City Finance Co. v. Perry
| Decision Date | 06 March 1953 |
| Parties | , 195 Tenn. 81, 36 A.L.R.2d 224 CITY FINANCE CO. v. PERRY. |
| Court | Tennessee Supreme Court |
Harry P. Rubert and Jess D. Ewing, Memphis, for plaintiff in error.
John C. Robertson and Hardison, Walton & Collins, Memphis, for defendant in error.
On November 23, 1951 Theo O. Fisher executed a chattel mortgage to plaintiff-in-error, City Finance Company, on a 1941 model passenger automobile to secure the payment of a loan that day made Fisher in the amount of $120. On November 27, 1951 City Finance Company's chattel mortgage lien was duly recorded in the Motor Vehicle Division, Tennessee Department of Safety, in Nashville, on the title certificate issued in the name of Fisher on said automobile, as provided by the Tennessee Motor Vehicle Title and Registration Law of 1951, being Chapter 70, Public Acts of 1951. There is no evidence that this chattel mortgage was recorded in the Register's Office at Memphis.
Thereafter, December 20, 1951, Fisher took this automobile to the garage of Perry and caused repairs to be made thereon to the amount of $120. Perry had no actual notice of the prior chattel mortgage to City Finance Company. Fisher did not pay the account for these repairs. Perry retained possession of the automobile so as to preserve his common law lien.
Fisher defaulted in payment of his chattel mortgage loan to City Finance Company. Therefore, on January 24, 1951 City Finance Company instituted a replevin suit against Fisher and Perry. Fisher did not resist. Perry did, on the ground that his common law lien was superior to the chattel mortgage lien of City Finance Company.
The Circuit Court adjudged the subsequent common law lien of Perry superior to the prior chattel mortgage lien of City Finance Company. The reason is not stated. City Finance Company has appealed to this Court, the above stated facts being stipulated.
The aforementioned Motor Vehicle Title and Registration Law of 1951 requires all owners of motor vehicles using the highways to register the same in the name of the owner with the Motor Vehicle Division of the Tennessee Department of Safety and to procure from it a certificate of title and a title card. This certificate is delivered to the owner if there be no lien or encumbrance appearing thereon. Otherwise, it is delivered to the person holding such lien shown in the certificate, and is held by such person until the lien be discharged. A notation of the discharge is then made upon the certificate, and it is delivered to the owner of the vehicle. Section 35(d) of the statute. The City Finance Company had complied with all these requirements of this statute before Perry made the repairs for which he insists that his lien is superior to the chattel mortgage lien of City Finance Company.
Section 77 of the statute provides that no person shall operate a motor vehicle upon the highways unless some occupant of the vehicle has in possession the certificate of title and title card 'except as otherwise expressly permitted in this Act'. This exception exists when there is a chattel mortgage lien upon the automobile. For, in that event, the certificate of title must be in the possession of the holder of the chattel mortgage, as heretofore noted.
Perry was charged with knowledge of this law. In the exercise of ordinary care he should have requested Fisher to exhibit his certificate of title which the law required to be in Fisher's possession unless it was being held by a lien holder. Fisher, of course, could not have presented the certificate, because it was lawfully in the possession of City Finance Company, the holder of the chattel mortgage. Therefore, upon Fisher's failure to exhibit this certificate, Perry would have been put on inquiry. Inquiry would have revealed the chattel mortgage of City Finance Company. '* * * 'whatever is sufficient to put a person upon inquiry, is notice of all the facts to which that inquiry will lead, when prosecuted with reasonable diligence and in good faith." Texas Co. v. Aycock, 190 Tenn. 16, 28, 227 S.W.2d 41, 46, 17 A.L.R.2d 322.
It is, however, the insistence of Perry that by reason of the provisions of section 69(a) of the statute the recording of the lien on the title certificate is not constructive notice to one acquiring a subsequent common law lien. Section 69(a), in so far as pertinent to this insistence, is as follows:
'such filing and the notation of the lien or encumbrance upon the certificate of title as provided in this Act shall constitute constructive notice of all liens and encumbrances against the vehicle described therein to creditors of the owner, to subsequent purchasers and encumbrances except such liens as may be authorized by...
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