recording of deed immaterial as to persons with actual knowledge of unrecorded interestSummary of this case from Berube v. Belhumeur
Argued January 3, 1962.
Decided March 6, 1962.
1. The validity and effect of a conditional sales contract for the purchase and sale of a motor vehicle executed in another state where delivery of the vehicle was made is governed by the law of that state.
2. A reservation of title in a vendor to a motor vehicle sold under a conditional sales contract executed in a foreign state where delivery of the car was made and the title thereto duly recorded is valid in this state as against an innocent purchaser for value unless defeated by the provisions of RSA 361:15.
3. The title of the conditional sales vendor in such case may not be defeated by its failure to record the contract in this state in the district where the car was removed (RSA 361:15) where the innocent purchaser acquired actual notice of the vendor's title prior to the latter's knowledge that the car had been so removed and within the statutory twenty-day recording period.
4. Actual knowledge of an unrecorded deed, mortgage or conditional sales contract is equivalent to a recording of it as to the party having such knowledge.
Petition for a declaratory judgment (RSA 491:22) to determine the title to an automobile bought from the plaintiff in California under a conditional sales contract and later sold to the defendant in Manchester.
The parties filed an agreed statement of the following facts. On February 21, 1958, one Insenga purchased an automobile in California from the plaintiff. He gave a down payment of $200 and executed a conditional sales agreement for the balance of $5,085.20. Under California law recording of automobile titles is accomplished by registration with the motor vehicle department. A registration of this automobile was issued reciting Insenga as the registered owner and the Bank of America, and later the plaintiff, as the legal owner. Insenga disappeared with the car immediately after the purchase and prior to the first payment due on March 25, 1958.
On July 3, 1959, Insenga delivered possession of this car carrying Florida registration plates, to the defendant as a trade-in for another car and disappeared from New Hampshire. Defendant found some paper in the car indicating that it came from the plaintiff and by letter dated October 23, 1959 inquired if it held a lien. Plaintiff replied on October 28, 1959 that it did and enclosed a photostat of the California certificate of ownership and a carbon copy of the original conditional sales contract. This contract did not have to be recorded in California and was not recorded in any state at any time but the title to the car was recorded in California with the motor vehicle department as previously stated. Plaintiff made demand on the defendant for the return of the car as soon as it had knowledge that it was in its possession.
The Trial Court ruled "that the defendant's title is superior on the ground that the failure of the plaintiff to comply with RSA 361:15 rendered their title void as against the defendant, an innocent purchaser for value."
Plaintiff's exceptions to the Court's decree and to the denial of its requests for findings and rulings were reserved and transferred by Griffith, J.
McLane, Carleton, Graf, Greene Brown and John A. Graf (Mr. John A. Graf orally), for the plaintiff.
Ernest R. D'Amours (by brief and orally), for the defendant.
The following are the determinative facts. On February 21, 1958 the plaintiff sold and delivered this automobile to Insenga in California under a conditional sales contract. The contract did not have to be recorded in California. Title to the car was registered with the motor vehicle department, the California agency for recording the respective interests of the parties.
On July 3, 1959 the defendant obtained the car as a trade-in Insenga in New Hampshire. Plaintiff first learned that the car was in this state on receipt of a letter from the defendant dated October 23, 1959. It immediately sent defendant evidence of its ownership and made a demand for the return of the car. Plaintiff never recorded its contract in New Hampshire.
Since the contract was made in California and the car delivered there, California law governed its validity and the extent of the rights acquired under it. National Bank v. Company, 90 N.H. 232, 234; Phelps v. Loupias, 97 Cal.App.2d 350. Plaintiff's reservation title perfected in accordance with California law (Cal. Vehicle Code, ss. 370, 460, 505) was valid in this state unless defeated by the provisions of RSA 361:15. Goudie v. Company, 81 N.H. 88, 94: Bay State Nat. Bank v. Collins, 101 N.H. 232, 234.
This statute 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 . . . [certain] purchasers and creditors . . . 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 defendant takes the position that since it bought the car for value and without notice of any prior rights in the plaintiff, it has a superior title because of plaintiff's failure to record its contract here after it obtained knowledge that the car had been removed to New Hampshire within the terms of RSA 361:15. We do not agree with this contention.
When the defendant obtained the automobile from Insenga on July 3, 1959, plaintiff had no knowledge of its removal to New Hampshire. Consequently it was under no obligation at that time to record its contract here and its title, valid under California law was valid in New Hampshire and unimpeachable, as against the rights of all others, including the defendant, regardless of how innocently and in what good faith those rights may have arisen. Machine Works v. Lang, 67 N.H. 348; Casket Co. v. Gunnison, 69 N.H. 297; Bay State Nat. Bank v. Collins, 101 N.H. 232, 234; 3 Jones, Chattel Mortgages and Conditional Sales, s. 1093, p. 167.
The plaintiff did not become subject to the requirements of RSA 361:15 until it received defendant's letter dated October 23, 1959. It had twenty days thereafter under the statute to record its contract in the proper district in New Hampshire. If it had done so there is no doubt that its title to the automobile would prevail. Bay State Nat. Bank v. Collins, supra; 2 Merrill on Notice, s. 1083, p. 730.
It is long established law in this state that actual knowledge of an unrecorded deed, mortgage or conditional sales contract is equivalent to a recording of it as to the party having such knowledge. Tucker v. Tilton, 55 N.H. 223. Plaintiff's reservation of title remained valid and superior when the defendant obtained actual knowledge of its existence within the twenty-day recording period (National Bank v. Company, 90 N.H. 232, 234) for this actual notice cannot be held of less legal significance than the constructive notice required by the statute. 2 Merrill on Notice, s. 925, p. 481; 2A Uniform Laws Annotated, s. 58, p. 80. The defendant having received all the protection intended by RSA 361:15, its title cannot be enhanced by plaintiff's failure to record its contract in New Hampshire thereafter. Frontier Motors v. Chick Norton Buick Co., 78 Ariz. 341; 2 Merrill on Notice, s. 1083, pp. 730, 731.
Since the present transaction occurred in 1959, there is no occasion to consider the applicability of the Uniform Commercial Code which became effective July 1, 1961. RSA ch. 382-A.
In view of the result reached it is unnecessary to consider other issues raised by the plaintiff.