Merchants Rating & Adjusting Co. v. Skaug, 27664.
| Decision Date | 03 May 1940 |
| Docket Number | 27664. |
| Citation | 102 P.2d 227,4 Wn.2d 46 |
| Court | Washington Supreme Court |
| Parties | MERCHANTS RATING & ADJUSTING CO. et al. v. SKAUG et al. |
Department 1.
Action by E. M. Skaug, Jr., and another, against the Merchants Rating & Adjusting Company and another, to restrain foreclosure of a mortgage and to remove matter to the Supreme Court. From an adverse judgment, the latter appeal.
Affirmed.
Appeal from Superior Court, Spokane County; Chas. W. greenough judge.
Chas W. Gillespie, of Spokane, for appellants.
Hamblen Gilbert & Brooke, of Spokane, for respondents.
We are urged by the parties, in giving our opinion in this matter to answer a broad general question of obvious importance to all who buy, sell, or deal in motor vehicles or who make loans upon the security of motor vehicles or finance motor vehicle transactions. Is chapter 188, Laws of 1937, p. 782, Rem.Rev.Stat. § 6312-1 et seq., a title registration act enacted to establish a system something like the Torrens system of registration of land titles, or was it enacted merely to aid state officers in enforcing police regulations as to such vehicles? It is agreed that the instant case arose out of the following transactions:
On April 15, 1937, fifteen days after chapter 188 went into effect, C. L. Reed, the owner of an automobile, mortgaged it to Merchants Rating & Adjusting Company to secure his indebtedness to that company. The adjusting company filed its mortgage in the office of the auditor of Spokane county, but neither it nor the registered owner applied to the state treasurer, in accordance with section 7 of chapter 188, Laws of 1937, p. 796, Rem.Rev.Stat. Vol. 7A (Supp.), § 6312-7, for the issuance to the adjusting company of a new certificate of ownership.
In September, 1938, E. M. Skaug, Jr., selected a secondhand automobile from the stock of Henry Stevens who held in his possession an assigned certificate of ownership showing full title in Naomi Long. In order to make the purchase, Skaug borrowed a sum of money from the First National Bank of Spokane, and secured the loan by giving the bank a chattel mortgage. Upon due application to the state treasurer, a certificate of title duly issued, reading as folllows:
The car which Skaug purchased proved to be the automobile formerly owned by C. L. Reed and by him mortgaged to the adjusting company. The adjusting company, having kept the mortgage in good standing, in accordance with the provisions of the chattel mortgage statutes, began a foreclosure by notice and sale in January, 1939. Skaug and the bank promptly brought this action to remove the matter to the superior court and to restrain the adjusting company from foreclosing its alleged mortgage.
It will be unnecessary to set out the pleadings in detail. It will be sufficient to say that the parties took issue as follows Skaug and the bank claimed they secured a full and certified unencumbered title from Naomi Long without any notice of the adjusting company's alleged mortgage lien. The adjusting company contended that Skaug and the bank had constructive notice of its mortgage, since it had in all respects complied with Rem.Rev.Stat. §§ 3781, 3782. The plaintiffs, without waiving their first contention, further contended that, in any event, they had been wholly without fault, while the adjusting company had been somewhat at fault in not seeing to it that a new certificate was issued when it took its mortgage, thus invoking the equitable rule that, where one of two innocent parties must suffer a loss, due to the wrongful act of a third, the loss should fall upon that party whose negligence or inattention made it possible for the wrongful act to be done. In answer to that contention, the adjusting company insisted that it was not its duty, but the duty of the mortgagor, to procure the issuance of a new certificate, and cited the statute, Rem.Rev.Stat. Vol. 7A (Supp.), § 6312-7: ...
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