Baltimore Transit Emp. Credit Union v. Thorne

• Decision Date: 27 June 1957
• Docket Number: No. 167,167
• Citation: 214 Md. 200,134 A.2d 84
• Parties: BALTIMORE TRANSIT EMPLOYEES CREDIT UNION v. Walter I. THORNE and Joseph Hazard
• Court: Maryland Court of Appeals

Page 200

214 Md. 200

134 A.2d 84

BALTIMORE TRANSIT EMPLOYEES CREDIT UNION v. Walter I. THORNE and Joseph Hazard

No. 167.

Court of Appeals of Maryland.

June 27, 1957.

Rehearing Denied Sept. 24, 1957.

John W. Hessian, Jr., and Arnold Fleischmann, Towson (Smalkin, Hessian, Martin & Taylor, Towson, and Walter W. Hamill, Baltimore, on the brief), for appellant.

Bernard E. Stern and Allan H. Fisher, Jr., Baltimore (Leon Abramson, Baltimore, on the brief), for appellees.

Before BRUNE, C. J., and COLLINS, HENDERSON and PRESCOTT, JJ.

COLLINS, Judge.

This is an appeal from a decree sustaining respondents', appellees', demurrer to complainant's, appellant's, bill of complaint.

The bill of complaint, filed on January 19, 1956, by Baltimore Transit Employees' Credit Union against Walter I. Thorne and Joseph Hazard, for the purposes of this case, alleges that on February 3, 1955, Thorne borrowed from the complainant $4,257.50 and secured said loan by a promissory note accompanied by a chattel mortgage on a 1955 Ford automobile. This chattel mortgage was recorded in Baltimore County on May 26, 1955, three months and twenty-three days after its execution. Thorne failed to pay the indebtedness and there was due at the time of the filing of the bill of complaint $3,189.25, with interest from October 2, 1955. The said mortgage being in default, the complainant desires to foreclose it and sell the automobile to satisfy the mortgage lien. The complainant has been advised that on or about October 25, 1955, Thorne sold the automobile to Archway Motors, Inc. Later Archway sold the Ford to Joseph Hazard, who now illegally holds and retains possession of it. The bill asks that an order be passed directing Thorne to pay the complainant the sum of $3,189.25, with interest and costs; if said sum is not paid on or before a date to be fixed by the court, a decree may be passed declaring the mortgagor's right of redemption forever barred and that a trustee be appointed to make sale of the Ford free and clear of all claims of the parties to the cause and those claiming by, from or under them; that the proceeds of the sale, after deduction of costs and expenses, be paid to the complainant to the extent of its mortgage claim; and that the respondent, Joseph Hazard, be required to deliver the automobile to the complainant and be restrained and enjoined from secreting or disposing of it in any manner whatsoever.

The title to the Ford showed no lien and was permitted to remain in Thorne's possession and neither Archway nor Hazard had actual knowledge of the indebtedness or of the chattel mortgage. The chancellor sustained the demurrer to the bill with leave to amend. No amendment was made and an appeal was taken to this Court. The question before us is whether the chattel mortgage given by Thorne to the complainant, dated February 3, 1955, and not recorded until May 26, 1955, more than twenty days after its date, gave constructive notice to third parties from the time of its recording.

The following statutory provisions, Code 1951, Article 21, are pertinent here:

'Bills of Sale'

'49. No personal property, of any description whatever, whereof the vendor, mortgagor, or donor shall remain in possession, shall pass, alter or change, or any property therein be transferred to an purchaser, mortgagee or donee, as against subsequent purchasers * * * unless by bill of sale or mortgage acknowledged and recorded as herein provided; * * *.'

'53. Bills of sale shall be recorded in the county or city where the vendor or donor resides within twenty days from the date thereof. If the vendor or donor resides out of the State, and the personal property conveyed by such bill of sale is located in this State, then such bill of sale shall be recorded in the county where such property is located, or in Baltimore City, if it be located in said city, within twenty days from the date of such bill of sale.'

'54. A mortgage of personal property shall be executed, acknowledged and recorded as bills of sale.'

'56. Mortgages of personal property shall be valid and take effect, except as between the parties thereto, only from the time of recording, and in case of more than one mortgage, the one first recorded shall have preference.'

These will be referred to throughout the opinion as Section 49, 53, 54 and 56.

The provisions of Code 1951, Article 16, Section 30, first enacted as Chapter 325, Acts of 1868, are also pertinent here. It is there provided:

'Whenever any deed or bill of sale shall have been duly signed and sealed by the parties thereto, but shall not have been acknowledged by the said parties, or any one of them, in the manner or form, or before the person authorized to take such act or acknowledgment, the circuit court for the county in which, by law, the said deed or bill of sale ought to be or to have been recorded, or the circuit courts of Baltimore City, if the said deed or bill of sale ought, by law to be or to have been recorded in said city, may, upon the petition of any party to said deed or bill of sale, or his or their assigns, or any person claiming under them, setting forth the defects in the acknowledgment of said deed or bill of sale, pass an order directing the other parties thereto to appear and answer the said petition, and may cause notice to be given to such parties by summons or publication according to the practice of the said court, and may direct testimony to be taken in relation to the matters in said petition, or in said petition contained; and the said court may grant relief upon said petition by directing the said parties, or any of them, to acknowledge or re-acknowledge the said deed or bill of sale, as the case may require; and the order of the said court, passed in the premises, directing the said acknowledgment to be made as aforesaid, shall operate in the same manner and to the same extent, from the date of the said order, as if the said party, ordered as aforesaid to acknowledge or re-acknowledge the said deed or bill of sale, had thereupon so done; provided, however, that the rights of any person who shall not be a party to said proceedings, as aforesaid, shall not be in any wise affected by said order.'

The complainant contends that, although this chattel mortgage was not recorded within twenty days from its date, Archway and Hazard should be charged with constructive notice of it from the time it was actually recorded.

The chancellor, in sustaining the demurrer, stated that two constructions could be given to Section 56, read with the other Sections; one, that a mortgage of personal property would be valid and effective from the time of recording whether that time was within twenty days of its date or thereafter; the other, that such chattel mortgage would be valid and effective only from the time of recording within the twenty day period, so that the preference established by the statute would be between mortgages recorded within twenty days of their date. He also stated: 'There is a plausibility and appeal in the argument that the statutory language should be interpreted to make a chattel mortgage valid and effective from the time of record, whether or not that be within the twenty day period.' He was of opinion, however, that the authorities seemed to show that a strict construction be given to the requirement of recording within a specified time, and that that specified time was within the twenty day period.

Sections 49 and 53 were enacted in substantially their present from by Chapter 8, Acts of 1729. Also, that Act required chattel mortgages to be recorded in twenty days. The case of Gill v. Griffith, 2 Md. Ch. 270, 286, was decided at the March Term, 1848. There, a chattel mortgage was executed on March 22, 1845, renewed from time to time, but not recorded until June 18, 1846, to save embarrassment to the mortgagor. Other persons had relied on mortgagor's ostensible ownership of the property. It was there argued that a deed or mortgage of personal estate, whereof the vendor or mortgagor remained in possession, was not void by construction of law, even though it was not recorded in time, and that this position was shown to be sound, by referring to the Act of 1785, Chapter 72, Section 11, which, under the circumstances mentioned in the Act, authorized the Chancery Court to order such deed to be recorded. It was there said by the chancellor: 'But this power, by the provision of the section, cannot be executed to the prejudice of subsequent creditors and purchasers, and, therefore, the...