Fruehauf Corp. v. Huntington Moving & Storage Co.

• Decision Date: 09 September 1975
• Docket Number: No. 13411,13411
• Court: West Virginia Supreme Court
• Parties: , 17 UCC Rep.Serv. 866 FRUEHAUF CORPORATION v. HUNTINGTON MOVING & STORAGE CO. et al.

Page 907

217 S.E.2d 907

159 W.Va. 14, 17 UCC Rep.Serv. 866

FRUEHAUF CORPORATION v. HUNTINGTON MOVING & STORAGE CO. et al.

No. 13411.

Supreme Court of Appeals of West Virginia.

Sept. 9, 1975.

Syllabus by the Court

1. A security interest perfected in a sister state pursuant to the Uniform Commercial Code provisions of that state creates a lien which should be accorded like dignity and priority under West Virginia's Uniform Commercial Code provisions when this State's courts are called upon to enforce the lien.

2. W.Va.Code 1931, 46--9--310, as amended, clearly provides that an improver's or repairman's lien in personalty has priority over a prior perfected security interest in the same property when the lien is either based upon a rule of law or based upon a statute which does not expressly subordinate it to other liens.

3. A lien provided for by a statute which is merely declaratory of the common law must be interpreted in conformity with its principles, but where the Legislature has enlarged and defined a common-law lien, its definition supersedes the definition of the courts, and thereafter the exercise of the powers of the courts with respect to such liens must be consistent with the legislative definition. 51 Am.Jur.2d Liens § 38 (1970).

4. W.Va.Code 1931, 38--14--1 Et seq. significantly broadens the common-law possessory lien and plainly demonstrates the Legislature's intent to supplant particular common-law liens with a series of statutory liens of similar, but expanded, character.

5. Statutes which relate to the same persons or things, or to the same class of persons or things, or statutes which have a common purpose will be regarded in Pari materia to assure recognition and implementation of the legislative intent. Accordingly, a court should not limit its consideration to any single part, provision, section, sentence, phrase or word, but rather review the act or statute in its entirety to ascertain legislative intent properly.

6. W.Va.Code 1931, 38--11--2 and 3, read in Pari materia, is a lien-creating statute which expressly subordinates the priority of an improver's lien created thereby to that of a prior perfected security interest and other prior liens of which the improver had actual or constructive notice.

Greene, Ketchum & Baker, James D. Nash, Jr., Huntington, for appellants.

Huddleston, Bolen, Beatty, Porter & Copen, R. Kemp Morton, Huntington, for appellee.

HADEN, Chief Justice:

This is an appeal by Huntington Moving & Storage Company and James J. Goode, defendants below, from the final judgment of the Circuit Court of Cabell County which granted to Fruehauf Corporation, appellee and plaintiff below, its motion for summary judgment.

On June 27, 1967, R. G. Maher purchased from the appellee a 1967 Fruehauf trailer by conditional sales contract, after which appellee perfected a security interest by recording the lien on a certificate of title issued by the Division of Motor Vehicles of the State of Virginia, and by properly filing the certificate in that state. On April 17, 1970, while the price of the trailer remained unpaid, Maher obtained additional trailers from Fruehauf Corporation. By a second security agreement Maher gave Fruehauf a security interest in the trailers as security for an indebtedness of $177,032.52, which included the unpaid purchase price of the subject trailer. Again, Fruehauf perfected in Virginia its lien on the trailer. Thereafter, Maher breached the terms of his security agreement with Fruehauf by defaulting on the agreed contractual payments.

In July 1971, Maher brought the trailer to appellant, Huntington Moving & Storage Company, for the purpose of having certain repairs and improvements made. He did not, however, return to render payment for such repairs or improvements and the trailer remained in the possession of appellant. On February 28, 1972, Fruehauf obtained a judgment against Maher in the United States District Court for the Eastern District of Virginia. That court determined that Fruehauf had a valid lien and security interest in the trailer and awarded Fruehauf possession of the trailer.

On March 10, 1972, the appellee discovered from Maher that the trailer had been moved to West Virginia and was in the possession of the storage company. Appellee instituted a civil action in the Circuit Court of Cabell County against the appellant demanding possession of the trailer or, in the alternative, a judgment for its value plus interest and costs. Upon motion, appellee obtained an order naming Goode, an employee of Huntington Moving & Storage Company, as a party defendant because of his status as a colorable 'purchaser' of the trailer at a distress sale conducted by a constable to satisfy the storage company's lien. Appellant, Huntington Moving & Storage Company, answered that it had obtained a statutory lien on the subject trailer in July 1971 by reason of repairs, improvements and storage costs worth $3,719.55, and that its statutory repairman's lien was paramount to the appellee's perfected security interest by virtue of W.Va.Code 1931, 38--11--3 and W.Va.Code 1931, 46--9--310, as amended.

On December 21, 1972, the Circuit Court of Cabell County granted appellee's motion for summary judgment. In ruling that appellee's perfected security interest created a lien prior to that of appellant's repairman's lien, the court ordered possession of the trailer restored to appellee. Appellants appeal from this judgment seeking a reversal and remand with directions to enter judgment in favor of them in the amount of $3,719.55.

It is undisputed that appellee's security interest is valid; it is in compliance with the requirements of Virginia law and thereby meets the test in W.Va.Code 1931, 46--9--103(4), as amended:

'(I)f personal property is covered by a certificate of title issued under a statute of this State or any other jurisdiction which requires indication on a certificate of title of any security interest in the property as a condition of perfection, then the perfection is governed by the law of the jurisdiction which issued the certificate.'

Nor is it controverted that West Virginia recognizes that a lien obtained in a sister state may be superior to a lien subsequently secured in this State. See Ashland Finance Co. v. Dudley, 98 W.Va. 255, 127 S.E. 33 (1925). See also, Callaghan v. Commercial Credit, 437 F.2d 898 (4th Cir. 1971).

The dispositive issue to be determined in this appeal is whether a perfected security interest in specific personal property has priority over a subsequent repairman's lien created by statute or by rule of law on the same property.

The respective parties concede that W.Va.Code 1931, 46--9--310, as amended, is applicable to the instant appeal. This provision was adopted and enacted by the Legislature in 1963 and is part of the Uniform Commercial Code. It reads as follows:

'When a person in the ordinary course of his business furnishes services or materials with respect to goods subject to a security interest, a lien upon goods in the possession of such person given by statute or rule of law for such materials or services takes priority over a perfected security interest unless the lien is statutory and the statute expressly provides otherwise.'

The statutory language makes it clear that a repairman's lien would have priority over a perfected security interest when the lien is one which is: (1) based upon a rule of law or (2) based upon a statute which does not expressly subordinate it to other liens.

The issue to be determined therefore is dependent strictly upon the language of the lien-creating statute. W.Va.Code 1931, 38--11--2, provides, Inter alia, that:

'Any lienor shall take such rights as a purchaser of the property deposited with him would take, and shall take subject to other titles, interest, liens, or charges in the same manner that a purchaser would take. The lienor's rights shall be determined as of the time when the property was deposited with him, . . ..'

The succeeding section reads as follows:

'A person who, while in possession thereof, makes, alters, repairs, stores, transports, or in any way enhances the value of an article of personal property, . . . shall have a lien upon such article . . . while lawfully in the possession thereof, for the charges agreed upon, or, if no charges be agreed upon, then for his just and reasonable charges for the work done or the board or storage or transportation furnished, and may retain possession thereof until such charges are paid. Such lien shall be good against the person who deposited the property with the lienor, and against any other person by whose authority or with whose consent the property was deposited. . . .' (38--11--3)

The parties contend that we are concerned here only with the repairman's lien created by statute and, by final analysis, that is true.

West Virginia, however, has recognized that the common law gives to mechanics, artisans and other workmen a lien for the manufacture or improvement of goods delivered to them, although only while they remain in possession of the goods. Keystone Manufacturing Co. v. Close, 81 W.Va. 205, 94 S.E. 132 (1917). The nature of the common-law lien is the right of possession of that personal property on which work and labor has been performed. Burrough v. Ely, 54 W.Va. 118, 46 S.E. 371 (1903). Accordingly, if appellant's possessory rights are derived from the common-law lien rather than from the statute, the 'unless' clause contained in W.Va. Code 1931, 46--9--310, as amended, would not apply and the appellant's lien would thus take priority over appellee's perfected security interest.

In determining which lien should apply, the apparent general rule provides that (A) lien provided for by a statute which is merely declaratory of the common law must be interpreted in conformity with its principles, but where the legislature has enlarged and defined a common-law lien, its definition supersedes...