First Virginia Bank v. Sutherland, 760091

• Decision Date: 14 January 1977
• Docket Number: No. 760091,760091
• Citation: 217 Va. 588,231 S.E.2d 706
• Parties: , 20 UCC Rep.Serv. 1401 FIRST VIRGINIA BANK, a Virginia Banking Corporation v. William E. SUTHERLAND, Jr., t/a Groveton Arco. Record
• Court: Virginia Supreme Court

Page 706

231 S.E.2d 706

217 Va. 588, 20 UCC Rep.Serv. 1401

FIRST VIRGINIA BANK, a Virginia Banking Corporation v. William E. SUTHERLAND, Jr., t/a Groveton Arco.

Record No. 760091.

Supreme Court of Virginia.

Jan. 14, 1977.

James W. Patterson, Arlington (Carol A. Sigmond; Miller, Miller, Patterson & Reese, Arlington, on brief), for plaintiff in error.

Thomas J. Freaney, Jr., Alexandria, for defendant in error.

Before I'ANSON, C.J., and CARRICO, HARRISON, COCHRAN, HARMAN and POFF, JJ.

HARRISON, Justice.

The issue in this case is whether the charges of William E. Sutherland, Jr., trading as Groveton Arco, for towing and storing a motor vehicle are superior in dignity, by virtue of Code §§ 46.1--2 and 46.1--3, to the express lien of First Virginia Bank, created by Code § 46.1--73. The court below ruled that Sutherland's charges were superior, and the bank appealed.

On July 25, 1973, Warren Preston, Jr. purchased from Brown Pontiac, Inc., a Pontiac automobile on an installment contract financed by the First Virginia Bank. For some reason not fully explained in the record, the Division of Motor Vehicles did not issue a title to Preston until February 15, 1974. However, the lien of the bank, dated July 25, 1973, in the amount of $5,078.16, is reflected on the certificate of title to the vehicle and is evidenced by a security agreement.

On February 2, 1974, Preston was involved in an accident while operating his automobile. At that time the vehicle was impounded because the investigating police officer noted a discrepancy between its license plates and its registration certificate. At the request of the officer, Sutherland, in accordance with his agreement with Fairfax County, towed the vehicle to appellee's storage lot. In March, 1974, Preston defaulted in the payment of a monthly installment due on his contract. The bank, in an attempt to protect its security interest, asserted a claim to possession of the vehicle.

Sutherland testified that he sent Preston and the bank notices of his charges for the towing and storage of the automobile. One notice, dated March 20, 1974, recites that a total of $197.50 was due Sutherland. The second notice, dated May 31, 1974, recites that the amount then due was $557.50. Each purports to give Preston five days notice to contact Sutherland and advise as to his 'intentions' concerning the Pontiac automobile. Preston was advised that unless he responded Sutherland would 'be forced to dispose of the car as salvage and apply the proceeds to your account', and that, as a last resort Sutherland would 'forward your balance to our attorneys for whatever action they might deem necessary'.

The first notice was sent by certified mail, and Preston acknowledged receiving it. He denied receiving the second notice, and the bank denied receiving either notice. Michael S. Berry, an employee of the bank, testified that on or about May 7, 1974, he contacted a Mr. Caldwell, an employee of Sutherland's, and that Caldwell told him the Preston vehicle could be recovered if the bank paid Sutherland $197.50, and presented a release from the police department. Berry said that when he presented the release and the $197.50 requested, he was informed that the storage balance was then $480. Sutherland denied that the bank ever offered to pay him any amount in excess of $75. The bank refused to pay the charge of $480 allegedly demanded by appellee and instituted the action in detinue under review to recover possession of the automobile.

Code § 46.1--2 concerns generally the removal and disposition of unattended, abandoned or immobile vehicles left outside the corporate limits of any city or town, or on an interstate highway inside such corporate limits. Code § 46.1--3 applies to such vehicles found on the public streets, public grounds or private property and gives to localities the right to adopt ordinances with provisions substantially similar to the provisions of Code § 46.1--2.

Section 16--133 of the Fairfax County Code, adopted pursuant to authority granted it by Code § 46.1--3, provides that each removal of a vehicle 'shall be reported immmediately to the chief of police, who shall give notice to the owner of the motor vehicle . . . as promptly as possible'. Should the owner be unknown, or fail to pay the costs incidental to the removal and storage, County Code § 16--133 provides that after notice to the owner at his last known address and to the holder of any lien of record in the Division of Motor Vehicles against the vehicle, 'the chief of police may, after holding the motor vehicle . . . ninety days and after due notice of sale dispose of the same at public sale and the proceeds from the sale shall be forwarded by the chief of police to the county treasurer'.

County Code § 16--133 further provides, in part, that:

'The treasurer shall pay from the proceeds of sale the cost of removal, storage, investigation as to the ownership and liens and notice of sale, and the balance of such funds shall be held by him for the owner and paid to the owner upon satisfactory proof of ownership.'

Under similar circumstances, and pursuant to Code § 46.1--2, the Commissioner of Motor Vehicles, after a lapse of thirty days, is given the authority to dispose of a vehicle towed into a garage, and he is directed to pay the proceeds from any sale of such vehicle into the state treasury. This statute also makes provision for payment from the proceeds of the costs of removal, storage, investigation as to ownership, appraisement and sale.

Significantly, neither the Code sections involved here nor § 16--133 of the Fairfax County Code specifically provide that there shall be a lien on the vehicle, or on the proceeds from a sale thereof, for the costs incidental to removal, storage and sale. And neither the State Treasurer, the Commissioner of Motor Vehicles, nor the County Treasurer is given any guidance as to the priority to be accorded the holder of a security interest when making disbursement of the proceeds of sale.

We do not regard this omission as a legislative oversight. The statutes and the county ordinance involved are designed primarily to give police officers the authority to have unattended, abandoned or immobile vehicles removed from the highways and streets of this state, and from private property under certain circumstances, without prior permission of the owners; and to assure any garageman towing and storing a vehicle at the request of an officer the legal right to recover from the owner the charges and costs incident thereto, or to subject the vehicle to the payment thereof by sale. The amount to be recovered depends upon the facts in each case, the distance a vehicle is towed, the length of time stored and the cost and effort expended in locating the owner. We must look to other sections of the Code to determine what priority is given such charges for storage and towing in instances when the vehicle is sold and the proceeds of sale must be disbursed.

Code § 46.1--73 fixes the priority of a security interest shown on the certificate of title to a motor vehicle. The section provides as follows:

'The security interests,...