Mid-Continent Finance Corporation v. Grant

• Decision Date: 07 April 1952
• Docket Number: No. 38306,MID-CONTINENT,38306
• Citation: 58 So.2d 1,213 Miss. 789
• Parties: FINANCE CORP. v. GRANT.
• Court: Mississippi Supreme Court

Page 1

58 So.2d 1

213 Miss. 789

MID-CONTINENT FINANCE CORP. v. GRANT.

No. 38306.

Supreme Court of Mississippi.

April 7, 1952.

Judgment Amendment June 9, 1952.

See 59 So.2d 272.

Bell & McBee, Greenwood, for appellant.

Means Johnston, Greenwood, for appellee.

ARRINGTON, Justice.

The appellant, the Mid-Continent Finance Corporation, a corporation, instituted this action in replevin in the County Court of Leflore County for the recovery of a Plymouth automobile in the possession of John T. Grant, the appellee. Judgment was rendered for the appellee and upon appeal to the Circuit Court of Leflore County, the judgment was affirmed. From this judgment, the appellant appeals.

A brief summary of the facts is as follows: On November 4, 1948, Whitman W. Gaston of Ackerman, Choctaw County, Mississippi, purchased from the Tri-State Auto Company of Memphis, Tennessee, a Plymouth automobile for a price of $2866.92. Of this amount, $735 was paid in cash, leaving a balance of $2131.92. The purchaser signed on the same date a conditional sales contract in which he agreed to pay the balance due in 18 consecutive monthly installments of $118.44 each, and executed his promissory note for this amount. The conditional sales contract contained the usual provisions found in agreements of this kind, and provided 'that title to said car shall remain in the holder hereof (which shall be taken to mean the seller or the Mid-Continent Finance Corporation if this contract and note are assigned to it or anyone else to whom this contract and note may be assigned) until said balance is fully paid in cash.'

On the same date, the Tri-State Auto Company assigned the contract and note to the appellant. On the following day, November 5, 1948, Gaston sold the automobile to the Leflore Auto Company in Greenwood, Mississippi for a cash consideration. On December 1, 1948, the Leflore Auto Company sold the said automobile to the appellee, John T. Grant. The said Gaston represented to the Leflore Auto Company that he was the owner of the automobile and that it was free of all liens. The appellant had no knowledge of the fact that Gaston had sold the automobile to the Leflore Auto Company, nor that the appellee had purchased same until several weeks later, when default was made in the payments of the note and contract by Gaston, and the appellant, looking for the automobile, found it in the possession of the appellee Grant. On March 28, 1948, the appellant relying upon its title brought this suit in replevin for the possession of the automobile, which resulted in judgment for the appellee.

The appellant assigns as error that the lower court erred in giving judgment for the appellee. The appellee's defense in the court below was that he was an innocent purchaser for value without notice and that he acquired a good title thereto. Under the decisions of this Court, this being a Tennessee contract, this case will be governed by the laws of that state. The appellee contends here that the conditional sales contract was a lien under the laws of the State of Tennessee and that it should have been recorded in Choctaw County, Mississippi, by virtue of Section 870, Mississippi Code of 1942, which is as follows: 'Mortgages, deeds of trust, and other liens on personal property executed out of this state shall only be binding on such property in or when removed into this state, as against creditors and bona fide purchasers without notice, from the time such mortgage, deed of trust, or other instrument, duly acknowledged or proved, or a duly certified copy of the record thereof, shall be delivered to the proper clerk in this state for record.'

The appellant contends that the conditional sales contract where title was retained by the seller is not a lien under the laws of the State of Tennessee; that it is not required to be recorded in Tennessee, and not being a lien, was not required to be recorded in Choctaw County, Mississippi, the home of the purchaser Gaston. There is no dispute as to the facts in this case. It is admitted that the conditional sales contract was not recorded in Mississippi, therefore, the sole question presented is, was the conditional sales contract a lien under the laws of the State of Tennessee within the meaning of Section 870, Mississippi Code of 1942, quoted above.

The appellee cites a number of Tennessee cases with reference to conditional sales contracts with title retained. In Franklin Savings & Loan Corporation v. Snapp, Deputy Sheriff, 179 Tenn. 151, 163 S.W.2d 332, 333, the Court said: 'A title retention is but a form of lien, in the nature of a chattel mortgage, to secure the purchase price. American Indemnity Co. v. Allen, 176 Tenn. 134, 138 S.W.2d 445; Nance v. O. K. Houck Piano Co., 128 Tenn. 1, 155 S.W. 1172, Ann.Cas.1914D, 834; Shaw v. Webb, 131 Tenn. 173, 174 S.W. 273, L.R.A.1915D, 1141, Ann.Cas.1916A, 626. In the case of Exposition Arcade Corporation v. Lit Bros., 113 Va. 574, 75 S.E. 117, Ann.Cas.1913D, 335, proven on the trial of the instant case, the court, in dealing with a conditional sales contract, held that 'The transaction is, in legal effect, the same as if the buyer had obtained title from the seller, and had given back a mortgage to secure the purchase price."

There are a large number of other authorities cited which hold that a conditional vendor acquires a lien merely as security for the purchase money by the retention of title. Upon our own examination of this question, we find that in the case of McCombs v. Guild, Church & Co., 1882, 77 Tenn. 81, with reference to conditional sales contract, the Court said: 'It has uniformly been held in this State that a contract for the sale of personal property, by which the possession is delivered to the purchaser but the title retained in the seller until the purchase money be paid, is valid, and if the purchaser dispose of the property before the title is vested in him by the payment of the purchase money, the original owner may follow it into the hands of the third party: Houston v. Dyche, 19 Tenn. 76; Gambling v. Read, 19 Tenn. 281; Price v. Jones, 40 Tenn. 84; Holmark v. Molin, 45 Tenn. 482. And although the contract of sale be reduced to writing, it need not be registered: Bradshaw v. Thomas, 15 Tenn. 497; Buson v. Doughterty, 30 Tenn. 50. As between the original vendor and sub-vendee in such a case it is a question of title, and neither payment of the price nor want of notice of the vendor's right will protect the subvendee: Price v. Jones, 40 Tenn. 85.'

In a recent case, decided in 1950, Ghormley v. Raulston, 34 Tenn.App. 109, 233 S.W.2d 57, 59, the Court said: 'In Tennessee a conditional sales contract is but a form of lien to secure the purchase price, partaking of the nature of a chattel mortgage. Marion Manufacturing Co. v. Buchanan, 118 Tenn. 238, 99 S.W. 984 ; McDonald Automobile Co. v. Bicknell, 129 Tenn. 493, 167 S.W. 108; Blackwood Tire & Vulcanizing Co. v. Auto Storage Co., 133 Tenn. 515, 182 S.W. 576 [L.R.A.1916E, 254]; Williamson Brothers v. Daniel, 21 Tenn.App. 346, 110 S.W.2d 1028.'

The law in the State of Tennessee with reference to conditional sales contracts appears to be the same as the law in our own State. In Mitchell v. Williams, 155 Miss. 343, 124 So. 430, 431, the Court held: 'It is argued for the appellant that the reserved title contract is in effect only a mortgage, and as it was not recorded in the county records, and as Mitchell had no notice of its existence, that he is protected as a bona fide purchaser. This contention is not sustained by the law of this state. See Harrison v. Broadway Motor Co., 128 Miss. 766, 91 So. 453, 25 A.L.R. 1148; Burkhalter v. Mitchell [& McTendon], 107 Miss. 92, 64 So. 967; United States Motor Truck Co. v. Southern Securities Company, 131 Miss. 664, 95 So. 639; Richton...