Hess v. Paulo
| Decision Date | 18 February 1949 |
| Docket Number | No. 2708.,2708. |
| Citation | 38 Haw. 279 |
| Parties | GEORGE HESS v. SAM PAULO, SR. |
| Court | Hawaii Supreme Court |
OPINION TEXT STARTS HERE
ERROR TO CIRCUIT COURT FIRST CIRCUIT, HON. A. M. CRISTY, JUDGE.
Syllabus by the Court
A statutory “legal owner” under the motor vehicle law, defined to be “a person who holds the legal title to a motor vehicle or a mortgage thereon” (§ 7335, R. L. H. 1945), applies with equal force to a mortgagor holding the legal title as it does in the alternative to a mortgagee holding a mortgage.
The registering of one rather than the other mortgage party as legal owner of an automobile is the counterpart of actual possession and complementary to the registering of the other as owner within the general legislative purpose of the motor vehicle law to provide a simple means of registering title and interest to and in a mortgaged automobile.
During the existence of the mortgage the interest of the mortgagee remains complementary to the title of the mortgagor, and the motor vehicle law, within alternative application of the statutory definition of a legal owner to each mortgage party, treats them equally by imposing upon a mortgagor on transfer of his title the same duties that it imposes upon a mortgagee on assignment of his interest.
The issuance of new certificates of registration and ownership by the treasurer is the condition precedent under the motor vehicle law to the validity of an intended transfer or assignment of the title or interest of a legal owner and the nonissuance of such certificates renders it a nullity as a matter of law.
A bill of sale, absolute in form and accompanied by an agreement of conditional resale, is a mortgage within the meaning of statute (R. L. H. 1945, § 8871) where intended to operate as security for a loan or to be subject to defeasance upon repayment of the loan in accordance with the terms and conditions set forth in the agreement of conditional resale.
A judgment creditor has the right to show by parol evidence that a transaction between his judgment debtor and a third party was a mortgage and then as a holder of an attachment lien second in rank to a mortgage lien show that the mortgage lien has been extinguished.
The character of a mortgage of a motor vehicle is that it constitutes a transfer of the mortgagor's interest to the mortgagee, the interest being a property right to have the mortgaged vehicle subjected to the payment of the mortgage debt, and the effect on registration of the transfer of such interest under the procedure prescribed by the motor vehicle law is to create a lien only as security for the obligation, otherwise the mortgage operates merely as a contract between the parties, the mortgage not having the effect to pass title from the mortgagor to the mortgagee.
Registration of a transfer of the mortgagor's interest is achieved by registering the mortgagee as owner and the mortgagor as legal owner where the mortgage is accompanied by a change of actual possession and by registering the mortgagor as owner and the mortgagee as legal owner where the mortgage is not so accompanied, the registering of the mortgagee as legal owner in the latter case rendering the mortgage valid as against creditors and subsequent purchasers or mortgagees claiming in good faith and for value under the mortgagor and the general statutory requirement of recordation for chattel mortgages inapplicable to mortgages of registered motor vehicles as well as satisfying the legislative purpose therefor.
A mortgagee who assists in, and consents to, the sale of the mortgaged automobile by his mortgagor under the mortgagor's written authority, and does so by applying the full proceeds of sale and value of the automobile to the mortgage debt and by releasing his muniment of mortgage interest in the automobile to the purchaser in physical possession, waives and extinguishes his mortgage lien as against the purchaser and as against any attaching creditors of the mortgagor intervening before the transfer of the mortgagor's title to the purchaser has been effectuated under the motor vehicle law.
As far as the purchaser of an automobile from a conditional vendee, and as far as any attaching creditors of the vendee intervening before the transfer of the vendee's title to the purchaser has been effectuated under the motor vehicle law are concerned, the title reserved by the conditional vendor automatically passes to the vendee under the contract and by operation of law without further consent or acts on the part of the vendor where the vendee or his purchaser as the implied agent of the vendee pays the balance due on the contract, or otherwise fully satisfies the vendee's contract obligation which is accepted as such by the vendor whose conduct with respect thereto is entirely repugnant to any further retention of title by him.
D. G. Ridley for defendant, the plaintiff in error.
W. C. Ingman for plaintiff, the defendant in error.
Smith, Wild, Beebe & Cades and J. R. Cades for Bishop National Bank at Honolulu, amicus curiae.
(Peters, J., dissenting.)
George H. Hess brought replevin against Sam Paulo, Sr., to recover possession of an automobile, driven in Honolulu and registered in the office of the treasurer of the city and county of Honolulu under the motor vehicle law. (R. L. H. 1945, c. 138, pt. II, §§ 7335-7348.) Sam Paulo, Sr., is a deputy high sheriff who holds possession of the automobile on levy of attachment for a judgment creditor of George Lamb. At the time of attachment George Lamb was registered as owner and the Honolulu Federal Employees' Federal Credit Union as legal owner of the automobile under the motor vehicle law. For convenience and clarity George H. Hess is hereinafter designated as the “plaintiff,” Sam Paulo, Sr., as the “defendant,” George Lamb as “Lamb” and the Honolulu Federal Employees' Federal Credit Union as the “finance corporation,” a descriptive of its type of organization. The plaintiff claims the right to possession by reason of purchase of the automobile from Lamb on delivery of the certificate of ownership, endorsed by the finance corporation as legal owner. The defendant claims the right of possession by reason of the levy of attachment against Lamb's right, title and interest in and to the automobile. After a jury-waived trial, the circuit court entered judgment against the defendant, granting recovery of possession to the plaintiff and assessing damages in the sum of five hundred dollars. The defendant appeals by writ of error.
The paramount question presented by the assignment of errors is whether or not upon the facts of the case the plaintiff's title to the registered automobile is subject to a prior attachment lien of the defendant as a matter of law.
The pertinent facts are herein briefly stated.
On May 6, 1947, Lamb purchased the automobile from its registered and legal owner, one J. M. Cowden, for $1400. Prior thereto, but on the same day, Lamb had borrowed this amount from the finance corporation together with an additional $300 to repay his pre-existing indebtedness to the finance corporation. As part of that loan transaction between Lamb and the finance corporation, Lamb immediately after purchase from Cowden delivered a bill of sale for the automobile to the finance corporation, signed an agreement of resale, conditioned upon the corporation's retention of title and the right to take possession on default, and with two cosigners executed a promissory note. Lamb retained possession of the automobile on its purchase and made no delivery of it to the finance corporation. Although the agreement of resale valued the automobile at $1000, it and the note expressed but one obligation on the part of Lamb to pay the total amount of the loan of $1700 in monthly installments of $70 and interest. The loan, bill of sale, agreement of resale and note were collectively nothing more than a “purely finance loan transaction” as characterized by the president of the finance corporation. On May 9, 1947, Lamb was registered as owner and the finance corporation as legal owner, the treasurer on that day having issued certificates of registration and ownership to them, respectively. Lamb held the certificate of registration. The finance corporation held the bill of sale, the conditional resale agreement and note as well as the certificate of ownership. Lamb defaulted on the agreement and note after making one payment of $70, but the finance corporation at no time took possession or even commenced to exercise any right to do so.
On August 26, 1947, the plaintiff, after being placed in physical possession of the automobile by Lamb pursuant to an agreement of absolute sale with him, paid to the finance corporation $1000 in purchase of the automobile. The finance corporation on written authority from Lamb immediately credited this money to Lamb's promissory note and delivered to the plaintiff the certificate of ownership after endorsing it. But the finance corporation did not execute a bill of sale to the plaintiff or deliver, transfer or assign to him the conditional resale agreement or the note, nor was such contemplated by Lamb, the finance corporation or the plaintiff. Upon receipt of the certificate of ownership so endorsed, the plaintiff endorsed it as “new legal owner or holder of mortgage, note, lease, etc.” and thereupon presented it to the treasurer of the city and county of Honolulu without securing the endorsement of Lamb. He requested that the treasurer issue to him new certificates of complete registered and legal ownership. This the treasurer refused to do without Lamb's endorsement on the certificate of ownership.
On September 4, 1947, the defendant seized the automobile under a writ of attachment in a creditor's action against Lamb. On September 29, 1947, after the creditor had obtained judgment, the defendant levied execution upon the...
To continue reading
Request your trial
-
Robinson v. Durston
...before this court which indicates any right on the part of the defendants to compel the payment of any sums of money.' "In Hess v. Paulo, supra, 38 Haw. 279, 286-287, it is stated, by quoting from Guilford-Chester Water Co. v. Town of Guilford, 107 Conn. 519, 141 A. 880, that 'a test genera......
-
Kaheawa Wind Power, LLC v. Cnty. of Maui
...v. Widemann, 9 Haw. 685, 690–91 (Haw. Kingdom 1892) superseded on other grounds, RLH § 8871 (1945), as recognized in Hess v. Paulo, 38 Haw. 279 (Haw.Terr.1949) ; Arizona Dep't of Revenue v. Arizona Outdoor Advertisers, Inc., 202 Ariz. 93, 95–96, 41 P.3d 631, 633–34 (App.2002) ; Perez Bar & ......
-
Island Leasing, LLC v. Kane
...nor form nor superficial declaration of intention will successfully obscure the true nature of . . . [a] transaction," Hess v. Paulo, 38 Haw. 279 at 286 (1949), we are obliged to seek the substance of the agreements in question from the evidence in the record.Dang v. F & S Land Dev. Corp., ......
-
Ellis, Matter of
...in real property ... subject to disfeasance upon the payment of an obligation ... is to be deemed a mortgage ...."); Hess v. Paulo, 38 Haw. 279, 285-86 (1949) (construing former Haw.Rev.Stat. § 8871 (1945), now codified at § 506-1) (purpose of rule is "to ensure effectuation of the genuine ......