, 396 A.2d 1324, reversed the trial court in part, holding that a possessory lien was not validly imposed upon the tractor because associates never consented to Turley's services. We agree and accordingly affirm. 2
"(I)t is a well-settled principle of the common law that he who by labor, skill, or materials adds value to the chattel of another . . . has a possessory lien thereon for the value of his services and may retain the chattel in his possession until the same be paid." Brown on Personal Property 394-95 (3rd ed. 1975); see e. g. Saxton v. Gemehl, 72 Pa.Super. 177 (1919). At its inception, the common law possessory lien was restricted to those circumstances where a lien creditor rendered his services upon the implied promise of the debtor to repay him. Since the action of assumpsit was not recognized at early common law, the possessory lien provided such creditors an extrajudicial remedy to collect their debt. Consistent with this limited purpose, the lien did not arise where the creditor had an action at law upon an express contract. When the action of assumpsit on contracts implied in fact became available, however, the possessory lien was not abolished, but for reasons which are not clear was instead extended to creditors under express contracts. See Brown on Personal Property, supra at 394.
Possessory liens are fundamentally consensual in nature, arising from an agreement, either express or implied, between the owner of the goods and the artisan who renders services for those goods. See e. g. Younger v. Plunkett, 395 F.Supp. 702, 707 (E.D.Pa.1975) ( Pennsylvania law). That possessory liens arise exclusively in the context of express or implied consent is long established in the jurisprudence of this Commonwealth. As this Court stated in Meyers & Bro. v. Bratespiece, 174 Pa. 119, 121, 34 A. 551, 551 (1896) (quotation omitted):
See Estey Co. v. Dick, 41 Pa.Super. 610 (1910); Stern v. Sica, 66 Pa.Super. 84 (1917); Hecht v. Valkone Dye & Finishing Works, 66 Pa.Super. 97 (1917); Bankers' Commercial Security Co. v. Brennan, 75 Pa.Super. 199 (1920); Leitch v. Sanford Motor Truck Co., 279 Pa. 160, 123 A. 658 (1924); Automobile Finance Co. v. Markman, 82 Pa.Super. 478 (1924); Midland Credit Co. v. White, 175 Pa.Super. 314, 104 A.2d 350 (1954); R. E. Lee, Power of Possessor of Personal Property to Create Lien for Repairs and Storage Charges Superior to Existing Interests of Others, 90 U.Pa.L.Rev. 910, 922-28 (1942); see also Welded Tube Co. v. Phoenix Steel Corp., 377 F.Supp. 74 (E.D.Pa.1974) ( Pennsylvania law); Younger v. Plunkett, supra.
There is nothing in this record to suggest that Associates expressly consented to appellant Turley's towing and storage services. 3 So too, nothing in the circumstances of this case suggests implied consent on the part of Associates. Associates obtained a security interest on the tractor to protect its loan from other creditors of the O'Dells, as well as from default by the O'Dells. Surely such circumstances do not support a conclusion that Associates authorized the O'Dells to encumber Associates' secured interest. Rather, they suggest that Associates intended that the O'Dells personally incur the expenses necessary to the maintenance of the tractor and thereby allow Associates to retain its security unencumbered. Additionally, at the time Turley entered the contract with the O'Dells, the disabled tractor did not pose a threat to the public welfare and Turley had ample opportunity to check the financial status of the tractor and arrange an appropriate method of payment. 4 Appellant Turley is therefore not entitled to a possessory lien on the tractor.
This holding does not unfairly dispose of appellant Turley's claim of monies owed for services rendered. When the O'Dells breached their contract with Turley, he could have sued them for contract damages. Further, our conclusion is consonant with the recognized importance of the free flow of credit to consumer and business transactions. "The commercial customs of to-day do not favor the tying up of personal property by liens; and, if the courts should now countenance any such general attitude toward the credit system . . ., business, as that term is presently understood, would soon come to a standstill." Welded Tube Co. v. Phoenix Steel Corp., 512 F.2d 342, 345 (3rd Cir. 1975), quoting Mitchell v. Standard Repair Co., 275 Pa. 328, 332, 119 A. 410, 411 (1923); see R. E. Lee, Power to Create Lien, supra at 927. Accordingly, the order of the Superior Court must be affirmed. 5
Order affirmed.
FLAHERTY, J., joined by LARSEN, J., files a dissenting opinion.
I respectfully dissent from the majority's opinion. The clear result of the opinion announced today is that whenever a person takes his vehicle to a service garage for maintenance or repair, the garageman, in order to insure his right to assert a common-law possessory lien in the event that the work is not paid for, will be required to determine whether there is a security interest against the vehicle, and if so, he will then have the task of seeking permission from the secured party to perform the work. This approach is unreasonable and impractical. To say, as the majority does, that the garageman has a contract action against the non-paying customer, ignores reality. Further, if the garageman keeps possession of the car after the work is completed, the customer who will not pay presumably has an action in conversion or replevin against the garageman. This result is unjust.
To say that the garageman can protect himself by checking the title for indebtedness is commercially unrealistic. While it is true that in Pennsylvania there is an indication of encumbrance on the certificate of title, it is highly unusual for drivers to carry with them their certificates of title. In fact, if there is a security interest, the secured party most likely holds the certificate of title. If the owner, for whatever reason, then, does not have the title accessible, the garageman will not readily be able to determine the existence or non-existence of a security interest. Even if the title is accessible and the secured party has been identified, but has multiple offices, which office does the garageman call? And if he calls, what constitutes legal authority for him to proceed with the work? Is the telephone call adequate? If so, with whom must he speak? 1
Thus, the majority's approach not only makes it difficult for the small businessman to assert his common-law rights against a delinquent customer for whom he has rendered services, but also sidesteps the central question in this case: "Who is the owner?" The reason that this question is central is that, as the majority states, the law in Pennsylvania is that a common-law possessory lien arises when an artisan renders services affecting another's goods at the request or permission of the owner of the goods. The majority, for reasons not explained, and contrary to the Vehicle Code, determines that O'Dell is not the "owner" of the truck. The Vehicle Code provides at 75 Pa.C.S.A. § 1133, Act of June 17, 1976, P.L. 162 No. 81 § 1:
If an owner creates a security interest in a vehicle for which a certificate of title has been issued by the Commonwealth, the owner shall immediately execute an application on a form prescribed by the department, naming the lienholder on the certificate, showing the name and address of the lienholder and the date of the security agreement. The certificate of title, together with the application and the required fee, shall be mailed or delivered to the department.
This section and those following consistently distinguish "owner" and "lienhold...
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