Opinion
No. 4620.
Argued January 7, 1958.
Decided February 19, 1958.
1. Conditional sales contracts under which the vendor retains title to the goods until the contract price is paid by the vendee are valid at common law and, in the absence of a statute requiring such contracts to be recorded and limiting the rights of such vendors, a purchaser for value and without notice gains no rights against the vendor.
2. The conditional sales recording statute (RSA ch. 361) which provides (s. 15) that where goods are removed to this state from another state and are to be kept here for more than thirty days, the reservation of the property in the vendor shall be void as to purchasers and creditors for value and without notice unless the contract is recorded in the district of this state to which the goods are removed within twenty days after the vendor has received notice of the district to which the goods are removed requires, where the goods are automobiles, that the notice should make it reasonably clear to the vendor that the automobile itself as distinguished from the vendee is removed to this state and its removal is the sort contemplated by the statute (RSA 361:15).
3. The fact that the vendor of an automobile under a conditional sales agreement had notice that the nonresident vendee had removed to this state did not compel a finding as a matter of law that proper notice of removal of the automobile to this state was conveyed to the vendor with the reasonable certainty required by the statute (RSA 361:15).
4. Hence, a finding that the vendor never received proper notice of removal of the automobile to this state rendered the statutory recording provision (Id., s. 15) inapplicable, and such conditional sales agreement was held to have precedence over a subsequent chattel mortgage executed after the automobile had been removed to this state and unrecorded at the time it was repossessed by the vendor.
PETITION, for a declaratory judgment to determine priority of liens on an automobile which was double financed by the defendant William F. Collins. Trial by Court resulting in a verdict for the defendant, General Motors Acceptance Corporation, hereinafter called the defendant. The plaintiff, Bay State Merchants National Bank, excepted to the admission and exclusion of evidence, to certain findings and conclusions of the Court, to its failure to set aside the verdict and to make certain supplemental findings.
It appears that on January 19, 1954, the defendant Roberts Motor Sales, Inc. at Lancaster, New Hampshire, sold Collins an automobile under a conditional sales contract which was shortly thereafter assigned to the defendant. The agreement provided, and the parties understood, that the automobile was to be kept in Lowell, Massachusetts, where Collins then resided. The conditional sales contract was never recorded anywhere. On May 17, 1954, Collins by means of a fraudulent bill of sale negotiated a loan from the plaintiff at its place of business in Lawrence, Massachusetts, the plaintiff taking a chattel mortgage on the automobile as security for the loan. This mortgage also was not recorded anywhere. About June 25, Collins moved to Salem, New Hampshire. On August 2, he applied to the plaintiff for an additional loan and at that time the latter learned he was living in Salem. The bank and Collins executed a second chattel mortgage on a New Hampshire form and dated it back to May 17, 1954. This mortgage was finally recorded on October 27 following at Salem. Previously on October 18 of the same year, the plaintiff and the defendant corporation learned of each other's liens. The next evening General Motors repossessed the car. It is agreed that the unpaid balance due the plaintiff is $1,328 and that due the defendant is $2,322.54. Other facts appear in the opinion. Transferred by Griffith, J.
John B. Ford (by brief and orally), for the plaintiff.
Leahy Denault (Mr. Denault orally), for the defendant General Motors Acceptance Corporation.
The defendants William F. Collins and Roberts Motor Sales, Inc. entered no appearance.
We agree with the plaintiff's contention that "the entire case turns" on whether at the time the defendant General Motors Acceptance Corporation repossessed the automobile on October 19, 1954, its conditional sales agreement of January 19, 1954, took precedence over the plaintiff's mortgage executed on August 2, 1954. The plaintiff bases its claim that its chattel mortgage takes precedence over the defendant's prior conditional sales agreement on the ground that the defendant failed to record its contract within a certain twenty-day period as provided by RSA 361:15 relating to conditional sales. The plaintiff concedes that were it not for the twenty-day provision the defendant would prevail (see Goudie v. Company, 81 N.H. 88), since the law of New Hampshire where the conditional sales agreement was made did not require it to be recorded here upon execution (RSA 361:6), and no recording was required in Massachusetts where the car was first kept. Hence the agreement was valid in this state, unless it could be defeated for failure to comply with s. 15, supra. A fact frequently overlooked in such situations is that conditional sales are valid at common law and are invalid under a recording statute only to the extent that such statute provides. Adams v. Lee, 64 N.H. 421, and authorities cited; Weeks v. Pike, 60 N.H. 447; 3 Jones, Chattel Mortgages and Conditional Sales, s. 1072, pp. 147, 148. It follows from this that "Unless the legislature has interposed a recording statute as a bar or limitation of the rights of the seller under a contract of conditional sale, his retention of title pending the payment of the price by the vendee is unimpeachable as against the rights of all others, regardless of how innocently, or in what good faith those rights may have arisen." 3 Jones, supra, s. 1093, p. 167. Absent the statute a purchaser for value and without notice gains no rights against the seller. Id. See also, Adams v. Lee, supra.
The relevant sections of RSA ch. 361 are as follows: Section 5. "Every provision in a conditional sale reserving property in the seller, which is required to be recorded hereunder, shall be void as to any purchaser from or creditor of the buyer, who, without notice of such provision, purchases the goods for value . . . before the contract shall be recorded as hereinafter provided, unless such contract is so recorded within twenty days after the making of the conditional sale." Section 1 defines a purchase as including "mortgage and pledge" and a purchaser as including "mortgagee and pledgee." Section 6 requires in substance that the contract shall be recorded "in the office of the clerk in the town . . . or place, if any, in which the goods are first kept for use in this state by the buyer after the sale . . . ." This section goes on to state that the contract to be valid need not be acknowledged or attested. Section 15 provides that "When, prior to the performance of the condition, the goods are removed by the buyer . . . from another state and are to be kept for more than thirty days in a. recording district in this state where such contract is not recorded, the reservation of the property in the seller shall be void as to the purchasers and creditors described in section 5, unless the conditional sale contract shall be recorded in the recording district to which the goods are so removed, within twenty days after the seller has received notice of the recording district to which the goods have been so removed. The provisions of this section shall not apply, however, to automobiles removed for vacation purposes . . . ." Notice is nowhere defined in chapter 361.
However, the Legislature evidently had in mind and distinguished from certain other goods automobiles which might be expected to be moved about and even to be out of their home district for periods of time, as is shown by the above section and section 1 previously quoted. In the circumstances, it appears to us that the sort of notice intended by the Legislature is one sufficient to make it reasonably clear to the seller that the automobile itself as distinguished from the vendee was not merely temporarily in another state but that its removal was the sort contemplated by the statute. In re Bowman, 36 F.2d 721; 78 C.J.S., Sales s. 578, p. 305. The rule has been stated as follows: "The notice contemplated by the statute need not be written. Actual notice, however conveyed, of the kind of removal contemplated by the statute is sufficient." 47 Am. Jur., Sales, s. 921, p. 130. It is undisputed that no written notice was ever given the defendant of the removal of the car to New Hampshire, and while such is not required by RSA 361:15, yet in its absence the Court had only the conflicting versions of the defendant Collins and the General Motors representatives upon which to base its conclusion that the defendant corporation never received notice of the removal of the car. True, there were records in the corporate files showing that it had addressed letters to Collins at his New Hampshire residence and treated him as living there after June 25, 1954. The Court has so found. However, we do not think this finding necessarily inconsistent, as claimed by the plaintiff, with the further finding that the defendant never received such notice of the removal of the automobile, as distinguished from the removal of Collins himself, as intended by the statute. The conflicting testimony was of course for the Court to resolve. We are content with its ruling that upon the findable facts notice of the removal of the automobile was not conveyed to the defendant with the reasonable certainty required by the statute prior to the repossession on October 19.
By statute the plaintiff's first mortgage, which was governed by the law of Massachusetts, was "not . . . valid against a person other than the parties" (Mass. G. L. (Ter. ed.) c. 255, s. 1) because never recorded. The plaintiff's second mortgage was governed by the law of this state, because executed with reference to it after Collins had moved to New Hampshire and the car was located here.
It thus appears that the prior conditional sales agreement of the defendant was valid as of October 19, 1954, when it repossessed the car, since it was unaffected by the twenty-day requirement. RSA 361:15. It, therefore, takes precedence over the subsequent mortgage of August 2, 1954, held by the plaintiff and unrecorded until October 27, 1954. Baribault v. Robertson, 82 N.H. 297. The conclusions reached render unnecessary consideration of other issues raised by the parties and all exceptions of merit being disposed of, the order is
Judgment on the verdict.
All concurred.