First Nat. Bank of Omaha v. Provident Finance Co.
| Decision Date | 06 December 1963 |
| Docket Number | No. 35461,35461 |
| Citation | 176 Neb. 45,125 N.W.2d 78 |
| Parties | FIRST NATIONAL BANK OF OMAHA, Appellee, v. PROVIDENT FINANCE CO., Appellant. |
| Court | Nebraska Supreme Court |
Syllabus by the Court
1. The Certificate of Title Act was enacted for the protection of owners of motor vehicles, those holding liens thereon, and the public.
2. One holding a lien upon a motor vehicle must, insofar as he can reasonably do so, protect himself and others thereafter dealing in good faith, by complying and requiring compliance with applicable laws concerning certificates of title to motor vehicles.
3. An innocent purchaser is one who buys property for a present valuable consideration without knowledge sufficient to charge him in law with notice of any infirmity in the title of the seller.
4. Where one of two innocent persons must suffer by the acts of a third, he whose conduct, act, or omission enabled such third person to occasion the loss must sustain it if the other party acted in good faith, without knowledge of the facts, and altered his position to his detriment.
5. The plaintiff in a replevin action has the burden of proof and must recover on the strength of its or his right in or to the property and not upon any weakness of the interest of the defendant therein.
Edward Shafton, Bernard E. Vinardi, Omaha, for appellant.
Finlayson, McKie & Kuhns, Omaha, for appellee.
Heard before WHITE, C. J., and CARTER, MESSMORE, YEAGER, SPENCER, BOSLAUGH, and BROWER, JJ.
The First National Bank of Omaha filed an action at law against Monte White Leasing Company, Monte White Motors, Inc., and Provident Finance Company, defendants, to obtain possession of a 1960 Chevrolet station wagon, the possession of which is alleged on information and belief to be in the Provident Finance Company, or, in the alternative for damages for the value of the 1960 Chevrolet station wagon if it could not be returned. The action was dismissed as to Monte White Leasing Company and Monte White Motors, Inc., and trial proceeded between the First National Bank of Omaha and the Provident Finance Company, based upon a stipulation of facts and oral testimony. Jury trial was waived. The trial court rendered judgment in favor of the plaintiff, the First National Bank of Omaha, that it was entitled to the immediate possession of the 1960 Chevrolet station wagon, and if delivery thereof could not be made, the First National Bank of Omaha recover from the Provident Finance Company the sum of $1,404.25, the value of the said property. Provident Finance Company filed a motion for new trial which was overruled. The Provident Finance Company perfected appeal to this court.
The First National Bank of Omaha is a corporation organized and existing under and by virtue of the laws of the United States pertaining to national banks, with its principal office and place of business in the city of Omaha. The Monte White Leasing Company is a corporation organized and existing under and by virtue of the laws of the State of Nebraska, with its principal office and place of business in the city of Omaha. Monte White Motors, Inc., is a corporation organized and existing under and by virtue of the laws of the State of Nebraska, with its principal office and place of business in the city of Omaha. The Provident Finance Company is a corporation organized and existing under and by virtue of the laws of the State of Nebraska, with its principal office and place of business in the city of Omaha.
For convenience the First National Bank of Omaha will be referred to as the Bank; Provident Finance Company will be referred to as Provident; Monte White Leasing Company as the Leasing Company; and Monte White Motors, Inc., as White Motors.
The allegations of the Bank's petition and the answer of Provident need not be set forth in view of the stipulation of facts and the oral testimony in addition thereto.
The stipulation of facts may be summarized as follows. After identifying the corporate capacity of the Bank, Provident, the Leasing Company, and White Motors, it was stipulated that on or about July 11, 1960, White Motors and the Leasing Company entered into a certain conditional sales contract by which White Motors sold to the Leasing Company one 1960 Chevrolet station wagon, serial No. 01135S173915. This station wagon was titled to the Leasing Company by a Nebraska certificate of title No. 1-1242328. An exhibit attached to the Bank's petition contains the conditional sales contract, also titled retail installment contract, showing a total balance of $3,064.50, payments to be made in 36 monthly installment payments of $85.12 each, beginning August 25, 1960, also a certificate of title to a motor vehicle dated July 12, 1960, showing the owner to be the Leasing Company, and noted thereon a first lien of the Bank under date of March 2, 1962.
On July 11, 1960, the conditional sales contract was assigned and transferred by White Motors, by Monte White president, to the Bank, and the aforesaid certificate of title was delivered to the bank. The same was from said date held by the Bank.
On March 2, 1962, the Bank filed the conditional sales contract in the office of the county clerk of Douglas County, and the same was on said date, by the county clerk, noted on the certificate of title.
On July 20, 1961, Monte White, as president of the Leasing Company, without knowledge of the Bank or Provident, executed an application for certified copy of the certificate of title under oath, and delivered the same to the county clerk of Douglas County, stating that the aforesaid certificate of title had been lost or destroyed and requesting the issuance of a certified copy of the said certificate of title. Said application was by the county clerk of Douglas County forwarded to the Motor Vehicle Department of the State of Nebraska. Thereafter, on July 21, 1961, the Motor Vehicle Department of the State of Nebraska transmitted to the county clerk of Douglas County authorization to issue duplicate certificate of title. On July 24, 1961, a duplicate certificate of title No. 1-24527 was issued by the office of the county clerk of Douglas County, and received from said clerk by the Leasing Company, said duplicate certificate of title being an exact duplicate, and so marked, of the aforesaid certificate of title No. 1-1242328, covering the same motor vehicle. No lien was noted on the duplicate certificate of title.
On October 3, 1961, Monte White, as president, for and on behalf of the Leasing Company, transferred the aforesaid motor vehicle to White Motors by executing the appropriate transfer in due form on the reverse side of the aforesaid duplicate certificate No. 1-24527. Thereafter, and also on October 3, 1961, pursuant to due and appropriate application on the back of certificate No. 1-24527, certificate of title No. 1-1342625 was issued by the county clerk of Douglas County in the name of White Motors for the 1960 Chevrolet station wagon, serial No. 01135S173915, showing that White Motors was the sole owner of such motor vehicle without any lien noted on the said certificate of title.
On November 24, 1961, White Motors, by its president Monte White, executed and delivered to Provident its promissory note in the principal sum of $1,308.58, dated November 24, 1961, due and payable 1 month thereafter. As security for the promissory note White Motors, by its president Monte White, executed and delivered to Provident a chattel mortgage on the 1960 Chevrolet station wagon, serial No. 01135S173915. Simultaneously with the delivery of the aforesaid note and mortgage White Motors, by its president Monte White, delivered to Provident the aforesaid certificate of title No. 1-1342625, dated October 3, 1961, evidencing title to the Chevrolet station wagon in White Motors, free and clear of any liens, and said certificate of title was at all times in the possession of Provident.
Provident filed the aforesaid chattel mortgage in the office of the county clerk of Douglas County on March 12, 1962, and the same was noted on the aforesaid certificate of title by the county clerk of Douglas County.
Provident had no knowledge of the existence of the aforesaid conditional sales contract and certificate of title relating to such motor vehicle held by the Bank, on November 24, 1961, or any time prior thereto.
Provident, in accordance with the customs and practices in the trade, permitted such motor vehicle to be placed on the used car sales lot of White Motors for sale, until taking possession as hereinafter stated.
White Motors defaulted in the payment of the promissory note and, in accordance with the terms and conditions of the aforesaid chattel mortgage, Provident took possession of the aforesaid motor vehicle and continued to maintain possession thereof.
At no time did the Bank have possession of the said motor vehicle.
Provident called as a witness a vice president of the Bank who testified that he had been employed by the Bank for 26 years and had been in charge of the installment loan department of the Bank for about 10 years; that the installment loan department does both wholesale and retail business; that on July 11, 1960, this witness acquired the retail installment contract for the Bank as specified in the stipulation of facts; and that the Bank's lien was recorded on March 2, 1962, under his direction. This witness further testified that he knew the procedure for recording such conditional sales contracts; that he knew of the statute providing for the recording of conditional sales contracts and noting them on the certificates of title, and knew there were risks and hazards involved in failing to do so, stating: 'The risk would be basically fraud or bankruptcy'; and that it had been an established plan of the Bank, applied in the present matter, not to file conditional sales contracts and not to have them shown on the title certificate.
On cross-examination this witness testified...
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