Summary
In Gibson v. Bolner, 165 Ohio St. 357, 135 N.E.2d 353 (1956), a chattel mortgage executed and recorded in Ohio, on a motor vehicle operated in Ohio, was held inferior to a lien noted on a Florida certificate of title, in which state the vehicle was originally sold and titled.
Summary of this case from Switzer v. CarrollOpinion
No. 34484
Decided June 13, 1956.
Motor vehicles — Certificate of title law — Manufacturer of trailer not "dealer" in motor vehicles — Section 4505.06, Revised Code — Certificate of title in name of purchaser — No obligation to obtain, when — Out-of-state certificate of title — Full faith and credit.
1. A manufacturer of a trailer is not a "dealer" in motor vehicles, referred to in Section 4505.06, Revised Code, and is under no obligation to obtain an Ohio certificate of title in the name of his purchaser, although such manufacturer sells the trailer direct to a user.
2. An out-of-state certificate of title is a public act and record of the state where issued and as such is entitled to full faith and credit in the courts of Ohio, provided that the according of full faith and credit to such certificate does not do violence to the established policy of Ohio as expressed in its statutes.
APPEAL from the Court of Appeals for Muskingum County.
On December 8, 1953, defendant Malcolm D. Bolner, representing himself to be Henry B. Bolner (father of Malcolm), placed an order for a refrigerator trailer with defendant Bartlett Trailer Corporation, appellant herein. Following a credit investigation of Henry, Bartlett accepted the order along with an $1,800 down payment and a chattel mortgage for the balance of the purchase price amounting to $6,939.60 and delivered the trailer to Malcolm. A manufacturer's certificate of origin was issued by Bartlett in Henry's name, on which certificate appears a notation of the chattel mortgage in Bartlett's favor.
Sometime about the middle of February 1954, while using an Autocar tractor as the motive power for the Bartlett trailer in the state of Florida, Malcolm was apprehended by a license inspector for using an improper license (Malcolm had taken a license from a wrecked trailer in the yard of Bartlett). To keep himself in the clear with the Florida authorities, Malcolm obtained a Florida certificate of title to the trailer, again using the name of his father. On this Florida certificate Bartlett was designated as the first-lien holder.
Prior to and during the times mentioned hereinabove, the plaintiff, Vira W. Gibson, appellee herein, became enamored by Malcolm and talk of marriage occurred between the two. The romance had developed to the point where, by November 1953, Malcolm was able to obtain a loan of $4,000 from Vira, which he used as a down payment and for insurance on the Autocar tractor. The following month he obtained $2,000 more, $1,800 of which was, with Vira's knowledge, used as the down payment on the trailer purchased from Bartlett.
Sometime in April 1954, the ardor of their romance cooled and plans for their marriage were abandoned. Vira became concerned about her $6,000 and on June 8 demanded and received from Malcolm a cognovit note for that amount. On the same date, Malcolm's father, Henry, executed chattel mortgages in Vira's favor on the Bartlett trailer, the Autocar tractor and a Lincoln automobile, which mortgages were filed with the recorder of Muskingum County. When Malcolm defaulted in payment on the note, Vira put it in judgment.
The present action was instituted in the Common Pleas Court of Muskingum County to foreclose the chattel mortgages, and at Vira's request a receiver was appointed to take custody of the three vehicles. The Autocar tractor and the Lincoln are not in controversy here. The argument below, as well as here, has resolved itself into one between Vira and Bartlett.
The judgment of the Common Pleas Court holding Vira's chattel mortgage superior to that of Bartlett and allocating one-half of the receiver's fee of $612.15 to Bartlett was affirmed by the Court of Appeals.
The cause is before this court as of right and upon the allowance of Bartlett's motion to certify the record.
Messrs. Graham, Graham, Gottlieb Johnston, appellee.
Messrs. Zinn, Tate Cultice, for appellant.
Were it not for Section 4505.04, Revised Code, which provides that no court shall recognize the right, title, claim or interest of any person in or to any motor vehicle unless evidenced by a certificate of title or a manufacturer's or importer's certificate, it would be an easy matter to hold that, since Bartlett dealt with Malcolm, title passed to Malcolm and liability attached to him in spite of an assumed name, and that, therefore, Henry had nothing which he could convey to Vira. However, since both indicia of title — the manufacturer's statement of origin and the Florida certificate of title — are in Henry's name, it is necessary to consider the priorities of the two mortgages.
Plaintiff's contention for priority is based on a failure of Bartlett to comply with Section 4505.06, Revised Code, which reads in part as follows:
"* * * 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. In all other cases, such certificates shall be obtained by the purchaser." (Emphasis added.)
Had Bartlett obtained such an Ohio certificate, contends plaintiff, the Bolners would not have been in a position to defraud anyone. Obviously, this theory hinges on whether Bartlett was a "dealer."
The following testimony of Mary Nefagna, vice-president of Bartlett, is the only testimony in the record that sheds any light on the nature of the company:
"Q. Will you explain in detail what the nature of the business of the Bartlett Trailer Corporation is? A. Yes, sir. We are engaged in the manufacture of truck trailers of all types and also the sale of these trailers.
"Q. Can you be more explicit? A. Yes, we are not a very large company and for that reason, production trailers isn't our big business. We make a lot of special equipment.
"Q. Are you saying from the raw material to the finished trailer? A. Yes, sir.
"Q. Without being vice-president what are your specific duties? A. I do most of the purchasing of the raw material that go into the trailers. I also am practically in charge of all the credits, deciding if a customer passes his credit or not. I am also in charge of the advertising for the Bartlett Trailer Corporation. I also sell trailers."
Bouvier's Law Dictionary (Baldwin's Century Edition), contains the following two definitions of "dealer":
"A dealer in the popular, and therefore in the statutory sense of the word, is not one who buys to keep, or makes to sell, but one who buys to sell again."
"He stands intermediately between the producer and the consumer, and depends for his profit, not upon the labor he bestows upon his commodities, but upon the skill and foresight with which he watches the market."
It is apparent that under these definitions Bartlett was not a "dealer" in motor vehicles and was, therefore, not required by Ohio law to do more than to issue a manufacturer's certificate of origin to the purchaser.
It is conceded that in this case no Ohio certificate of title was ever issued. The case is therefore easily distinguished from Mielke v. Leeberson, 150 Ohio St. 528, 83 N.E.2d 209, 7 A.L.R. (2d), 1342; and Kelley Kar Co. v. Finkler, 155 Ohio St. 541, 99 N.E.2d 665. It is strikingly similar, however, to In re Swesey (June 2, 1953, United States District Court for the Northern District of Ohio), 112 F. Supp., 773. In that case a resident of Ohio purchased an automobile in Michigan and gave a purchase-money mortgage to the seller. Representing that he resided in Ohio but had obtained employment in Michigan, the purchaser obtained a Michigan certificate of title on which the chattel mortgage was noted. When the owner became bankrupt, his trustee urged that the Michigan mortgage was not valid because the bankrupt had not obtained an Ohio certificate of title. In holding that the Ohio certificate of title law does not have extraterritorial effect and that an out-of-state certificate of title may be recognized by the courts of this state without the issuance of an Ohio title certificate, the court said:
"As appears from the admitted facts, the automobile in this case was not sold or disposed of or mortgaged or encumbered in Ohio. It was sold and mortgaged in Michigan. There is no question raised but that the sale and encumbrance of this automobile was valid under the laws of Michigan. There is nothing in the Ohio certificate of title law which indicated an intention on the part of the Legislature to make a transaction of this kind, valid under Michigan laws, void under the laws of Ohio, and the court will not read into the statute language which is not there."
Had Malcolm obtained an Ohio certificate of title based on the manufacturer's statement of origin, plaintiff could not have obtained a first mortgage because the Bartlett lien would have been noted on the Ohio title certificate. A similar result would have been reached had Malcolm obtained an Ohio title based on the Florida title. It would indeed be incongruous to hold that plaintiff has a first lien because an Ohio certificate was not issued when she could not possibly have had a first lien if an Ohio certificate had been issued.
The Florida certificate of title was admitted in evidence in the court below. It represents a public act and record of the state of Florida and as such was entitled to be accorded full faith and credit by the Ohio court. The policy of the Ohio title law is to protect the owners and mortgagees of motor vehicles. The noting of Bartlett's lien on the Florida certificate was in accord with the public policy of Ohio as expressed in its statutes. The Florida certificate should therefore have been recognized as according priority to Bartlett.
It follows that the judgments of the courts below must be reversed and final judgment entered for Bartlett.
In view of this result, the allocation of receiver's fees as made by the court below does not appear inequitable and is, therefore, not disturbed.
Judgment reversed.
WEYGANDT, C.J., MATTHIAS, HART, ZIMMERMAN, STEWART and TAFT, JJ., concur.