Findlay v. Investment Co.

• Decision Date: 15 June 1926
• Docket Number: 19570
• Citation: 115 Ohio St. 235,152 N.E. 903
• Parties: The City Of Findlay Et Al. v. Associates Investment Co.
• Court: Ohio Supreme Court

152 N.E. 903

115 Ohio St. 235

The City Of Findlay Et Al. v. Associates Investment Co.

No. 19570

Supreme Court of Ohio

June 15, 1926

Intoxicating liquors - Seizure and sale of vehicle used in unlawful transportation - Section 6212-43, General Code - Mortgagee of vehicle may establish and collect lien, how - Sale without public notice constructively fraudulent and void.

1.

Under Section 6212-43, General Code, when a vehicle which has been used for the transportation of intoxicating liquors in violation of law has been seized and sold at public auction the mortgagee of such vehicle may establish his lien by intervention or otherwise at the hearing or in other proceedings for said purpose, and may collect his lien according to its priority out of the funds realized upon the sale.

2.

A sale of a vehicle under Section 6212-43, General Cede, which is otherwise regular, but of which no public notice is given, is constructively fraudulent and void.

This cause was instituted in the court of common pleas of Hancock county by the defendant in error against Howard R. Sharp Minnie Kern, and the city of Findlay, Ohio, to foreclose a chattel mortgage on a certain automobile owned by Sharp. The petition is in the usual form for foreclosure of a chattel mortgage.

The prayer of the petition is: "Wherefore plaintiff prays for judgment against said defendants Howard R. Sharp and Minnie Kern for the sum of $394.40 with interest from the 10th day of October, 1924, and that its said mortgage be foreclosed, the said property ordered to be sold, and the proceeds of such sale be applied to the payment of plaintiff's said claim, and for such other and further relief as may be equitable."

The petition avers that the mortgaged property is now in the possession of defendant the city of Findlay, which claims some interest therein, but says that the city's claim, if any it has, is inferior to the claim of plaintiff, and asks that the city be required to answer and set up its interest in such property or be forever barred from asserting the same.

The answer of the city of Findlay sets up in substance that Sharp was apprehended in the act of transporting intoxicating liquors in the automobile in question, in violation of law, and was charged before the mayor of the city of Findlay with transporting intoxicating liquors contrary to law, to which charge he pleaded guilty; that the intoxicating liquors in question and the automobile used in the transportation were seized and that upon Sharp's plea of guilty before the mayor of the city he was fined, the liquors were ordered destroyed, and the automobile ordered sold.

In the reply the plaintiff admitted the arrest of the owner of the car, and that he pleaded guilty to the charge of unlawful transportation of intoxicating liquors and was fined, and that the automobile was seized at the time of the owner's arrest. The plaintiff, among other things, averred that it had no knowledge that the automobile was being used for illegal transportation of intoxicating liquor, and had no notice that the automobile was to be sold under any proceedings in the mayor's court.

The court of common pleas found that the sum of $413.34 was due to the plaintiff upon its chattel mortgage, that the conditions of the mortgage had been broken, and that the plaintiff had the right of foreclosure of the said mortgage, and also found that the plaintiff had a good and valid and subsisting lien upon the property described in the petition, and held that this lien was the first and best lien upon the property and that the rights of the city of Findlay were subordinate to the rights of the plaintiff.

The case was taken upon error proceedings to the Court of Appeals of Hancock county, which affirmed the judgment of the trial court, on the ground that the sale, and confirmation thereof, of the automobile by plaintiff in error, was constructively fraudulent.

The case comes into this court upon allowance of motion to certify the record.

Further facts are stated in the opinion.

Mr. William S. Snook, city solicitor, for plaintiffs in error.

Messrs. Foster & Sheridan, for defendant in error.

ALLEN J.

Under Section 6212-43, General Code, when a vehicle which has been used for the transportation of intoxicating liquors in violation of law has been seized by the duly constituted authorities of a municipality, and the mayor's court has ordered a sale by public auction of the property seized, and a sale has been held without public notice, can the mortgagee of such vehicle foreclose his mortgage upon the vehicle so seized and sold and thereby establish a lien prior to the title of the buyer at the public auction? This is the question of moment involved in this case.

The statute principally involved in our consideration of this question is Section 6212-43, General Code, which is as follows:

"When the commissioner of prohibition, his deputy, inspectors, or any officer of the law, shall discover any person in the act of transporting in violation of law, intoxicating liquors in any * * * automobile, * * * it shall be his duty to seize any and all intoxicating liquors found therein being transported contrary to law. Whenever intoxicating liquors transported or possessed illegally shall be seized by an officer named herein, he shall take possession of the * * * automobile, * * * and shall arrest any person in charge thereof. Such officer shall at once proceed against the person arrested under the law of the state prohibiting the liquor traffic, ill any court having jurisdiction under such law, but the said vehicle * * * shall be returned to the owner upon execution by him of a good and valid bond with sufficient sureties, ill a sum equal to the value of the property, which said bond shall be approved by said officer and shall be conditioned to return said property to the custody of said officer on the day of trial to abide by the judgment of the court. The court upon conviction of the person so arrested shall order the liquor destroyed, and unless good cause to the contrary is shown by the owner, shall order a sale by public auction of the property seized, and the officer making the sale, after deducting the expenses of keeping the property, the fee for the seizure, and the cost of the sale, shall pay all liens, according to their priorities, which are established, by intervention or otherwise at said hearing or in other proceeding brought for said purpose, as being bona fide and as having been created without the lienor having any notice that the carrying vehicle was being used or was to be used for illegal transportation of liquor, and shall distribute the balance as is distributed money arising from fines and forfeited bonds under the law of the state prohibiting the liquor traffic.

"All liens against property sold under the provisions of this section shall be transferred from the property to the proceeds of the sale of the property. If, however, no one shall be found claiming the * * * automobile, * * * the taking of the same, with a description thereof, shall be advertised in some newspaper published in the city or county where taken, or if there is no newspaper published in such city or county, in a newspaper having circulation in the county, once a week for four weeks and by hand bills posted in three public places near the place of seizure, and if ne claimant shall appear within ten days after the last publication of the advertisement, the property shall be sold and the proceeds after deducting the expense and costs shall be distributed as hereinbefore provided in case there was a claimant for the said vehicle or conveyance."

The main contention of the plaintiffs in error is that the judgment of the Court of Appeals herein gives to the investment company the right to do the very thing denied it by statute, namely, the right to recover possession of the car. The defendant in error, on the other hand, contends that since it is innocent of wrongdoing, and had no knowledge of the use of the car for the illegal sale of intoxicating liquors, it is entitled to possession of the car and has a lien upon the car itself, instead of being remitted to the fund secured from the sale.

In order to decide these questions we must consider whether under the statute it is the owner's interest in the...