Atlas Sec. Co. v. Grove

• Decision Date: 19 December 1922
• Docket Number: No. 11384.,11384.
• Citation: 79 Ind.App. 144,137 N.E. 570
• Parties: ATLAS SECURITIES CO. v. GROVE.
• Court: Indiana Appellate Court

79 Ind.App. 144

137 N.E. 570

ATLAS SECURITIES CO.

v.GROVE.

No. 11384.

Appellate Court of Indiana, Division No. 2.

Dec. 19, 1922.

Appeal from Circuit Court, Sullivan County; Wm. H. Bridewell, Judge.

Suit by Elza Grove against one Bedwell in which the Atlas Securities Company intervened. From a decree for plaintiff, intervenor appeals. Reversed with direction to overrule demurrers and with leave to further plead.

Louis Rosenberg, of Indianapolis, and Lindley & Bedwell, of Sullivan, for appellant.

McMAHAN, J.

Ray and Walter Wyman, being the owners of an automobile, sold the same to one Bedwell on October 25, 1920, for the sum of $317.40, $100 of which was paid in cash at the time of sale, the balance being evidenced by six promissory notes payable in a bank in this state, and due in one, two, three, four, five, and six months from date. The contract of sale was in writing, and provided that the title to the automobile should remain in the vendors until the whole of the purchase price was paid, that Bedwell should keep the automobile free from all liens and incumbrances on account of “taxes, assessments, or otherwise,” and that he should make all repairs necessary to keep it in first-class condition. The machine at once passed into the possession of Bedwell, who about one week later took it to appellee, a mechanic, to have some repairs made on it. After the repairs were made, the machine was turned back to Bedwell. Appellee filed notice of his intention to hold a lien on the automobile pursuant to section 8294d, Burns' 1921, Acts 1915, p. 621. Bedwell having failed to pay appellee, the latter filed his complaint herein against Bedwell to foreclose a claimed mechanic's lien on the automobile for the amount of such repair bill.

Appellant filed an intervening petition in which it claimed to be the owner of the automobile and, on being permitted to defend, without any amended complaint being filed, it filed an answer in three paragraphs. The first paragraph of answer alleged that appellant was and had been the owner of the automobile since October 25, 1920, that appellant did not authorize the making of any repairs or the furnishing of the materials described in the complaint, and that such repairs and materials were furnished at the request of Bedwell alone. The second paragraph was withdrawn.

The third paragraph alleged that Ray and Walter Wyman, being the owners of the automobile, did, on October 25, 1920, sell and deliver the same to Bedwell under a conditional sale contract, wherein it was agreed that the title thereto should remain in the Wymans until the purchase price was fully paid. This contract was made a part of the answer and provided that Bedwell should keep the automobile free from all liens and incumbrances on account of “taxes, assessments or otherwise”; that all repairs or accessories attached to the automobile during the life of the contract became a part thereof; and required Bedwell to make all repairs necessary to keep the property in first-class condition. It also provided that the vendors, in case Bedwell failed to perform his part of the contract or failed to pay the balance due on the purchase price, or attempted to incumber the automobile, had the right to the possession of the automobile. It was further alleged in this paragraph of answer that said Ray and Walter Wyman, on October 25, 1920, sold and assigned said contract and all their right and interest in said automobile to appellant; that, after said assignment to appellant, it had been and was the owner of said automobile; that at no time prior to the making of the repairs mentioned in the complaint did appellant have any knowledge that Bedwell would cause said repairs to be made; that there were no negotiations between appellant and Bedwell concerning the making of such repairs; that the only right and powers Bedwell had in relation to and concerning the automobile were those contained in said contract; that Bedwell had no authority to use or repair said automobile other than set out in the contract; that appellant never at any time or manner other than set out in the contract authorized, suffered, or permitted appellee or Bedwell to make any repairs; that all repairs made by appellee were made after October 25, 1920, and that Bedwell had failed to pay the balance due and owing appellant on the purchase price.

A demurrer having been sustained to each of these answers, appellant excepted, and, refusing to plead further, the court entered a decree in favor of appellee foreclosing the lien.

[1] The first contention of appellant is that the court erred in sustaining the demurrer to each paragraph of answer, for the reason that the Motor Vehicle Lien Law (Acts 1915, p. 621), is unconstitutional. But this question was not raised in the trial court, either by demurrer or otherwise, and consequently is not presented on appeal. If it were, it would be our duty to transfer this appeal to the Supreme Court for want of jurisdiction. As bearing upon this question, however, see Jensen v. Wilcox Lumber Co., 295 Ill. 294, 129 N. E. 133, where a similar statute was held void on the ground that it was class legislation. Appellant, however, has presented other questions calling for serious consideration.

In so far as the record discloses, appellee had no actual notice of the retention of title, nor did appellant know that the automobile had been placed with appellee to be repaired. There is no allegation in the complaint or in either paragraph of answer that the repairs made by appellee were or were not necessary to keep the automobile in “first-class condition.”

It is to be noted that we are not dealing with a claim of a mechanic to a common-law lien which depends for its validity, as to third parties at least, upon the retention of possession by the mechanic. Here appellee, after the repairs were made, parted with possession and returned the automobile to the conditional vendee. A consideration of some cases involving the right of a mechanic in possession and claiming a common-law lien as against a conditional vendor and a prior mortgagee may be helpful in determining the question here involved.

In Baughman Automobile Co. v. Emanuel, 137 Ga. 354, 73 S. E. 511, 38 L. R. A. (N. S.) 97, the mechanic, having retained possession of the property repaired, was attempting to enforce a common-law lien against the conditional vendor, who knew that the mechanic was making the repairs. The mechanic also had notice of the rights of the conditional vendor. It was held that the lien of the mechanic was subordinate to the right of the vendor. A like ruling was made in Small v. Robinson, 69 Me. 425, 31 Am. Rep. 299.

While there is not complete harmony among the cases, the great weight of authority is to the effect that a like rule prevails as to a lien secured by a duly recorded chattel mortgage, and that such takes precedence over a mechanic's lien for repairs subsequently done at the purchaser's request. Denison v. Shuler, 47 Mich. 598, 11 N. W. 402, 41 Am. Rep. 734;Sargent v. Usher, 55 N. H. 287, 20 Am. Rep. 208; Small v. Robinson, supra; Carrington v. Ward, 71 N. Y. 360.

The principle is believed to be universal, says Chief Justice Marshall, that a prior lien gives a prior claim, which is entitled to prior satisfaction, out of the subject it finds, unless the lien be intrinsically defective, or be displaced by some act of the party holding it, which shall postpone him in a court of law or equity to a subsequent claimant. Rankin v. Scott, 12 Wheat. 177, 6 L. Ed. 593.

[2] By a long line of decisions, where a statute creates a lien, that lien, as contradistinguished from a common-law lien, is held not to take precedence of a prior contractual lien where the creating statute does not clearly show or declare an intention to cause the statutory lien to override the earlier one. This is true even where the statutory lien arises for work done on, and to the betterment of, the property in question. Wilson v. Donaldson, 121 Cal. 8, 53 Pac. 404, 43 L. R. A. 524, 66 Am. St. Rep. 17;Adler v. Godfrey, 153 Wis. 186, 140 N. W. 1115;Reeves & Co. v. Russell, 28 N. D. 265, 148 N. W. 654, L. R. A. 1915D, 1149, and cases cited in annotation at page 1154; Shaw v. Webb, 131 Tenn. 173, 174 S. W. 273, L. R. A. 1915D, 1141, Ann. Cas. 1916A, 626, and cases cited.

The authorities governing the right of a mechanic to a common-law lien as against a mortgage of personal property are conflicting. Thus in Denison v. Shuler, 47 Mich. 598, 11 N. W. 402, 41 Am. Rep. 734, it was held that such a lien attached only to the mortgagor's interest. Other cases uphold the priority of such a lien over the mortgagee's title, where it can be fairly implied that the mortgagee consented that the mortgagor might have the property repaired. In Watts v. Sweeney, 127 Ind. 116, 26 N. E. 680, 22 Am. St. Rep. 615, it was held that a mechanic was entitled to foreclose such a lien as to the mortgagee of a locomotive, the mortgagor being a common carrier, and such locomotive being necessary in the operation of the carrier's business, and the repairs also being necessary. This was upon the theory that where such machinery was intrusted to the custody of a mortgagor for a long period of time, to be used by the mortgagor in the operation of a railroad, it would be presumed against the mortgagee that all necessary repairs were to be made, and in case of such necessary repairs the mortgagor was constituted the agent of the mortgagee in having such repairs made. The court, after having held that the mortgagee was presumed to have contracted with a knowledge of the law giving to a mechanic a lien, said:

“Where the lien is purely a statutory one, or where the property is of such a character that it would not be reasonable to anticipate the necessity for any needed repairs for the period of time the property is to or does remain in the possession of the mortgagor, or when it is but reasonable to expect the...