Jefferson v. Jones, 28

• Decision Date: 14 December 1979
• Docket Number: No. 28,28
• Parties: , 27 UCC Rep.Serv. 1174 Thomas N. JEFFERSON v. Lawrence V. JONES.
• Court: Maryland Court of Appeals

Page 544

286 Md. 544

408 A.2d 1036, 27 UCC Rep.Serv. 1174

Thomas N. JEFFERSON v. Lawrence V. JONES.

No. 28.

Court of Appeals of Maryland.

Dec. 14, 1979.

David N. Grimes, Rockville (Bullard & Deutchman, P. A., Rockville, on the brief), for appellant.

No brief filed on behalf of appellee.

Argued before MURPHY, C. J., and SMITH, DIGGES, ELDRIDGE, ORTH, COLE and DAVIDSON, JJ.

DIGGES, Judge.

In the present case, we are called upon to decide an issue arising under the Maryland Uniform Commercial Code that this Court has not before had occasion to consider whether a purchaser of goods must prove that a third party has a superior or paramount title to those goods in order to substantiate a claim that a seller's warranty of title as established by section 2-312 of the Commercial Law Article, Md. Code (1975), has been breached?

The genesis of this dispute was the sale of a Honda motorcycle by appellee Lawrence V. Jones to appellant Thomas N. Jefferson in July, 1975. At the time of sale, although the appellant received immediate possession of the cycle, the seller retained the title certificate as security for the unpaid portion of the agreed purchase price. Upon the receipt of the balance due, Jones executed an assignment of the certificate to Jefferson, which was then reissued in the new owner's name by the Maryland Motor Vehicle Administration. Approximately two years later, while Jefferson was having the motorcycle repaired at a garage in the District of Columbia, he was asked by the D.C. police, for reasons not apparent in the record, to prove his entitlement to the vehicle. In an effort to establish his ownership, Jefferson produced his title certificate, but when the identification number listed on it (CB450E1009012) did not correspond to the one embossed on the frame of the vehicle (CB4501010009), the police became suspicious and seized the motorcycle. Following the denial of his demand that possession of the motorcycle be relinquished to him, Jefferson instituted an action in the Superior Court of the District of Columbia against the police in replevin and for conversion. Before trial, the matter was settled and the motorcycle was returned to Jefferson. He then asked Jones to indemnify him for the legal expenses which he had incurred in retrieving the vehicle, and when Jones refused, the appellant filed the present breach of warranty action. ¹

In deciding in favor of the appellee, the District Court (Fisher, J.) made the following factual and legal rulings:

(T)itle to the motorcycle in question is in the plaintiff, . . . it has been in the plaintiff since the day the title was delivered to him and . . . recorded by an Officer of the State Government by the issuance of a registration card and a certificate of title. . . . (T)he history of the title . . . shows that there has been no change, (and that) nobody in authority has made a claim against that title. . . . There has been no superior or paramount title shown, hence, I feel I have no alternative under the circumstances (but) to grant a judgment in favor of the defendant . . .. ((emphasis added).)

Jefferson appealed this ruling to the Circuit Court for Prince George's County (Woods, J.), which, with one minor exception, affirmed Judge Fisher's findings of fact and his interpretation of the relevant law. We granted certiorari, and now explain why we disagree with the two earlier court interpretations of section 2-312 in this action as requiring the buyer to prove superior or paramount title in a third party before a breach of the warranty of title is established.

Section 2-312 of the Maryland Uniform Commercial Code sets forth the warranty of title, relevant here, that is inherent in every sale of goods in this State:

Warranty of Title . . .

(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that

(a) The title conveyed shall be good, and its transfer rightful; and

(b) The goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.

(2) A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have. (Md. Code (1975), Commercial Law Art., § 2-312.)

Of primary concern in this case is the requirement imposed upon the seller by subsection (1)(a) that a good title be rightfully transferred. In analyzing its meaning we mention that the term "good title" is not one of art with a fixed significance in the law of property, R. Nordstrom, Handbook of the Law of Sales § 58, at 185 (1970), nor is it in any way defined by the provisions of the Commercial Law Article. Consequently, as is so often the case with legislative enactments, we must resort to the principles of statutory construction if we are to understand the obligation which section 2-312 establishes.

Although we are directed by the General Assembly to construe the Uniform Commercial Code in a manner which "make(s) uniform the law among the various (states)" adopting it, Md. Code (1975), Commercial Law Art., §§ 1-102(1), -102(2)(c), we nonetheless utilize, in interpreting the Code, the same principles of statutory construction that we would apply in determining the meaning of any other legislative enactment. See Fairchild v. Maritime Air Serv., 274 Md. 181, 185-86, 333 A.2d 313, 315-16 (1975); 1 R. Anderson, Uniform Commercial Code § 1-102:4 (2d ed. 1970). These well settled principles require ascertainment of the legislative intent, and if, as is the case here, construction becomes necessary because the terminology chosen is not clear, then we must consider not only the significance of the literal language used, but the effect of our proposed reading in light of the legislative purpose sought to be accomplished. E. g., Harbor Island Marina v. Calvert Co., 286 Md. 303, 311, 407 A.2d 738, 742-43 (1979); Fairchild v. Maritime Air Serv., supra, 274 Md. at 185-86, 333 A.2d at 316. Unlike most state statutory enactments, the U.C.C. is accompanied by a useful aid for determining the purpose of its provisions the official comments of the Code's draftsmen. While these comments are not controlling authority and may not be used to vary the plain language of the statute, Frericks v. General Motors Corp., 278 Md. 304, 312, 363 A.2d 460, 464 (1976), they are an excellent place to begin a search for the legislature's intent when it adopted the Code. For cases utilizing the comments in a similar manner, See, e. g., First State Bank at Gallup v. Clark, 91 N.M. 117, 570 P.2d 1144, 1146 (1977); Whewell v. Dobson, 227 N.W.2d 115, 118 (Iowa 1975); Warren's Kiddie Shoppe, Inc. v. Casual Slacks, Inc., 120 Ga.App. 578, 171 S.E.2d 643, 645 (1969). A perusal of the applicable comments here reveals that the purpose of section 2-312 is to provide for a "buyer's basic needs in respect to a title. . . ." Md. Code (1975), Commercial Law Art., § 2-312, comment 1. A seller accomplishes this objective whenever he transfers to his purchaser "a good, clean title . . . in a rightful manner So that (the buyer) will not be exposed to a lawsuit in order to protect it." Id. (emphasis added). Thus, in the absence of any indication, express or otherwise, that the General Assembly intended anything to the contrary, we hold, in accord with the above quoted comments, that the U.C.C.'s warranty of title requirement is to protect a vendee from legal claims which may arise concerning his ownership of the purchased goods. Accord, Ricklefs v. Clemens, 216 Kan. 128, 531 P.2d 94, 100 (1975); American Container Corp. v. Hanley Trucking Corp., 111 N.J.Super. 322, 268 A.2d 313, 317-18 (1970). The type or nature, however, of a third party's claim of title or right to possession giving rise to a breach of the warranty is not further delineated by the statute. Consequently, we will now proceed to determine the nature of the claims which the legislature intended should have the protection of the warranty of title provided for in section 2-312.

The intermediate appellate and trial court's answer to this query was that a breach of section 2-312(1)(a) occurs only when a purchaser establishes the existence of a "superior or paramount" title in a third party. These rulings are in accord with the showing that was required at common law before a breach of the implied warranty of title could be found. See Crisfield v. Storr, 36 Md. 129, 148-49 (1872); Myers v. Smith, 27 Md. 91, 110 (1867); Accord, John St. Auto Wrecking v. Motors Insurance Corp., 56 Misc.2d 232, 288 N.Y.S.2d 281, 283 (Civ.Ct.1968); 2 A. Squillante & J. Fonseca, Williston on Sales § 15-18, at 385 (4th ed. 1974); 67 Am.Jur.2d Sales § 482 (1973). However, it is our view that the legislature intended, in accord with the design of the drafters, that the Code's warranty of title would provide a buyer with greater protection than its common law counterpart. Our determination in this regard here is amply supported by the statement in the comments that "(d)isturbance of quiet possession, . . . (which at common law required interference by a holder of a superior or paramount title before a breach was declared, See Jarrett v. Scofield, 200 Md. 641, 645-46, 92 A.2d 370, 371-73 (1952),) is one way, Among many, in which the breach of the warranty of title may be established." Md. Code (1975), Commercial Law Art., § 2-312, comment 1 (emphasis added). Again, finding nothing to the contrary, we therefore conclude that the General Assembly intended that section 2-312's protection, unless waived by the purchaser, ² applies to third party claims of title no matter whether eventually determined to be inferior or superior to the buyer's ownership. This conclusion is also in accord with the decisions of those courts in our sister states which have had an...