Opinion
No. 28180
Decided December 31, 1940.
Motor vehicles — Replevin — Distributor sold automobile to dealer-partnership — Individual partner, without separate title, bill of sale, or paying state taxes — Executed chattel mortgage to partnership which assigned mortgage to finance company — Partnership sold automobile to purchaser for value who paid sales tax — Partnership applied for certificate of title, without evidence of ownership — Sections 6290-2, 6290-5 and 6290-13, General Code — Certificate of title issued by clerk of courts — Without presentation of chattel mortgage, but same noted on certificate — Certificate came into possession of finance company — Finance company not entitled to replevy automobile from innocent purchaser.
A partnership, dealing in motor vehicles and doing business under a trade name which did not disclose the name of any partner, purchased in this state a motor vehicle from a distributor on November 6, 1937. Thereafter, one of the partners to whom separate title or separate possession was never given and to whom no bill of sale was ever issued, and upon which transaction no sales or use tax was ever paid, executed a chattel mortgage on such motor vehicle to the partnership as mortgagee on a mortgage form furnished by a finance company. On the same day that the chattel mortgage was issued, the partnership assigned the chattel mortgage and notes secured thereby to the finance company in the trade name under which it was doing business in Hamilton county. The partnership retained possession of the motor vehicle without any tag, mark or other notice upon it of the existence of the chattel mortgage until May 21, 1938, when it was sold and delivered by the partnership to a purchaser for value, who paid all but a small part of the purchase price in cash and in addition thereto, paid the Ohio sales or use tax and the fees for obtaining a certificate of title. On May 23, 1938, the dealer (partnership) made application to the clerk of courts for a certificate of title to the motor vehicle in its own name. The dealer did not accompany the application for such certificate with a manufacturer's or importer's certificate as provided by Sections 6290-2 and 6290-13, General Code, or by a proper bill of sale or sworn statement of ownership, the originals of which had been filed with the clerk, or a duly certified copy thereof, all as required by Section 6290-5, General Code. Without the presentation to him of the chattel mortgage dated November 12, 1937, which had been assigned on the same day to the finance company under its trade name, the clerk noted on the certificate of title a chattel mortgage without date in the correct corporate name of the finance company, and issued a certificate of title which came into the possession of the finance company without any consideration other than the payment on or about November 12, 1937, for the assigned chattel mortgage and note secured thereby, which transaction was completed prior to the effective date (January 1, 1938) of the Certificate of Title Law (Section 6290-2 et seq., General Code). On June 16, 1938, the finance company, under its proper corporate name, brought a replevin action against the purchaser. Held: The Court of Appeals did not err in affirming the judgment of the Court of Common Pleas, which in turn affirmed the judgment of the Municipal Court of Cincinnati, which held that the finance company was not entitled to the right of property and possession and that such motor vehicle was not wrongfully detained, and ordering the return of the motor vehicle to the purchaser, a defendant below.
CERTIFIED by the Court of Appeals of Hamilton county.
Appellant is a Pennsylvania corporation doing business in Cincinnati under the trade name of Cincinnati Finance Company.
On November 6, 1937, The L.T. Patterson Company, distributors of Chrysler automobiles, sold a Chrysler sedan to a Cincinnati retail dealer, Northside Auto Sales.
Northside Auto Sales is a partnership composed of George Munday and William Preston.
On November 12, 1937, partner Munday executed a note secured by a chattel mortgage on the Chrysler sedan to Northside Auto Sales. On the same day, this mortgage was filed with the county recorder of Hamilton county under Sections 8560 and 8561, General Code. The sworn statement appearing on the back of this chattel mortgage reads as follows:
"Affiant being first duly sworn says that he is (agent of) Northside Auto Sales (dealer's name) the mortgagee named in the foregoing mortgage; that the said mortgagee has a valid claim against the mortgagor named therein amounting to nine hundred twenty-six and 55/100 dollars ($926.55) (balance due); that said claim is just and unpaid; and that said mortgage is given in good faith to secure the same.
"George Munday
"(Member of firm must sign this affidavit but shall not add title to signature.)"
(Duly verified.)
On the same day (November 12, 1937), the mortgage was assigned to Cincinnati Finance Company. This assignment was executed by Munday on behalf of Northside Auto Sales. Munday was therefore mortgagor, mortgagee (as a member of the partnership), assignor of the mortgage, and verifier of the mortgage on behalf of the mortgagee.
The record does not disclose that any bill of sale was ever issued either to or by Northside Auto Sales or to or by Munday (who executed the chattel mortgage), as required by Section 6310-3 et seq., General Code, in effect up to and including December 31, 1937. No tags or marks were placed upon the Chrysler automobile to warn or notify prospective purchasers that the automobile was mortgaged. There was no notice or indication of ownership by anyone other than Northside Auto Sales. The automobile remained in the possession of Northside Auto Sales.
On May 21, 1938, appellee, Albert Usinger, purchased the Chrysler sedan from Northside Auto Sales. On that day, Munday had driven the Chrysler sedan to Usinger's place, where the sale and delivery were made. After the terms had been agreed upon and the delivery made, Usinger went to the place of business of Northside Auto Sales and signed a "car order and invoice, Northside Auto Sales." In this invoice, there is a charge against Usinger of $21 for Ohio sales tax and $3 for service. The evidence shows that this $3 charge was made to cover the expense "for recording the sales tax or the bill of sale or whatever it is called."
On the following Monday morning (May 23, 1938), both of the partners doing business as Northside Auto Sales went to Usinger's shop and collected $600. A balance of $124 was to be paid on June 21, 1938. The record shows that witness Fred Usinger who handed appellee Usinger's check to the partners testified that when the partners collected the $600, he said: " 'Here is your money as per agreement,' and I remarked to him the second time * * * 'When are we going to get this bill of sale, George?' * * *
"The Court: Go ahead and tell us about the rest of it.
"A. Well, the bill of sale will be turned over to you from three to five days at the very latest."
On the same day that the partners received the $600 check from Usinger (May 23), Northside Auto Sales made application for a certificate of title under Section 6290-2 et seq., General Code, which became effective January 1, 1938. In this application it was represented that the Chrysler sedan had been acquired by Northside Auto Sales from L. T. Patterson Company. The application showed no Ohio sales or use tax was paid. In the application and on the certificate of title, issued by the clerk of courts in the name of Northside Auto Sales as owner, a chattel mortgage and note for $926.55 held by Automobile Finance Company (not Cincinnati Finance Company, to whom the mortgage had been assigned), were noted as a lien.
The finance company's records show Munday as the purchaser of a Chrysler sedan and also as owner and operator of Northside Auto Sales.
The vendor's license was issued to George Munday and William Preston, who gave their trade name as Northside Auto Sales.
On June 16, 1938, appellant under its corporate name filed a bill of particulars and affidavit in replevin in the Municipal Court of Cincinnati against George Munday and Louis Usinger. Albert Usinger, appellee herein, was later made party defendant.
During the trial, the attorneys for the finance company introduced in evidence the certificate of title. The record is silent as to whom this certificate of title was delivered, or in whose possession it was prior to its introduction in evidence.
The Municipal Court found that the finance company did not have a valid chattel mortgage and "was not entitled to the right of property and possession of said automobile, and that same was not wrongfully detained." The Municipal Court further found the right of property and possession in appellee, Albert Usinger. Motion for new trial was overruled and appeal was taken to the Court of Common Pleas, where the judgment of the Municipal Court was affirmed. The case was then taken on appeal on questions of law to the Court of Appeals of Hamilton county, which affirmed the judgment of the Court of Common Pleas, one judge dissenting.
The Court of Appeals of Hamilton county certified the case to this court as being in conflict with the judgment of the Court of Appeals of the Eighth Appellate District in the case of Union Commercial Corp. v. R. J. Schmunk Co.
Mr. Benjamin S. Schwartz and Mr. Joseph Schwartz, for appellant.
Messrs. Franks Franks, for appellee.
The Municipal Court of Cincinnati has jurisdiction in actions for the replevin of personal property. Section 1558-6(1) and Section 1558-6 a( e), General Code. In the actions and proceedings of which the Municipal Court has jurisdiction, all laws conferring jurisdiction upon a Court of Common Pleas, a police court, or a justice of the peace, giving such court or officer power to hear and determine such causes, extend to the Municipal Court of Cincinnati. Section 1558-9, General Code.
When the appraised value of the property replevied exceeds $300, it is the duty of a justice of the peace to certify the proceedings in the case to the Common Pleas Court. As the value of the property here involved is more than $300, it will be assumed that the proceedings below were under Section 12051 et seq., General Code, rather than under Section 10462 et seq., General Code, and reference hereinafter will be made accordingly.
Section 12051, General Code, provides: "The possession of specific personal property may be recovered in an action as provided in this chapter." The chapter referred to is Chapter 6, Division VII, Title IV, Part Third, under the classification of "Special Actions." However, such action is subject to the same general rules as in other civil actions. 35 Ohio Jurisprudence, 431.
As stated in 35 Ohio Jurisprudence, 432: "It has been declared that the action of replevin, as regulated by statute in Ohio, differs essentially from the English action of replevin and that of most of the sister states, and that but little light could be cast upon the question by reference to the decisions of other states, based, as they are, upon statutory provisions and rules of practice materially variant from those of Ohio."
Section 12052, General Code, provides that an order for the delivery of property to the plaintiff shall issue when there is filed in the office of the clerk of the court an affidavit on behalf of plaintiff describing the property claimed and showing that the plaintiff is the owner of the property or has an interest therein. If the ownership or interest is special or partial the facts shall be stated. Such affidavit shall also show that the property is wrongfully detained by the defendant.
Under Section 12069, General Code, it is the duty of the jury, or in case a jury be waived or not demanded, the court, to find whether the plaintiff had the right of property or the right of possession only, at the commencement of the suit.
The plaintiff cannot prevail unless he has proved by a preponderance of the evidence either his right of property or right of possession at the commencement of the suit.
It is well settled that an action in replevin will lie on behalf of a chattel mortgagee or his assignee, who is entitled to possession of the property. See Ohio authorities cited in note, 35 Ohio Jurisprudence, 454.
However, a fraudulent chattel mortgage, or a chattel mortgage given by one not the owner of the chattel, even though executed and deposited with the county recorder pursuant to Section 8560 et seq., General Code, will not entitle a holder with knowledge of the fraud, or a holder of a mortgage signed by one not the owner, to maintain an action in replevin against an innocent purchaser for value.
While the evidence disclosed by the bill of exceptions is sketchy and interspersed with many objections and much argument, it does show the following: That appellant, doing business under the trade name of Cincinnati Finance Company, had been buying chattel mortgages on automobiles sold by the partnership doing business under the name of Northside Auto Sales; that the printed chattel mortgage form used in this case was one evidently prepared and printed by appellant and bears on its face a printed assignment to Cincinnati Finance Company; that this printed assignment form requires the signature of the dealer countersigned by the owner, partner, or officer of the dealer; that the assignment of this mortgage was executed by "Northside Auto Sales, by George Munday," and under Munday's signature appear the words "(Signature of owner, partner, or officer)"; that prominently printed on this mortgage form in capital letters is the following, "Bill of sale must be filed before this mortgage"; that the jurat on the chattel mortgage also showed Munday to be a member of Northside Auto Sales partnership, mortgagee; that the manager of appellant and appellant's checkers had visited the place of business of Northside Auto Sales and checked this particular automobile, which was to be used as a demonstrator; that Northside Auto Sales had purchased this automobile from the Chrysler distributor a few days before the execution of the mortgage; that title at no time was ever in the name of George Munday; and that no bill of sale had ever been issued to Munday or anyone else for this automobile. The evidence does not show the date of payment to the distributor.
In answer to the question on cross-examination, "Now at the time you made this loan on this automobile, you made that loan to the Northside Auto Sales, did you not?" appellant's manager answered: "I can't say, it is possible the check was made direct to the distributor."
This manager further testified on cross-examination:
"Q. And you didn't take the trouble to find out if he had a title, did you? A. I was not here at that time. * * *
"Q. Who was the man that took care of that transaction, is he here now? A. He is out of town. C.H. Stevenson was the manager at that time.
"Q. But you have never seen a bill of sale of George Munday at any time? A. No, sir.
"Q. And so far as you know this loan was made without a bill of sale ever having been issued to George Munday? A. I can't answer that, I don't know."
A deputy clerk of courts testified that no bill of sale to George Munday had been filed.
Under the provisions in the General Code governing the disposition or acquisition of a motor vehicle, in effect at the date of this mortgage, it was unlawful to sell, convey, give away, transfer, exchange, receive, purchase or obtain any motor vehicle or used motor vehicle within this state, except in the manner and subject to the conditions provided in Section 6310-3 et seq., General Code, then in force.
We are not unmindful of the holding of this court in the fourth paragraph of the syllabus in the case of Commercial Credit Co. v. Schreyer, 120 Ohio St. 568, 166 N.E. 808, 63 A. L. R., 674, as follows: "A note secured by a chattel mortgage upon a motor vehicle in the possession of the mortgagor at the time of the execution of the mortgage, though the mortgagor had at the time no bill of sale therefor executed in compliance with Sections 6310-3 to 6310-14, General Code, is nevertheless a valid mortgage between the parties, and, if and when said mortgage is filed with the county recorder of the county where the mortgagor resides, it has priority over subsequent purchasers and mortgagees in good faith. ( Ohio Farmers' Ins. Co. v. Todino, 111 Ohio St. 274, and Helwig v. Warren State Bank, 115 Ohio St. 182, overruled.)"
That case is not authority here for the reason that there is no evidence which shows that the automobile ever stood in the name of the mortgagor or that it ever left the possession of the partnership prior to the sale and delivery to appellee Usinger. On the contrary, the evidence is clear that at the time of the execution of the mortgage in question, the motor vehicle was in the possession and ownership of the partnership, Northside Auto Sales. It is not necessary here to go into the question of whether a partner has the right to give a chattel mortgage on partnership property. Even though such mortgage might be good against the partnership property where no rights of third parties have intervened, yet it cannot be said that such a chattel mortgage when duly filed with the county recorder is constructive notice to anyone.
The reasonable deduction from the evidence in this case and the state of the law existing at the time of the execution of the chattel mortgage, is that Northside Auto Sales, a Chrysler retail dealer, wanted to purchase a Chrysler sedan as a demonstrator, and desired to borrow the necessary capital from appellant; while appellant was willing to loan the necessary capital it wanted to avoid the effect of the holdings of the courts in respect of "floor-plan" chattel mortgages.
Appellant's own records, in addition to the assignment and jurat on the mortgage itself, show that it knew the mortgagor was a member of the mortgagee partnership. The lack of a bill of sale to Munday, as required not only by law but by the notice on appellant's own chattel mortgage form, as well as the lack of any showing of the payment of the state sales or use tax, is also persuasive.
The filing of the chattel mortgage from Munday to Northside Auto Sales was not constructive notice of a lien on an automobile owned by Northside Auto Sales, for which no bill of sale was ever executed or filed. Nor was the assignment of that mortgage to Cincinnati Finance Company constructive notice of its ownership by Automobile Finance Company, appellant herein.
An examination of the registrar's index kept pursuant to Section 6299, General Code, in effect at the date of this mortgage, would not have disclosed Munday's name as the owner of this automobile. If Section 6301, General Code, in effect at the same time, had been complied with, this automobile would have appeared in the name of Northside Auto Sales, dealer.
It is not necessary to pass on the question whether this chattel mortgage might be good between appellant and the partnership — the question here being: Is it good against an innocent purchaser for value — one who has paid full value and had no notice actual or constructive of the interest of any other person than his immediate assignor?
The appellant claims that appellee Usinger never acquired ownership, for the reason that he is not in possession of a certificate of title issued under the certificate of title law, Section 6290-2 et seq., General Code, in effect at the time appellee Usinger purchased the automobile.
Section 6290-2, General Code, provides: "No manufacturer, importer, dealer or other person hereafter shall sell or otherwise dispose of a new motor vehicle to a dealer to be used by such dealer for purposes of display and resale without delivering to such dealer a manufacturer's or importer's certificate duly executed in accordance with the provisions of this chapter and with such assignments thereon as may be necessary to show title in the purchaser thereof; nor shall such dealer purchase or acquire a new motor vehicle without obtaining from the seller thereof such manufacturer's or importer's certificate."
Section 6290-3, General Code, provides: "No person except as provided in the preceding section hereafter shall sell or otherwise dispose of a motor vehicle without delivery [delivering] to the purchaser or transferee thereof a certificate of title with such assignment thereon as may be necessary to show title in the purchaser, nor purchase or otherwise acquire a motor vehicle unless he shall obtain a certificate of title for the same in his name in accordance with the provisions of this chapter."
Section 6290-4, General Code, provides: "No person acquiring a motor vehicle from the owner thereof, whether such owner be a manufacturer, importer, dealer or otherwise, hereafter shall acquire any right, title, claim, or interest in or to said motor vehicle until he shall have had issued to him a certificate of title to said motor vehicle, or delivered to him a manufacturer's or importer's certificate for the same; nor shall any waiver or estoppel operate in favor of such person against a person having possession of such certificate of title or manufacturer's or importer's certificate for said motor vehicle for a valuable consideration. No court in any case at law or in equity shall recognize the right, title, claim, or interest of any person in or to any motor vehicle, hereafter sold or disposed of, or mortgaged or encumbered, unless evidenced by a certificate of title or manufacturer's or importer's certificate duly issued, in accordance with the provisions of this chapter."
Section 6290-5, General Code, provides: "Application for a certificate of title shall be made upon a form hereinafter prescribed by this chapter; and shall be sworn to before a notary public or other officer empowered to administer oaths; and shall be filed with the clerk of courts of the county in which the applicant resides if the applicant be a resident of this state or if not such resident, in the county in which the transaction is consummated; and shall be accompanied by the fee prescribed in this chapter; and if a certificate of title has previously been issued for such motor vehicle in this state, shall be accompanied by said certificate of title duly assigned, unless otherwise provided for in this chapter. If a certificate of title has not previously been issued for such motor vehicle in this state said application, unless otherwise provided for in this chapter, shall be accompanied by a manufacturer's or importer's certificate as provided for in this chapter; or by a proper bill of sale or sworn, statement of ownership, the originals of which have been duly filed with the clerk of courts, or a duly certified copy thereof; or by a certificate of title, bill of sale or other evidence of ownership required by the law of another state from which such motor vehicle was brought into this state. The clerk of courts shall retain the evidence of title presented by the applicant and on which the certificate of title is issued. The clerk of courts shall use reasonable diligence in ascertaining whether or not the facts in said application are true by checking the application and documents accompanying same with the records of motor vehicles in his office; and if satisfied that the applicant is the owner of such motor vehicle and that the application is in the proper form, the clerk of courts shall issue a certificate of title over his signature and sealed with his seal, but not otherwise.
" In the case of the sale of a motor vehicle by a dealer to a general purchaser or user, the certificate of title shall be obtained in the name of the purchaser by the dealer upon application signed by the purchaser and in all other cases such certificate shall be obtained by the purchaser. In all cases of transfers of motor vehicles, the application for certificate of title shall be filed within three days after the delivery of such motor vehicle.
"The clerk of courts, except as hereinafter provided, shall refuse to accept for filing any application for certificate of title and shall refuse to issue certificate of title, when the motor vehicle was transferred in the state of Ohio after the effective date of this act, unless prepaid tax receipts required by Section 5546-3 of the General Code are presented with the application in the manner and form to be prescribed by the Tax Commission. * * *
"In the following cases the clerk of courts shall accept for filing such application and shall issue certificate of title without requiring payment or evidence of payment of either tax: * * *
"(3) When the transaction in this state is not a retail sale as defined by Section 5546-1 of the General Code. * * *" (Italics ours.)
Section 6290-9, General Code, provides: "The provisions of Sections 8560 to 8572, inclusive, of the General Code, shall never be construed to apply to or to permit or require the deposit, filing or other record whatsoever of a chattel mortgage, conveyance intended to operate as a mortgage, trust receipt, conditional sales contract, or other similar instrument, or any copy of same, made hereafter and covering a motor vehicle. Any mortgage, conveyance intended to operate as a mortgage, trust receipt, conditional sales contract, or other similar instrument made hereafter and covering a motor vehicle, if such instrument is accompanied by delivery of said manufacturer's or importer's certificate and followed by actual and continued possession of same by the holder of said instrument, or in the case of a certificate of title if a notation of same has been made by the clerk of courts on the face thereof, shall be valid as against the creditors of the mortgagor whether armed with process or not, and subsequent purchasers, mortgagees and other lien holders or claimants but otherwise shall not be valid against them. All liens, mortgages and encumbrances noted upon a certificate of title shall take priority according to the order of time in which the same are noted thereon by the clerk of courts. Exposure for sale of any automobile or motor vehicle by the owner thereof, with the knowledge or with the knowledge and consent of the holder of any lien, mortgage or encumbrance thereon, shall not render the same void or ineffective as against the creditors of such owner, or holders of subsequent liens, mortgages or encumbrances upon such motor vehicle.
"The holder of a chattel mortgage, trust receipt, conditional sales contract or similar instrument, upon presentation of said instrument to the clerk of courts of the county where such certificate of title was issued, together with the certificate of title and the fee prescribed by his [this] chapter, may have a notation of such lien made on the face of such certificate of title. The clerk of courts shall enter said notation and the date thereof over his signature and seal of office, and he shall also note such lien and the date thereof on the duplicate of same in his files and on that day shall notify the registrar who shall do likewise. The clerk of courts shall also indicate by appropriate notation on such instrument itself the fact that such lien has been noted on the certificate of title. * * *
"The provisions of Sections 8560 to 8572, inclusive, of the General Code shall continue to apply to the deposit, filing, refiling, or other record whatsoever of a chattel mortgage, conveyance intended to operate as a mortgage, trust receipt, conditional sales contract, or other similar instrument, or any copy of same, made prior to the effective date of this act and covering a motor vehicle." (Italics ours.)
It will be noted that in case of the sale of a motor vehicle by a dealer to a general purchaser or user, the certificate of title shall be obtained in the name of the purchaser by the dealer upon application signed by the purchaser, and that the application for the certificate of title shall be filed within three days after the delivery of such motor vehicle.
In the case of State, ex rel. City Loan Savings Co., v. Taggart, Recorder, 134 Ohio St. 374, 17 N.E.2d 758, which upheld the constitutionality of the Certificate of Title Law, it is said: "As to the contention that the citizens of Ohio and relator in particular are deprived of their property without due process of law, the respondent points out that it must be assumed the clerks of courts and the registrar, as public officials, will act honestly and reasonably in the performance of the duties conferred upon them, and that there is nothing in the 'certificate of title law' which prohibits an aggrieved person from resort to the courts if a clerk of courts or the registrar, without warrant, arbitrarily or fraudulently denies or cancels a certificate of title, or if a clerk acts in like manner with regard to the notation of a lien."
The certificate of title in question here was improperly issued and is void in the hands of appellant.
Section 6290-5, General Code, requires that if a certificate of title has not previously been issued in this state, the application therefor shall be accompanied by a manufacturer's or importer's certificate in the form prescribed by Section 6290-13, General Code, or by a proper bill of sale or sworn statement of ownership, the originals of which have been duly filed with the clerk of courts. The application for this certificate of title shows that the only evidence of ownership presented to the clerk of courts was "invoice number C-735" without any date and the simple statement that the "applicant acquired said motor vehicle by purchase from L. T. Patterson Company, 1010 Gilbert Ave., Cinti., O." This invoice number C-735 is dated November 6, 1937, and does not show any payment for the automobile in question. It is not conclusive of ownership, because it does not amount to a bill of sale and is not the substitute for a bill of sale or a sworn statement of ownership. At the time that this certificate of title was issued, appellee Usinger was the owner of the automobile in question, and by the terms of Section 6290-5, General Code, there was a period of three days from the delivery of the automobile on May 21 within which it was the duty of the dealer to make application for and obtain a certificate of title in appellee Usinger's name.
There is no provision in law for noting upon a certificate of title any chattel mortgage given prior to the enactment of the certificate of title law. By the provisions of Section 6290-9, General Code, the provisions of Sections 8560 to 8572, General Code, continue to apply to the deposit, filing, refiling or other record whatever of a chattel mortgage, conveyance intended to operate as a mortgage, trust receipt, conditional sales contract, or other similar instrument or copy of the same made prior to the effective date of the certificate of title law and covering a motor vehicle.
The clerk of courts is not authorized to note on the certificate of title any lien without the presentation of such lien to him. The act requires the clerk of courts to use reasonable diligence in ascertaining whether or not the facts in the application are true by checking the application and documents accompanying the same with his records. The evidence in this case does not show the existence of any chattel mortgage on file with the county recorder which had been assigned to appellant under the name of Automobile Finance Company. While Section 6290-6, General Code, requires the clerk to deliver the certificate of title to the holder of the first lien noted on the certificate of title, yet as the notation of a lien of a chattel mortgage and note held by Automobile Finance Company was improperly placed on the certificate of title, the certificate was improperly delivered (if delivered) to appellant, and appellant thereby gained no right or title to the certificate
Besides, the certificate of title, being issued upon the false representations of Munday and/or Northside Auto Sales, was void ab initio. The very purpose of the law is to protect ownership against fraud.
Appellant's mortgage does not contain any notation by the clerk that such lien had been noted on the certificate of title. Had the clerk of courts required, as he should have required, the production of the lien before issuing the certificate or noting it on the certificate, he would have found: (a) That the mortgage in question stood as assigned to Cincinnati Finance Company; and (b) on account of the date of its execution and filing with the county recorder, it was not an instrument or lien to be noted on the certificate of title.
Therefore, the certificate of title introduced in evidence on behalf of appellant (plaintiff below) is clearly invalid, and the appellant has no right to rely upon same.
There is a further reason why appellant had no right to rely on the certificate of title, even if it had been issued properly. Under Section 6290-4, General Code, unless the holder of the certificate of title paid a valuable consideration therefor, waiver and/or estoppel may still operate in favor of a person acquiring a motor vehicle from the owner thereof. Under the facts of this case, appellant is estopped from setting up its chattel mortgage against appellee Usinger.
In the absence of a certificate of title, appellee Usinger, defendant below, could not show a title complete. However, there was no burden upon defendant below to show any title or right of possession. The burden was upon the plaintiff below (appellant here) to show an unlawful detention by the defendant of a chattel of which the plaintiff below was owner or in which he had some interest, and of which plaintiff was entitled to immediate possession.
Under the facts in this case, plaintiff below was not entitled either to the right of property or the right of possession of this automobile. Although Usinger's right of property may be defective by reason of his lack of possession of a certificate of title, the evidence clearly establishes that he had the right of possession. Replevin will not lie against one who has the right of possession at the time of the commencement of the suit.
We are of the opinion that the trial court was justified in holding, under the evidence in this case, that the right of property, as well as the right of possession, was in defendant below, appellee here. Therefore, the judgment of the Court of Appeals in affirming the judgment of the Common Pleas Court, which affirmed the judgment of the Municipal Court of Cincinnati, should be and hereby is affirmed.
Judgment affirmed.
WEYGANDT, C.J., DAY, ZIMMERMAN, MATTHIAS and HART, JJ., concur.
The appellant bases its case on two premises: First, the validity of its mortgage and, second, the alleged lack of a certificate of title by the defendant, Albert Usinger. It seems clear from the record that at the time of the sale of this automobile by the Northside Auto Sales to the defendant, Albert Usinger, the Northside Auto Sales was the owner of the automobile by virtue of purchase from the L. T. Patterson Co., the distributor. Usinger, therefore, had purchased the car from one having the right to give him a certificate of title, and he, Usinger, had and still has, the right to demand and, if refused, to secure by appropriate court action, a certificate of title for this car.
Some difficulty seems to have arisen from the fact that subsequent to the sale the Northside Auto Sales Company issued to itself the certificate of title, and this certificate of title is now of record. It seems clear that such a certificate of title may be cancelled or corrected by appropriate court action. If it were otherwise, the Certificate of Title Act would become an aid to those attempting fraud, rather than a protection of the innocent against fraud. Express power is conferred by Section 6290-8, General Code, upon the registrar of motor vehicles to cancel certificates of title improperly issued for stolen or converted motor vehicles, and by appropriate action one entitled to a certificate of title may procure it. Usinger's failure to exercise this right can have no effect upon the controversy between him and the finance company, and can lend no weight whatsoever to the claim of the appellant that it is entitled to the car.
In replevin actions, it is a well-settled rule of law that the person attempting to recover property must do so on the strength of his own title and not the weakness of his opponent's. What, then, is the strength of the plaintiff's title?
Briefly stated, the evidence in the instant case shows that as between the Northside Auto Sales and the Automobile Finance Company this mortgage was a floor-plan mortgage. The finance company's manager, Mr. Slater, testified to previous sales by the Northside Auto Sales in which existing mortgages were paid off when the cars were resold, and that he knew the cars on which they held mortgages were for sale; in fact, he knew that the particular car in controversy was a demonstrator. No bill of sale was issued prior to January 1, 1938, and no certificate of title was issued until after the sale of the automobile to Usinger. The obvious reason for the failure to issue the certificate to Munday, the automobile purchaser, was that ordinarily a car is new but once, and if the certificate were issued, the automobile would have become a "used car." No construction can fairly be given the transaction other than a floor-plan mortgage device. It is not necessary that the floor-plan agreement be so designated in the mortgage. It can arise from the circumstances surrounding the transaction, and in the acquiescence of the mortgagee in allowing the motor vehicle to be offered for sale in the usual course of business.
It is well settled that when an owner places a car on the floor of a retail dealer's showroom for sale, and it is purchased in the usual course of business by one without knowledge of any conflicting claims, the purchaser will be protected and the owner estopped to set up his title against him.
A case with somewhat similar facts was before this court in Commercial Credit Co. v. Schreyer, 120 Ohio St. 568, 166 N.E. 808, 63 A. L. R., 674, in which a chattel mortgage was held valid as against a subsequent innocent purchaser, when at the time the mortgage was given the mortgagor had received no bill of sale for the car. A bill of sale, however, was later issued and the mortgage was made after a retail sale, instead of before, as in this case. The alleged sale to George Munday in this case was certainly not a retail sale; it was not so treated by either party, for no retail sales tax was paid, and no bill of sale, as required by the law in effect prior to January 1, 1938, was issued.
The appellant, having failed to establish its title to the automobile in question, could not recover it by action in replevin.