Finch v. Miller

• Decision Date: 13 February 1975
• Citation: 531 P.2d 892,271 Or. 271
• Parties: James FINCH and Sadie Finch, dba Jim's Auto Service, Respondents, v. David MILLER and Vicki Miller, husband and wife, Defendants, Credithrift of America, Inc., Appellant.
• Court: Oregon Supreme Court

Page 892

531 P.2d 892

271 Or. 271

James FINCH and Sadie Finch, dba Jim's Auto Service, Respondents, v. David MILLER and Vicki Miller, husband and wife, Defendants Credithrift of America, Inc., Appellant.

Supreme Court of Oregon, In Banc.

Argued and Submitted Jan. 9, 1975.

Decided Feb. 13, 1975.

Henry J. Bailey III, Salem, argued the cause for appellant. With him on the brief was Daniel J. Gatti, Salem.

No appearance for respondent.

DENECKE, Justice.

The legal issue is whether plaintiffs' lien for repairs to Miller's Chevrolet automobile has priority over the prior perfected security interest of the defendant Credithrift in the same automobile.

ORS 79.3100 ¹ provides that a possessory lien for work on chattels has priority over a previously perfected security interest. ² ORS 87.100 at the date pertinent to this case provided, in part:

'* * * The lien of every person as provided in ORS 87.085 (nonpossessory liens for labor on chattels) shall be superior to the rights of the person holding the title to the chattel or any lien thereon antedating the time of the expenditure provided in ORS 87.085 by such lien claimant. However, the lien filed under the provisions of ORS 87.909 (providing for filing notice of lien for nonpossessory liens) shall only have such priority over a chattel mortgage duly recorded prior to the date of the expenditure claimed under the lien during the period the lien claimant retains possession of the chattel; * * *.' ³

Credithrift contends that a security interest perfected before a nonpossessory lien attaches has priority. Assuming this contention is correct, the question remains whether plaintiffs are claiming as nonpossessory or possessory lien claimants. Credithrift admits that if plaintiffs have a possessory lien, they are entitled to prevail under ORS 79.3100, quoted above.

Plaintiffs' complaint alleges that they repaired Miller's car at Miller's request. Plaintiffs further allege:

'* * * On June 7, 1973, the work was completed and on that date David Miller came in and took his vehicle without paying the balance due for the work Plaintiff had performed. Said taking was contrary to the oral agreement then existing between David Miller and Plaintiff regarding the circumstances under which this vehicle would be released to David Miller, and was without the consent of the Plaintiff. * * *.'

Credithrift filed a demurrer based upon the ground that the complaint did not state a cause of 'action.' The demurrer was overruled, Credithrift refused to plead further, and judgment was entered for plaintiffs. With this posture of the proceeding, the facts must be determined from the allegations of plaintiffs' complaint.

The essence of the allegations above quoted is the assertion that Miller took the car 'without the consent of the Plaintiff.' This fact leads into the next question: Is a possessory lien lost if the chattel is taken from the lienor without the lienor's consent?

The only statement of this court on the issue is in dictum in Yellow Mfg. Accept. Corp. v. Bristol, 193 Or. 24, 41, 236 P.2d 939 (1951):

'Priority of a possessory or nonpossessory lien over that of a chattel mortgage is not lost where the property is taken from the actual possession of the lien claimant Without his consent by force or fraud, or where the property is taken from him involuntarily, as by a replevin action. 53 C.J.S., Liens, § 17d(3), page 865. * * *.'

This dictum states the accepted law. The Comment to § 80(1) of Restatement, Security, at 222, states:

'* * * The lienor, like the pledgee, does not lese his legal interest if he is deprived without his consent of his possession either by the bailor or a third person. * * *.'

The author of a comment in 17 Cornell L.Q. 279, 283, n. 23 (1931--1932), states the rule and the reason as follows:

'* * * Possession lost involuntarily does not result in the loss of a lien. It is only where the loss of possession occurs under circumstances that such loss is inconsistent with the claim of a lien. * * *.'

The general rule was followed in General Motors A. Corp. v. Colwell Diesel S. & G., Inc., 302 A.2d 595 (Me.1973) (Possession lost because of replevin action; held possessory lien not lost.)

We hold that the plaintiffs did not lose their possessory lien when Miller took the car from their possession without their consent.

Plaintiffs have confused their position by statements in their prayer. They prayed, 'For a decree declaring Plaintiffs' perfected lien represented by the notice of lien...