Sayre & Fisher Brick Co. v. Dearden

• Decision Date: 21 November 1952
• Docket Number: No. L,L
• Citation: 23 N.J.Super. 453,93 A.2d 52
• Parties: SAYRE & FISHER BRICK CO. v. DEARDEN et al. --666.
• Court: New Jersey Superior Court

Page 453

23 N.J.Super. 453

93 A.2d 52

SAYRE & FISHER BRICK CO. v. DEARDEN et al.

No. L.--666.

Superior Court of New Jersey

Law Division.

Nov. 21, 1952.

Theodore D. Parsons, Atty. Gen., attorney for the defendants (John J. Kitchen, Deputy Atty. Gen., appearing).

Furst, Furst & Feldman, Newark, attorneys for the plaintiff (Louis Kraemer, Newark, appearing).

WOODS, J.S.C.

The plaintiff in this matter is the holder of a chattel mortgage secured by 18 motor vehicles given by one Peter Fonsetto, dated August 20, 1952 and recorded in the office of the County Clerk for Bergen County on the same date. On that date, too, pursuant to N.J.S.A. 39:10--11 Fonsetto signed 18 statements of encumbrance affecting the 18 individual motor vehicles on the forms prescribed by the Director of Motor Vehicles, and all of the statements were also signed by the Clerk of Bergen County certifying that the chattel mortgage had been recorded by him on August 20, 1952.

N.J.S.A. 39:10--11 provides as follows:

'* * * Whenever a chattel mortgage is placed on a motor vehicle it shall be recorded in the county as provided in sections 46:28--5 and 46:28--7 of the Revised Statutes, and shall also, unless it is given to secure an agricultural loan, be presented to the director With a certificate of ownership and a statement of the encumbrance on a form prescribed by the director; otherwise there shall be the same result of failure to record as provided in section 46:28--5 of the Revised Statutes. The director shall issue a new certificate of ownership recording the encumbrance thereon and shall collect a fee of two dollars ($2.00) for the issuance and filing thereof.'

R.S. 49:28--5 and 46:28--7, N.J.S.A., state that unless a chattel mortgage is duly executed, acknowledged and recorded as therein provided, it shall be absolutely void as against the creditors of the mortgagor and as against subsequent purchasers and mortgagees in good faith.

In the instant case the plaintiff recorded its chattel mortgage with the county clerk after proper and correct execution, and was ready to deliver to the Director of Motor Vehicles the statements required by the statute. However, it is unable to obtain the certificates of ownership which are presently in the possession of five different financial institutions which hold conditional sales or first mortgages on the 18 motor vehicles, and therefore cannot comply with the provisions of N.J.S.A. 39:10--11.

By letter dated August 18, 1952, the Supervisor of the Certificate of Ownership Bureau of the Division of Motor Vehicles wrote the plaintiff as follows:

'In the absence of the certificate of ownership, therefore, you would not be in position to comply with the law, and the chattel mortgage lien could not be recorded with the Director of Motor Vehicles; furthermore, we wish to advise that the certificate of ownership form itself is not designed for the recording of a second lien, and this office is not equipped to handle the recording of second liens.'

Again, on September 11, 1952, the Supervisor wrote the plaintiff:

'We are returning to you herewith, eighteen (18) statements of encumbrance forms received at this office with your letter of September 9th.

'We regret to advise that we are not in a position to follow the suggestion offered in your letter. Chapter 334, Laws of 1951, places the burden of compliance with the law upon the chattel mortgagee.'

Plaintiff filed its complaint in lieu of prerogative writ and for declaratory judgment and demanded a declaratory judgment as follows:

1. That chapter 334, Laws of 1951 is unconstitutional and void as against plaintiff's mortgage.

2. That, in the alternative, chapter 334, Laws of 1951, is not applicable to a subsequent encumbrance.

3. That, in the alternative, the Division of Motor Vehicles is under the statutory duty of taking such steps as may be necessary to effect the recordation of plaintiff's mortgage on the statutory certificate of ownership form, and that the Division of Motor Vehicles and William J. Dearden, as Acting Director of the Division of Motor Vehicles, and Theodore D. Parsons, as Attorney General of the State of New Jersey, be directed to record plaintiff's encumbrance as required by chapter 334, Laws of 1951.

The defendants move for an order dismissing the complaint filed in this cause on the following grounds:

1. Plaintiff has not complied with the statutory requirements for filing a chattel mortgage covering a motor vehicle with the Division of Motor Vehicles.

2. Plaintiff's only remedy is to review the action of an administrative agency by appeal to the Superior Court, Appellate Division, pursuant to Rule 3:81--8.

3. This court is without jurisdiction over the subject matter and without power to give plaintiff the relief requested.

The defendants motion for an order dismissing the complaint filed raises the question as to whether or note a proceeding under the Declaratory Judgments Act is available here.

'The remedial purpose of the Act, is 'to settle and afford relief from uncertainty and insecurity with respect to rights, status and other legal relations,' R.S. 2:26--67, N.J.S.A. The Act merely broadens the rationale of remedies long cognizabel in equity * * *. To serve these ends, it is provided that 'All courts of record in this state shall * * * have power to declare rights, status and other legal relations,' R.S. 2:26--68, N.J.S.A., and particularly to determine 'any question of construction or validity arising under * * * (a) statute * * *,' R.S. 2:26--69, N.J.S.A. The remedy thus provided, however, is circumscribed by the salutary qualification that the jurisdiction of the courts may not be invoked in the absence of an actual controversy.' New Jersey Turnpike Authority v. Parsons, 3 N.J. 235, 69 A.2d 875, 877 (1949).

In the instant case, on the facts before us, there appears to exist an actual controversy.

The motion also raises a point of law, namely, the interpretation and constitutionality of N.J.S.A. 39:10--11. This particular problem is one upon which our courts have not spoken insofar as we are able to ascertain, nor does it appear to have come to the attention of the courts of other states, probably because similar statutes make provision for the recording and notation of second and subsequent liens, while our act is silent as to this situation. For example, the Virginia statute provides that for the purpose of recording such subsequent lien, the director may require any lienholder to deliver to the director the certificate of title, and upon issuing the said new certificate, it shall thereupon be sent or delivered to the lienholder from whom the prior certificate of title was obtained. The statutes of the State of Pennsylvania, California and Washington have similar provisions.

We must, therefore, find the answer by the application of our settled rules of statutory construction. We must try to determine the intention of the Legislature and then to observe and follow it through though there may be a conflict between its intent and the expression thereof in the act. The passage of the Motor Vehicle Certificate of Ownership Law and the amendments thereto supersedes the chattel mortgage recording laws, and the recording of a chattel mortgage lien on a motor vehicle in the county clerk's office does not furnish constructive notice to a subsequent lienholder or innocent purchaser for value. There can be no doubt but that it was the intention of the Legislature to provide for a simple means for the ascertainment of liens against motor vehicles. It is a matter of common knowledge that a large number of new motor vehicles and an even larger number of secondhand motor vehicle sales take place in the course of a year's time. A large percentage are sold on credit secured by conditional sales contracts or chattel mortgages. It would be very difficult and sometimes impossible for a purchaser or a subsequent lienholder to safely guard against the purchase of an encumbered car by searching the chattel mortgage and conditional sales indices of the county clerk's office in which the purchase is made, the seller lives, or the chattel is used, for motor vehicles, being extremely mobile, can pass from county to county in a matter of minutes. Aside from the extreme mobility of this type of personal property, for a person who depended upon a search of the county indices to protect himself against prior encumbrances, it would be necessary to ascertain the name and residence of every former owner and might well necessitate the search of the records of half a dozen counties. Undoubtedly it was the intention of the Legislature to provide for a simple means for the ascertainment of liens against motor vehicles. Instead of requiring a creditor or purchaser to look for liens against a motor vehicle in many places, the fact that such liens exist could be established by looking in one place as designated by the statute, that is, the office of the Director of Motor Vehicles and the certificate of ownership. N.J.S.A. 39:10--14.

The act as a whole indicates conclusively that the Legislature believed the chattel mortgage recordation laws theretofore existing, insofar as they affected motor vehicles, were inadequate for the protection of lienholders and innocent purchasers for value. We construe the act to conclusively declare that no valid lien can be asserted against a motor vehicle unless it is disclosed by a valid certificate of ownership regularly issued by the Director of the Department of Motor Vehicles, even though an asserted lien has been previously filed in the office of the county clerk as provided by R.S. 46:28--5 and 46:28--7, N.J.S.A. Surely, the Legislature intended this section to apply to all liens, otherwise the statute would be without teeth. The fact that the certificate of ownership form itself 'is not designed for the recording of a second lien and the office is not equipped to...