Opinion
No. 43237.
December 7, 1964.
1. Liens — purchase-money lien — statute not applicable to chattels purchased by execution creditor, without notice, at execution sale.
Statutory purchase-money lien did not apply to chattels sold at execution sale to buyer's judgment creditor who bought without notice of lien's existence. Sec. 337, Code 1942.
2. Liens — purchase-money — when lien lost — bona fide purchasers without notice.
Statutory purchase-money lien is lost when personalty passes to purchaser from first vendee, without notice that purchase-money is unpaid. Sec. 337, Code 1942.
3. Execution — sales — rights of purchaser, generally.
Generally, purchaser at execution sale will be innocent purchaser if he would have been deemed one had he bought at voluntary sale.
4. Execution — sales — rights of purchaser — secret infirmities.
Purchaser at execution sale is protected against secret infirmities existing against title of execution debtor.
5. Execution — sales — execution creditor — bona fide purchaser for value.
With perhaps limited exception, execution creditor can be bona fide purchaser for value.
6. Execution — sales — rights of execution creditor — rules, as to equitable purchase-money liens on land analogous.
Rules, as to equitable purchase-money liens on land and when they are terminated by a purchaser without notice, were not directly in point, but were relevant and analogous in general definition of rights of judgment creditor purchasing chattel at execution sale without notice of statutory purchase-money lien. Sec. 337, Code 1942.
Headnotes as approved by Ethridge, J.
APPEAL from the Circuit Court of Washington County; ARTHUR B. CLARK, JR., J.
Burrell O. McGee, Wynn, Hafter, Lake Tindall, Greenville, for appellant.
I. The business sign statute, Section 273, Mississippi Code of 1942, does not prevent appellant from enforcing its purchase money lien against the property in question. Bramlett v. Wetlin, 71 Miss. 902, 15 So. 934; Commercial Credit Corp. v. Davidson, 112 Fed. 2d 54; Crump v. Hill, 105 F.2d 124; Dobbs v. Pratt, 64 Miss. 123, 8 So. 167; Dorsey v. Latham, 194 Miss. 263, 11 So.2d 897; Kinney v. Paine, 68 Miss. 258, 8 So. 747; National Cash Register Co. v. Thompson, 210 Miss. 37, 48 So.2d 608; Superior Laundry Cleaners, Inc. v. American Laundry Machinery Co., 170 Miss. 450, 155 So. 186; Sec. 273, Code 1942.
II. Appellant's purchase money lien is valid against the property in question after the sheriff's sale of the property to appellee. Commercial Credit Corp. v. Davidson, supra; Lissa v. Posey, 64 Miss. 352, 1 So. 500; Sec. 273, Code 1942.
Keady, Campbell DeLong, Greenville, for appellee.
I. Appellant's "purchase money lien" ceased to exist when the property passed out of the hands of the first purchaser (McKenzie), to one (appellee) without notice that any part of the purchase money was unpaid. Bramlett v. Wetlin, 71 Miss. 902, 15 So. 934; Commercial Credit Corp. v. Davidson, 112 F.2d 54; Lissa v. Posey, 64 Miss. 352, 1 So. 500; Pearson v. Moore Dry Goods Co., 146 Miss. 225, 110 So. 709; Re Monticello Veneer Co., 2 F. Supp. 27; Superior Laundry Cleaners, Inc. v. American Laundry Machinery Co., 170 Miss. 450, 155 So. 186; Tabb v. People's Bank Trust Co., 160 Miss. 22, 133 So. 137; Trenton Lumber Co. v. Boling, 230 Miss. 233, 92 So.2d 440; Secs. 273, 337, Code 1942; Searles, Logic and Scientific Methods, Chaps. 6, 9 pp. 84, 85, 141, 150.
II. If any lien in favor of appellant continued to exist after the property was transferred to appellee, without notice, same is unenforceable under the Business Sign Statute. Associates Discount Corp. v. Ruddock, 224 Miss. 533, 81 So.2d 249; Campbell Paint Varnish Co. v. Hall, 131 Miss. 671, 95 So. 641; Commercial Credit Corp. v. Davidson, supra; Dodds v. Pratt, 64 Miss. 123, 8 So. 167; Fitz Gerald v. American Manufacturing Co., 114 Miss. 580, 75 So. 440; Floyd v. C. Nelson Manufacturing Co., 93 F.2d 857; Gayden v. Tufts, 68 Miss. 691, 10 So. 53; Gumbel v. Koon, 59 Miss. 264; International Harvester Co. v. Gully, 188 Miss. 115, 194 So. 472; Murdock Acceptance Corp. v. Smith, 222 Miss. 594, 76 So.2d 688; National Cash Register Co. v. Thompson, 210 Miss. 37, 48 So.2d 608; Tufts v. Stone, 70 Miss. 54, 11 So. 792.
(Hn 1) This case involves the question of whether a statutory purchase-money lien applies to chattels sold at an execution sale to a judgment creditor of the vendee, without notice of the lien's existence. We hold it does not, and affirm the judgment of the Circuit Court of Washington County.
In 1960 Motor Parts Bearing Company (called Motor Parts), appellant, sold a wheel-aligning machine and equipment to T.C. McKenzie, doing business as Greenville O.K. Tire Store, on a conditional sale contract which was not recorded. The chattels were installed in the business premises of McKenzie and were used in his business. About a year and a half later, in October 1961, O.K. Rubber Welders, Inc. (called Welders, Inc.), the appellee, filed an attachment affidavit against McKenzie alleging he was indebted to it for merchandise sold him. Welders, Inc. obtained a judgment against McKenzie for $6,848.66. On a writ of execution, the sheriff sold the chattels to Welders, Inc. for $2,000 cash. It was stipulated that Welders, Inc. did not have knowledge that any of the purchase price remained unpaid by McKenzie to Motor Parts. Nor had McKenzie disclosed Motor Parts' lien or claim to the property by any sign displayed at his place of business.
In March 1963, Motor Parts filed an affidavit in circuit court asserting a purchase-money lien against the property for the balance of the purchase price due it ($2,973.60). Pursuant to the writ, the property was seized and held by the sheriff. Welders, Inc. answered, and after a hearing on stipulation of facts, the trial court entered judgment for the defendant.
Motor Parts makes no claim on its unrecorded conditional sale contract to McKenzie. It relies solely upon the statutory purchase-money lien created by section 337, Mississippi Code Annotated (1956): "The vendor of personal property shall have a lien thereon for the purchase-money while it remains in the hands of the first purchaser, or of one deriving title or possession through him, with notice that the purchase-money was unpaid."
(Hn 2) This lien on personal property is lost when the personalty passes to a purchaser from the first vendee, without notice that the purchase-money was unpaid. Tabb v. Peoples Bank Trust Co., 160 Miss. 22, 133 So. 137 (1931). Conversely, it exists only when one deriving title or possession through the first purchaser had "notice that the purchase-money was unpaid." Since Welders, Inc. acquired title and possession without notice that the purchase-money was unpaid, Motor Parts' lien under section 337 ceased to exist. The statute defines the extent of its rights.
Appellant argues that a purchaser at an execution sale acquires only the interest of the defendant in execution. It relies on Lissa v. Posey, 64 Miss. 352, 1 So. 500 (1887), involving a purchase of land at an execution sale, and a common-law vendor's lien for the purchase price of land. Lissa and related cases do not control here, because an equitable purchase-money lien on land is in a different category from the statutory purchase-money lien on personal property. The latter, defined in section 337, ceases to exist when the property passes to one without notice that the purchase-money was unpaid. Commercial Credit Corp. v. Davidson, 112 F.2d 54 (5th Cir. 1940), involved a contest between a purchase-money claimant and a trustee in bankruptcy, who, the court held, stood in the position of the bankrupt, as a matter of federal law, and who could assert no better title than the bankrupt had. The trustee in effect had notice that the purchase money was unpaid. In the instant case, Welders, Inc. had no such notice.
(Hn 3) Moreover, although we are dealing with the specific limitations of the statutory lien, it is appropriate to note that generally a purchaser at an execution sale will be an innocent purchaser where he would have been deemed one at a voluntary sale. 33 C.J.S. Executions §§ 293, 294 (1942). (Hn 4) Such a purchaser is protected against secret infirmities existing against the title of the execution debtor. 21 Am. Jur. Executions § 289 (1939). (Hn 5) With perhaps the limited exception stated in Walton v. Hargroves, 42 Miss. 18 (1868), an execution creditor can be a bona fide purchaser for value. Hart v. Gardner, 81 Miss. 650, 33 So. 442 (1902); Mississippi Valley Co. v. Chicago, 58 Miss. 846 (1881); 21 Am. Jur. Executions § 219 (1939). (Hn 6) These rules, as to equitable purchase-money liens on land and when they are terminated by a purchaser without notice, are not directly in point, but are relevant and analogous in a general definition of the rights of a judgment creditor purchasing without notice at an execution sale.
The controlling fact here is that appellant relies on the purchase-money lien of section 337, and it ceased to exist when the personal property was bought by Welders, Inc. without notice of its existence. Since this proposition decides the case, it is not necessary to consider the business sign statute. Miss. Code Ann. § 273 (1956).
Affirmed.
Lee, C.J., and Gillespie, McElroy and Brady, JJ., concur.