Chetopa State Bank v. Manes

• Citation: 221 Ark. 784,255 S.W.2d 957
• Decision Date: 16 March 1953
• Docket Number: No. 4-9946,4-9946
• Parties: CHETOPA STATE BANK v. MANES et al.
• Court: Supreme Court of Arkansas

Page 957

255 S.W.2d 957

221 Ark. 784

CHETOPA STATE BANK v. MANES et al.

No. 4-9946.

Supreme Court of Arkansas.

March 16, 1953.

J. L. Bittle, Heber Springs, for appellant.

G. P. Houston, Heber Springs and Gordon Armitage, Searcy, for appellee.

McFADDIN, Justice.

Appellant, Chetopa State Bank, of Chetopa, Kansas (hereinafter called 'Bank') filed this action in replevin to repossess a Chevrolet Coupe from appellee, Manes. ¹ From a Jury verdict and judgment for Manes, the Bank prosecutes this appeal.

On April 3, 1950, M. M. Weaver and Wanda Weaver, his wife, were residents of Chetopa, Kansas. They obtained a loan from the Bank for $743.50, secured by a chattel mortgage on the Chevrolet Coupe here involved. The mortgage was duly filed and recorded in the County Clerk's Office, as required by the Kansas law. ² The latter part of April or early May, 1950, the Weavers secretly drove away from Kansas in the Chevrolet Coupe, and did not return. In late May, 1950, the Weavers were in Arkansas, and sold the Chevrolet Coupe to Frank Carder, an automobile dealer in Searcy, Arkansas, and exhibited and surrendered to him a Kansas Certificate of Title to the car, showing no lien claim of any kind. ³

Carder sold the Chevrolet Coupe to Barger, who had the car registered under the Arkansas Title Certificate Law, Act 142 of 1949, and obtained an Arkansas Title Certificate which showed no liens on the car. Barger then sold the Chevrolet Coupe to the appellee, Manes, who had the title transferred to himself and holds an Arkansas Title Certificate, dated July 20, 1951, showing a clear title.

As aforesaid, the Circuit Court trial resulted in a Jury verdict for Manes, because the Trial Court, over the Bank's general and specific objections and exceptions, instructed the Jury:

'* * * You are further instructed that the law of the State of Arkansas provides that one who holds a lien against an automobile in the form of a vendors lien or chattel mortgage or conditional sales contract or other lien shall file and register such lien with the State Revenue Department of the State of Arkansas, and that if and when such lien holder does file his evidence of his lien or claim against the automobile with the Revenue Department from that time on, notice to everybody that such lien exists, and the law further provides that if such lien or claim is not filed with the State Revenue Department that it is not notice to third persons dealing with reference to such automobile. So, gentlemen, if you find from a preponderance of the evidence in this case that the plaintiff does hold a valid unpaid chattel mortgage against this automobile and that there is an unpaid balance of some amount on said indebtedness then you will find for the plaintiff for the possession of said automobile or for the balance due on the indebtedness unless you further find from a preponderance of the evidence that the plaintiff has not and did not file evidence of his claim or lien with the Revenue Department of the State of Arkansas. In the event you find from a preponderance of the evidence the plaintiff did not file evidence of its indebtedness with the State Revenue Department and that this automobile was purchased by the defendant without such evidence having been filed with the Revenue Department by the plaintiff, then you will find that the defendant was an innocent purchaser of the automobile and that the lien of plaintiff is not binding upon him.'

We have italicized the concluding portion of the Instruction to call attention to the fact that it was in effect a peremptory instruction for the defendant, since there was no claim that the Bank had ever filed evidence of its Certificate of Indebtedness with the Revenue Department of Arkansas.

It is asserted by Plaintiff and not denied by Defendant that the filing of the mortgage in Kansas perfected the Bank's lien, and that the Bank's mortgage was good in Kansas, even against an innocent purchaser. We held in Nelson v. Forbes & Sons, 164 Ark. 460, 261 S.W. 910, and reaffirmed in Hinton v. Bond Discount Co., 214 Ark. 718, 218 S.W.2d 75, ⁴ that 'a chattel mortgage, executed and valid in another State, and properly recorded there, will be enforced in Arkansas on removal to this State, even against an innocent purchaser.' So the Bank in the case at bar contends that it is entitled to recover the car against Manes.

But Manes relies on Act 142 of 1949, which is the Arkansas Uniform Motor-Vehicle Administration, Certificate of Title and Antitheft Act, and claims that such Act became effective after Hinton v. Bond Discount Co., supra, and changed the rule of law stated in that case. Manes claims that the provisions of Act 142 of 1949 are mandatory; that the Bank was required to have the foreign vehicle registered in this State to perfect its lien; and that Manes is entitled to prevail because he purchased the car in reliance on an Arkansas Title Certificate which showed no lien.

We are thus brought squarely to the question, whether a prior lien on a motor vehicle good in the State where the parties lived and the transaction occurred, is superior to an after acquired title when the car is brought into Arkansas and a Title Certificate obtained from the Revenue Department of this State which shows no lien. We have never decided the precise question, since Act 142 of 1949 is a comparatively recent statute, but Courts of other States have decided cases involving somewhat similar questions; and there is a diversity of holdings. ⁵

The leading case on one side is that from the Supreme Court of Florida in Lee v. Bank of Georgia, 159 Fla. 481, 32 So.2d 7, 13 A.L.R.2d 1306, in which it was held that a prior mortgage duly recorded in Georgia, and covering an automobile, was inferior to the after acquired title in Florida, when the purchaser relied on a title certificate issued by the Florida Motor Vehicle Commission.

The leading cases on the other side are from Arizona, Ohio, and North Carolina. The Supreme Court of Arizona, in Ragner v. General Motors Acceptance Corp., 66 Ariz. 157, 185 P.2d 525, held that a prior chattel mortgage on an automobile, duly recorded in Texas and Louisiana, was superior to a title subsequently acquired in Arizona, in reliance on a title certificate issued by the Arizona Highway Department and showing no liens. The Court of Appeals of Ohio, in Associates Discounts Corp. v. Colonial Finance Co., 88 Ohio App. 205, 98 N.E.2d 848, reached the same conclusion on the law as did the Arizona Court. A result in accord with the Arizona holding was also reached by ...