Summary
referring to the "doctrine of accessions" to determine whether tires placed on a vehicle were accessions, ultimately determining lien priority
Summary of this case from In re EaddyOpinion
14788
December 9, 1938.
Before OXNER, J., Greenville, April, 1936. Affirmed.
Action in claim and delivery by Goodrich Silvertown, Inc., against Carl Purvis Rogers and Easterby Motor Company to recover automobile tires sold under title retention contract. From an order that judgment be that plaintiff recover possession of the tires, or $15.00 as the value thereof, the last named defendant appeals.
The order of Judge Oxner, requested to be reported, follows:
This action is one in claim and delivery which was begun before Louie E. Smith, Esq., magistrate, who decided the case in favor of the defendant. From this decision the plaintiff appeals. The defendant Carl Purvis Rogers defaulted and the defendant, Easterby Motor Company entered a general denial.
The facts in this case are not in dispute. On March 10th, 1934, the Easterby Motor Company sold to Carl Purvis Rogers, one of the defendants, one Chevrolet Roadster automobile and took a purchase-money mortgage thereon for the sum of $204.00 which was duly recorded in the R.M. C. office for Greenville County on March 15th, 1934. The automobile was fully equipped at that time with tires. On or about May 12, 1934, the Goodrich Silvertown Company sold to the said Carl Purvis Rogers a set of tires for said automobile under a contract which retained title in the seller until the tires were paid for. This contract was recorded May 24th, 1934, in the R.M.C. office for Greenville County. On or about September 1st, 1934, Easterby Motor Company repossessed the automobile because of default in the payment of the purchase money mortgage, the balance being $120.00. The tire company did not take the old tires on the purchase of the new tires, but had actual notice that the automobile was mortgaged to the defendant.
The plaintiff appeals from the decision of the magistrate on the ground that under the above facts it has the right to repossess the tires under its duly recorded title retention contract. The defendant motor company contends, in support of the decision, that the wires are no longer subject to the claim of the plaintiff for two reasons, first, the doctrine of accession, and second, the recordation act and decisions applicable thereto.
Under the doctrine of accession the defendant motor company takes the position that where personal property is sold under a chattel mortgage, as the automobile in question, and the buyer purchases and places accessories thereon, such accessories so added to the subject-matter of the chattel mortgage become the property of the seller, when the property is reclaimed for the nonpayment of the purchase price. This is true as between the seller and purchaser of the automobile but does not cover the situation where, as in this case, the rights of third parties intervene. If the seller of the accessories has parted with possession under a title retention contract, then the seller of the automobile is within the doctrine of accession only if the thing added has become so incorporated into the principal chattel as to be incapable of separation without injury to the whole. Motor Credit Company v. A.B. Smith, 1930, 181 Ark. 127, 24 S.W.2d 974, 68 A.L.R., 1239; Bousquet v. Mack Motor Truck Company, 1929, 269 Mass. 200, 168 N.E., 800; K.C. Tire Company v. Way Motor Company, 1930, 143 Okla. 87, 287 P., 993. In the case at bar the tires are designated by serial number, may be severed without detriment to the automobile and appropriated to other use without loss. In the case of K.C. Tire Company v. Way Motor Company, referred to above, the facts were similar to those of the case under discussion, and the Court, in deciding that the seller of the tires did not lose ownership by accession, said (page 944): " * * * we think these tires did not become a part of the mortgaged security. These tires were not an integral and permanent part of the automobile; they could be severed easily and without any damage to the car; they could be used readily upon another car of like make and size, and were easily identified by number, as well as make and size, so there could be no possible dispute about their identity."
The cases relied on by the defendant motor company may be distinguished. In Blackwood Tire Vulcanizing Company v. Auto Storage Company, 1916, 133 Tenn. 515, 182 S.W., 576, L.R.A., 1916-E, 254, Ann. Cas., 1917-C, 1168, and the case of Diamond Service Station v. Broadway Motor Company, 1929, 158 Tenn., 258, 12 S.W.2d 705, the seller of the tires did not take back a title retention contract but sold them on open account. In Bozeman Mortuary Association v. Fairchild, 253 Ky., 74, 68 S.W.2d 756, 92 A.L.R., 419, the accessories were placed on the car by a thief, and in Dersch v. Thomas, 138 Cal.App. Supp., 785, 30 P.2d 630, the question is presented as to the removability of the body of a truck.
Berry, in his work on Automobiles, 6th Ed., Vol. 2, Section 1806, lays down the rule that "where the seller of an automobile under a contract of conditional sale retakes the automobile upon default of the buyer to keep the terms of the contract, he is entitled to any tires or other replacements which the purchaser placed on the machine while it was in his possession, provided the title to such parts passed to the purchaser when he acquired them." But this rule does not help the defendant motor company. By its terms it is applicable only when the purchaser has title to the tires. The reason in any case for the recovery of the thing sold or its value is the fact that the seller has not parted with ownership. Nor should this right be defeated merely because the thing sold has been attached to another object. In this same work, in Section 1805, in discussing the rights of the holder of the mortgage on the automobile and the seller of accessories under a title retention contract, the learned author has this to say: "The chattel mortgage applies to and covers the after acquired property in the condition in which it comes into the mortgagor's hands."
Therefore, in view of the cases above and the principles drawn therefrom, the interest of the seller of accessories under a title retention contract is not defeated by accession.
Now, as to the second ground, defendant motor company contends that it is within the protection of the Recordation Act and the decisions applicable thereto.
A study of the development of the Recordation Acts (Sec. 8875 of the Code) shows that they were an outgrowth of efforts to protect "subsequent purchasers and creditors" from "secret liens". These are the true key words to any proper study and application of the principles. Such study shows (and it is undisputed) that at the common law, a mortgage, deed or other instrument, although not recorded, was good not only between the parties but against the world. This led to difficult situations and to hardships when thereafter innocent purchasers and mortgagees were involved. In other words, the evil of such secret transfers and secret liens became evident, and resulted in the equitable doctrine of "subsequent purchaser for value without notice" as will as the development of the Recording Acts.
Therefore, the important point is that the common-law doctrine as to the validity of a paper such as that of the plaintiff is applicable here except insofar as it is limited if at all by the terms of the Recording Act. By its terms, however, the Act (Sec. 8875) merely places a limitation upon such validity insofar as it affects the rights of subsequent purchasers or creditors without notice, and in the case at bar, the defendant motor company cannot claim the benefit of the limitation in that it is a prior creditor. Nor can the defendant qualify as a subsequent purchaser without notice because when it repossessed the automobile, the title retention contract of the plaintiff was on record. At first glance, the case of Perkins v. Loan Exchange Bank, 43 S.C. 39, 20 S.E., 759, however, seems to hold to the contrary, but a careful reading of this case in connection with Syllabus 2 would indicate that the bank seems to have sold and purchased the property under its prior mortgage before notice of the other paper and could thus qualify as a subsequent purchaser. Syllabus 2 reads as follows: "A duly recorded mortgage of personal property in possession and of after-acquired machinery, a seizure and sale on default, and a purchase by the mortgagee, gives to the purchaser, both as mortgagee and purchaser, a prior right to a piece of machinery acquired by the mortgagor and taken possession of by him subject to a mortgage for its purchase price, after the execution of the older mortgage, such purchase money mortgage not having been recorded until after the sale, and not known to the purchaser until such record." (Italics added.)
Thus in the Perkins case the holder of the underlying mortgage repossessed the property and become a purchaser without notice in that the holder of the subsequent mortgage failed to record until after repossession and sale.
The fact that the mortgage of the defendant motor company contained a clause covering after acquired property is not controlling. Before the sale of the to Rogers, title thereto was in the plaintiff. It passed to Rogers simultaneously, with the taking effect of the mortgage to the plaintiff, it being in effect a single transaction and Rogers only acquired title subject to the title retention contract, this being the true intention of the parties. He was never, therefore, able at any time, either prior or subsequent to the purchase, to pass any greater rights than he had. In this connection see the following from Judge Cothran's opinion in Carroll v. Cash Mills, 125 S.C. 332, 344, 118 S.E., 290, citing, Holt v. Henley, 232 U.S. 637, 640, 34 S.Ct., 459, 58 L.Ed., 767, involving a similar point, and quoting therefrom with approval as follows [page 293]: "The mortgagees have no equity and do not bring themselves within the statutory provision. We believe the better rule in a case like this. * * * is that the `mortgagees take just such an interest in the property as the mortgagor (purchaser) acquired; no more, no less.'"
Under the rule in the Cash Mills case, a mortgage intended to cover after acquired property can only attach itself to such property in the condition in which it comes into the mortgagor's hands. In the case at bar, the tires were subject to the interest of the seller, who by virtue of its sales contract retained a specific lien thereon. See, also, in this connection, Berry, Section 1805, herein above. And, as I have pointed out, the transaction does not come within the Recordation Act as such acts are intended for the protection of subsequent, not prior creditors or purchasers.
The decision of the lower Court is hereby reversed with instructions that the judgment be that the plaintiff recover of the defendant motor company the possession of the property described in the complaint, or in case a delivery thereof cannot be had, then for its value, $15.00.
Messrs. Price Poag and Blease Griffith, for appellant, cite: Accession: Rich. Eq., 294. As to when title passes to mortgage: 146 S.C. 257; 143 S.E., 820; 130 S.C. 521; 126 S.E., 649; 43 S.C. 39. Mortgage must be recorded to obtain priority: 36 S.C. 343; 33 S.C. 451; 14 S.C. 112; 132 S.C. 374; 129 S.E., 77; 125 S.C. 332; 118 S.E., 290; 17 F.2d 503; 17 F.2d 417; 167 S.C. 443; 166 S.E., 613; 113 S.C. 519; 101 S.E., 822.
Messrs. Hingson Todd, for respondent, cite: Accession: 68 A.L.R., 1243; 1 C.J.S., 416; 197 S.E., 698; 287 P., 993; 168 N.E., 800; 147 A., 754; 274 N.W., 172; 96 S.W.2d 316; 24 S.W.2d 974; 68 A.L.R., 1239; 179 N.E., 394; 161 A., 96; 187 P., 510. Title to mortgaged property: 9 P.2d 724; 19 P., 246; 26 N.E., 687; 19 S.W. 1087. Lien: 10 A.J., 851; 11 C.J., 647; 12 Wall, 362; 20 L.Ed., 434; 99 U.S. 235; 102 U.S. 1; 26 L.Ed., 59; 232 U.S. 640; 58 L.Ed., 767; 88 N.W., 397; 134 P., 243; 37 S.W.2d 1090; 235 F., 114; 125 S.C.; 332; 118 S.E., 290.
December 9, 1938.
We think that the two questions presented by the appeal in this case, one having to do with the doctrine of accession and the other with the recording acts, were properly disposed of by the Circuit Judge, and we approve the result of his decree. Under the admitted facts, the conclusion reached by him as to the first finds general support in the authorities, while his disposition of the second is clearly sustained by our own decisions, including Perkins v. Loan Exchange Bank, 43 S.C. 39, 20 S.E., 759, relied on by the appellant.
The Circuit order, therefore, which will be reported, is affirmed.
MR. CHIEF JUSTICE STABLER and MESSRS. JUSTICES BONHAM, BAKER and FISHBURNE concur.
MR. JUSTICE CARTER did not participate on account of illness.