General Motors Acceptance Corp. v. Colwell Diesel Service & Garage, Inc.

• Decision Date: 27 March 1973
• Citation: 302 A.2d 595
• Parties: , 12 UCC Rep.Serv. 226 GENERAL MOTORS ACCEPTANCE CORPORATION v. COLWELL DIESEL SERVICE & GARAGE, INC.
• Court: Maine Supreme Court

Page 595

302 A.2d 595

69 A.L.R.3d 1153, 12 UCC Rep.Serv. 226

GENERAL MOTORS ACCEPTANCE CORPORATION v. COLWELL DIESEL SERVICE & GARAGE, INC.

Supreme Judicial Court of Maine.

March 27, 1973.

Jensen, Baird, Chapman & Gardner, by Merton G. Henry, W. Scott Carlisle, III, Portland, for plaintiff.

Silsby & Silsby, by James A. Silsby, Ellsworth, for defendant.

Before DUFRESNE, C. J., and WEBBER, WEATHERBEE, POMEROY, WERNICK and ARCHIBALD, JJ.

DUFRESNE, Chief Justice.

The instant appeal questions the propriety of the ruling below that Colwell Diesel Service & Garage, Inc., the appellee, hereinafter referred to as Colwell, had a valid mechanics' lien entitled to priority over the lien of General Motors Acceptance Corporation, the appellant, whose lien arose by virtue of a perfected purchase-money security interest.

By agreed statement of facts submitted to the Justice below, it appears that one James F. Rafferty purchased a 1962 International tractor truck from Bean & Conquest, Inc. under a retail instalment contract. This agreement was executed on October 16, 1968 and, on the same date, was negotiated and assigned to the appellant. It is conceded that the appellant complied with all filing requirements under the law and held a perfected security interest in the chattel paper and in the 1962 International tractor truck. In 1969 Rafferty contracted with Colwell for repairs to the truck and, pursuant to said contract, Colwell did provide labor and materials in making the repairs which were completed on April 23, 1969 and amounted, in terms of reasonable value, to the sum of four hundred and fifty-one dollars and four cents ($451.04). Although authorized to make repairs under the terms of the retail instalment contract, Rafferty did not secure the consent of the appellant prior to contracting for such repairs with Colwell.

Upon Rafferty's failure to pay the repair bill, Colwell retained possession of the truck claiming a mechanics' lien thereon. A notice of lien-claim pursuant to 10 M.R.S.A., § 3802 was filed on May 22, 1969. Colwell brought its complaint against Rafferty to enforce its mechanics' lien on June 28, 1969. Rafferty defaulted and this gave rise to a judgment in favor of Colwell against Rafferty on September 30, 1969 with execution, as stated in the agreed statement of facts, 'issued to Defendant (Colwell) against James Rafferty for the sum of $451.04 plus costs of $14.61' on October 30, 1969. The record does not disclose that such judgment was anything more than a personal judgment. As a matter of fact, the appellant in July 1969 had recovered possession of the truck from Colwell by prosecuting its complaint in replevin, wherein the appellee denied appellant's right to possession and, by way of counterclaim, sought damages for conversion. General Motors Acceptance Corporation appeals from the trial Court's judgment in favor of Colwell on its counterclaim in the amount of $451.04 plus costs. The appeal must be denied.

It is a well-settled principle of the common law that he who by labor, skill or materials adds value to the chattel of another whether under an express or an implied agreement has a possessory lien thereon for the value of his services and materials, and may retain the chattel in his possession until the same be paid. See, Taggard v. Buckmore, 1856, 42 Me. 77. This right rests upon principles of natural justice and commercial necessity. It is clear equity that a party, who has enhanced the value of the property, by incorporating therein his labor or materials, shall have security on the improved property. See, 8 Am.Jur.2d, Bailments, § 229, p. 1121; 38 Am.Jur.2d, Garages, etc. § 138, p. 435. Such a lien may be waived or lost, by voluntarily parting with the possession of the goods. Danforth v. Pratt, 1856, 42 Me. 50. In this case Colwell established the possessory requirement of the common-law lien; it retained possession of the truck until the appellant recovered it as a result of the prosecution of the replevin action. Where retention of possession is, by the common law or by statute, an underlying prerequisite to a valid mechanics' lien, this requirement is fulfilled where the loss of possession is due to removal of the goods by means of a replevin action.

The common law repairman's lien, also known as an artisan's lien, has been held to survive the enactment of our statutory mechanics' lien. ¹ In Crosby v. Hill, 1922, 121 Me. 432, 117 A. 585, our Court ruled that the statutory lien for repairs did not supersede or destroy the common law lien, nor did it create a new right, but merely provided a new and additional remedy. Some courts have reached a contrary conclusion. See, Bond v. Dudley, 1968, 244 Ark. 568, 426 S.W.2d 780; J. M. Lowe Auto Co. v. Winkler, 1917, 127 Ark. 433, 191 S.W. 927. The appellee's prosecution of its statutory lien remedy to the extent of obtaining an unpaid personal judgment against Rafferty neither operated as a waiver or abandonment of its common law lien which it could enforce by retaining possession of the truck upon which the repairs were made and services furnished. We note appellant's contention that, since no attachment of the truck was made as required by 10 M.R.S.A., § 3801, the statutory remedy to enforce the lien was doomed from the beginning. The Court below ruled otherwise on the ground that there was no need for an attachment where the truck was already in possession of the appelleelien-claimant. We intimate no opinion on the point, since we rule that the statute (10 M.R.S.A., § 3801) did not become operative in the facts of the instant case.

The appellant, it is admitted, did not consent to the appellee's repair of the truck. Prior to the adoption of the Uniform Commercial Code, Title 11 of the Maine Revised Statutes Annotated, which became effective on December 31, 1964, no mechanics' lien attached where the repairs were made without 'the direction or consent of the owner.' This was the rule, whether the lien was a common law lien (Bath Motor Mart v. Miller, 1922, 122 Me. 29, 118 A. 715), or a statutory lien. Hartford Accident and Indemnity Company v. Spofford, 1927, 126 Me. 392, 138 A. 769. The owner of property, in the context of security interests and lien rights, under pre-Code decisional law meant the holder of the legal title. The priority of rights was largely premised, as appears in Small v. Robinson, 1879, 69 Me. 425, upon Chief Justice Shaw's observation in Hollingsworth v. Dow, 1837, 19 Pick. 228, at page 230, to the effect that

'A lien is a proprietary interest, a qualified ownership, and, in general, can only be created by the owner, or by some person by him authorized.'

Thus, prior to the adoption of the Code, the mere right to possession and use of a chattel, without the legal title, carried with it no authority to encumber the property with mechanics' liens without the consent of the holder of the legal title. See, Small v. Robinson, supra, where a bailee's contract for repairs did not give rise to the imposition of a lien against the bailor; Bath Motor Mart v. Miller, supra, where the non-consenting holder of a Holmes note prevailed over a lien-claimant for repairs to an automobile; Hartford Accident & Indemnity Co. v. Spofford, supra, where a conditional vendor won out over the garageman who claimed a lien; Eastern Trust & Banking Co. v. Bean & Conquest, Inc., 1952, 148 Me. 85, 90 A.2d 449, where the chattel mortgagee's title was held unaffected by a mechanics' lien claim in the absence of the mortgagee's consent or direction respecting the repairs.

The immediate issue before us is, whether the appellee, Colwell, had a valid common law mechanics' lien upon the truck, at the time it was deprived of the possession of it in the replevin action, which takes priority over the appellant's prior perfected security interest? Resolution of this issue, in turn, will depend upon the proper interpretation to be given to the pertinent provisions of the Uniform Commercial Code.

11 M.R.S.A., § 9-310 provides 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 common law mechanics' or artisan's lien is a lien given by 'rule of law' within the purview of 11 M.R.S.A., § 9-310. Nickell v. Lambrecht, 1970, 29 Mich.App. 191, 185 N.W.2d 155.

Contrary to the thinking of the Maine draftsmen of the Code, as presented to the Legislature for adoption, to the effect that '(f)rom the language of the cases and the statutes expressly requiring consent of the owner, it seems clear that a lien cannot arise without such consent (and) (i)f so, this section would make no change in Maine law' (See, Volume 5, Maine Revised Statutes Annotated, Maine Code Comment, at page 333), the draftsmen of the Uniform Commercial Code, by their official comment, saw it differently:

'Under chattel mortgage or conditional sales law many decisions made the priority of such liens turn on whether the secured party did or did not have This Section changes such rules and makes the lien for services or materials prior in all cases where they are furnished in the ordinary course of the lienor's business and the goods involved are in the lienor's possession. Some of the statutes creating such liens expressly make the lien subordinate to a prior security interest. This Section does not repeal such statutory provisions. If the statute creating the lien is silent, even though it has been construed by decision to make the lien subordinate to the security interest, this Section provides a rule of interpretation that the lien should take priority over the security interest.' (Emphasis added.)

The Legislature, in enacting the Uniform...