General Motors Acceptance Corp. v. Nuss

• Decision Date: 29 April 1940
• Docket Number: 35709.
• Citation: 196 So. 323,195 La. 209
• Court: Louisiana Supreme Court
• Parties: GENERAL MOTORS ACCEPTANCE CORPORATION v. NUSS (GENERAL FINANCE CO. OF LOUISIANA, Inc., Intervener).

196 So. 323

195 La. 209

GENERAL MOTORS ACCEPTANCE CORPORATION v. NUSS (GENERAL FINANCE CO. OF LOUISIANA, Inc., Intervener).

No. 35709.

Supreme Court of Louisiana.

April 29, 1940

Action by the General Motors Acceptance Corporation against George L. Nuss for a writ of sequestration and seizure and sale of an automobile and application of the proceeds to satisfaction of plaintiff's chattel mortgage, wherein the General Finance Company of Louisiana, Inc., intervened. To review a judgment of the Court of Appeal, reversing judgment for plaintiff, dissolving writ of sequestration, and dismissing suit, 192 So. 248, the plaintiff brings certiorari.

Judgment of the Court of Appeal annulled, and judgment of the Civil District Court reinstated and affirmed.

O'Niell & O'Niell, of New Orleans, for applicant.

Prowell & McBride, of New Orleans, for respondents.

ROGERS, Justice.

This case presents a contest between a Missouri mortgagee, on the one hand, and a Louisiana purchaser and a Louisiana mortgagee, on the other hand, with respect to a certain Chevrolet automobile. The district court maintained the right of priority claimed by the Missouri mortgagee, but this judgment was reversed by the Court of Appeal, one of its three judges dissenting. Certiorari has brought the case here.

The facts are not disputed. So far as is necessary to be stated they are that the Buford Chevrolet Company, of Fredericktown Missouri, sold the automobile in question to Charles R. Caldwell, a resident of Fredericktown, who gave a mortgage on the automobile to his vendor to secure the credit portion of the purchase price. This mortgage, which was regularly executed and recorded according to the laws of Missouri, was subsequently acquired by the General Motors Acceptance Corporation of the State of New York. Without the knowledge or consent of the General Motors Acceptance Corporation, the automobile was removed from the State of Missouri to the City of New Orleans, where it came into the possession of the Globe Used Car Lot, and was purchased from that concern by George L. Nuss. The note of Nuss, given in part payment of the purchase price, was acquired by the General Finance Company of Louisiana, Inc. The automobile was sequestered at the instance of the General Motors Acceptance Corporation, Inc., seeking to enforce its rights under the Missouri mortgage. The sequestration was bonded by the defendant Nuss. The General Finance Company intervened and joined Nuss in resisting plaintiff's suit, both alleging that inasmuch as the Missouri mortgage was not recorded in Louisiana, it was ineffective as against their rights with respect to the automobile, which rights were acquired in good faith and without knowledge of the existence of the Missouri mortgage.

The question here is not one involving the consent of the holder of the Missouri mortgage to the removal of the mortgaged property from Missouri to Louisiana, or of its knowledge of such removal and failure to assert its rights within a reasonable time. The sole question presented here is whether the lien of the Missouri mortgagee is superior to the title of the innocent Louisiana purchaser and of the lien of the innocent Louisiana mortgagee, the automobile encumbered by mortgage having been removed from Missouri and brought to Louisiana without the knowledge or consent of the Missouri mortgagee, which asserted its right of priority within a reasonable time after it had knowledge of the removal.

Prior to the year 1912, a chattel mortgage was unknown to the laws of Louisiana and such a mortgage executed in another state was not enforcible in this State after the mortgaged chattel had been brought here. Delop v. Winsor, 26 La. Ann. 185. In 1912, the policy of this State with respect to chattel mortgages was changed when, at the session of the Legislature held that year, an act was passed providing for the granting of mortgages on lumber, logs and livestock. Act 65 of 1912.

Section 1 of Act 65 of 1912 was amended and reenacted by Act 155 of 1914. Both acts were amended and reenacted by Act 18 of 1915, Ex.Sess. These three acts, however, were expressly repealed by Act 151 of 1916, which provided for the granting of mortgages not only upon lumber, logs and livestock, but also on numerous other kinds of personal property. Act 151 of 1916, in turn, was repealed by Act 198 of 1918, which, with its amendments, is the present chattel mortgage law of this State. Under that law, as it now exists and operates, every kind of chattel may be mortgaged under the rules prescribed by the statutes constituting the law. One of the amendments to Act 198 of 1918 is Act 178 of 1936, which provides, among other things, that, in order to affect third persons without notice, both within the parish where recorded and outside the parish where recorded but within this State, instruments evidencing the chattel mortgage need only be recorded in the place where the mortgage is executed and at the domicile of the mortgagor.

Thus it will appear that for more than twenty-five years, as the result of legislative sanction, the practice of giving and accepting chattel mortgages has been an integral part of the general property law of this State. This being so, it would seem to be clear that in the interest of uniformity in the interpretation and the application of the law, the decisions of our courts should be brought into harmony with the decisions of the courts of our sister states where the legal concepts and principles of chattel mortgages have been well understood and settled for many years.

The highest courts of many of the states have spoken upon the subject, and, as reflected in their decisions, the weight of authority undoubtedly is that a valid chattel mortgage, recorded in the State where executed, and there conveying constructive notice, continues to have the same effect when the mortgaged property is removed to another state. See text of the following cases: Davis v. Standard Acciddent Ins. Co., 35 Ariz. 392, 278 P. 384; Creelman Lumber Co. v. Lesh & Co., 73 Ark. 16, 83 S.W. 320,3 Ann.Cas. 108; Mercantile Accept. Co. v. Frank, 203 Cal. 483, 265 P. 190, 57 A.L.R. 696; Mosko v. Matthews, 87 Colo. 55, 284 P. 1021; General Credit Corp. v. Rohde, 122 Conn. 100, 187 A. 676; In re Shannahan Hardware Co., 2 W.W.Harr., Del., 37, 118 A. 599; Smith's Transfer & Storage Co. v. Reliable Stores Corp., 61 App.D.C. 106, 58 F.2d 511; Hopkins v. Hemsley, 53 Idaho 120, 22 P.2d. 138; National Bond & Investment Co. v. Larsh, 262 Ill.App. 363; First National Bank v. Ripley,204 Iowa 590, 215 N.W. 647; Perkins v. National Bond & Inv. Co., 224 Ky. 65, 5 S.W.2d 475; Silver v. McDonald, 172 Minn. 458, 215 N.W. 844; Finance Service Corp. v. Kelly, Mo.App., 235 S.W. 146; National Bank of Commerce v. Morris, 114 Mo. 255, 21 S.W. 511,19 L.R.A. 463, 35 Am.St.Rep. 754; Farmers' & Merchants' Bank v. Sutherlin, 93 Neb. 707, 141 N.W. 827, 46 L.R.A.N.S., 95, Ann.Cas.1914B, 1250; Hart v. Oliver Farm Equipment Sales Co., 37 N.M. 267, 21 P.2d 96, 87 A.L.R. 962; Farmham v. Eichin, 230 A.D. 639, 246 N.Y.S. 133; Wilson v. Rustad, 7 N.D. 330, 75 N.W. 260,66 Am.St.Rep. 649; Kerfoot v. State Bank, 14 Okl. 104, 77 P. 46; Bankers' Finance Corporation v. Locke & Massey Motor Co., 170 Tenn. 28, 91 S.W.2d 297; Cunningham v. Donelson, 110 W.Va. 331, 158 S.E. 705; and Yund v. First National Bank, 14 Wyo. 81, 82 P. 6. The general rule is stated in Corpus Juris, Volume 11, Page 424, as follows: ‘ The great weight of authority is to the effect that a chattel mortgage, properly executed and recorded according to the law of the place where the mortgage is executed and the property is located, will, if valid there, be held valid even as against creditors and purchasers in good faith in another state to which the property is removed by the mortgagor, unless there is some statute in that state to the contrary, or unless the transaction contravenes the settled law or policy of the forum.’

For other statements of the general rule, see Restatement of The Law-Conflict of Laws, sec. 268, page 354; Jones on Chattel Mortgages and Conditional Sales, Bowers Edition, Vol. 1, sec. 299, page 479, Huddy Encyclopedia of Automobile Law, Ninth Edition, Vol. 11, page 32; and Blashfield's Cyclopedia of Automobile Law and Practice, Permanent Edition, § 4710, Vol. 7, page 327.

The Courts of only three states have refused to follow the prevailing rule, grounding their refusal upon the proposition that it would be unreasonable to require citizens of their respective states to take notice of the records of another state. The states in which the adverse decisions have been rendered are Pennsylvania, Michigan and Texas.

The opinion of the Court of Appeal in this case is apparently founded on the theory that the jurisprudence of this State is in line with the decisions of the states representing the opinion of a small minority. The cases involving slaves and the other early decisions of our Supreme Court referred to in the opinion of the Court of Appeal, beginning with Miles v. Oden, 8 Mart., N.S., 214, 19 Am.Dec. 177, decided in 1829, and ending with Delop v. Windsor, 26 La.Ann 185, decided in 1874, are not controlling of the issues presented in this case. The decisions affecting the status of slaves are not appropriate for the obvious reason that slaves were classed as immovables by operation of law. Civil Code of 1825, Article 461. As such, they were subject to the same rules as mortgages on real estate. The mere reading of the decisions discloses they rest upon the proposition that when a slave was brought into this State he became an immovable and was thereafter subject to the laws of the State concerning immovables. It is elementary that a mortgage on an immovable is ineffective against...