Morris v. Seattle-First National Bank

516 P.2d 1055, 10 Wash. App. 129, 13 U.C.C. Rep. Serv. (West) 1166, 1973 Wash. App. LEXIS 1090

• Court: Court of Appeals of Washington
• Decided: December 10, 1973
• Docket: 1382-1
• Status: Published

Opinions

Farris, J.

Seattle-First National Bank appeals from a judgment in the amount of $2,700 for conversion of a car owned by GM Auto Sales.

On January 3, 1968, First State Bank of Abilene, Texas, financed a 1968 Ford LTD for Edward Valick, taking a security interest on that vehicle. Thereafter, the State of Texas issued a certificate of title showing First State Bank as lienholder. In April 1968, Valick advised First State Bank that he would be spending several months in New York and asked the bank’s permission to obtain New York license plates. First State Bank gave Valick a letter dated April 29, 1968, allowing him to license the vehicle in the state of New York with the understanding that “we will not need to relinquish our Texas title for this purpose.” Valick then drove to New York, there procuring a New York title certificate which did not show the existence of any liens.

On about May 31, 1968, Valick offered to sell the LTD to GM Auto Sales. On June 3, the parties settled on a price conditioned on Valick’s obtaining a Washington title certificate. Valick then drove to Olympia and procured title solely in his own name, whereupon GM Auto Sales purchased the vehicle for $2,625.

At that time the loan payments due to First State Bank were delinquent and that bank did not know the whereabouts of either Valick or the automobile. Then, on June 1, 1968, Valick advised First State Bank that he was in Everett, Washington, and forwarded a payment of $593.27. Within a month the loan had again become delinquent. First State Bank contacted Seattle-First National Bank with the request that Sea-First, as First State. Bank’s special agent, repossess the car as was authorized under the terms of the loan agreement between First State Bank and Valick.

GM Auto Sales sent the car to Klein Motors for transmission work on about July 8, 1968. Although the sale from Valick to GM Auto Sales was completed, the title was still in Valick’s name and he signed the repair order at the request of GM Auto Sales. Sea-First demanded the return of the car. When this demand was refused, Sea-First repossessed it while it was still at Klein Motors. GM Auto Sales, whose name did not appear on the title either as owner or lienholder, demanded the car’s return; Sea-First refused. This action followed. The trial court granted a judgment of $2,700 against Sea-First for conversion of the car on the theory that the letter from First State Bank allowing the New York registration was a waiver by that bank of its rights under RCW 62A.9-103 (3) to perfect its security interest in Washington. We reverse.

Sea-First, acting as agent for First State Bank of Abilene, could-lawfully repossess the car as authorized under the security agreement unless GM Auto Sales gained an interest superior to that of First State Bank of Abilene by its purchase of the car from Valick.

Texas law governs the initial perfection of First State Bank’s security interest. The car was purchased in Texas, the execution of the contract and the initial titling of the car were in Texas, and buyer Valick was a Texas resident. See RCW 46.12.095(3) (a), (b).¹ The trial court properly-held that First State Bank had satisfied all of the statutory requirements in perfecting its security interest in Texas.

Under RCW 62A.9-103(3) a secured party has 4 months to locate its property and perfect its security interest in Washington following the property’s removal to Washington from a state in which the security interest was previously perfected.

If the security interest was already perfected under the law of the jurisdiction where the property was when the security interest attached and before being brought into this state, the security interest continues perfected in this state for four months and also thereafter if within the four month period it is perfected in this state.

RCW 62A.9-103(3).

Regardless of whether it perfected its security interest in compliance with Washington law, First State Bank’s security interest therefore continued under RCW 62A.9-103(3), to be perfected in Washington for the first 4 months after the car was brought into this state. Valick left Texas no earlier than April 29, 1968, the date of the letter from First State Bank which authorized him to license the car in New York. First State Bank’s security interest continued to be perfected in Washington until at least July 29, 1968, 4 months from that date. Therefore, when First State Bank repossessed the car on or about July 8, 1968, through its agent Sea-First, First State Bank’s security interest continued to have priority.

Reversed.

Williams, J., concurs.

1 “(3) If a vehicle is subject to a security interest when brought into this state, perfection of the security interest is determined by the law of the jurisdiction where the vehicle was when the security interest was attached, subject to the following:

“(a) If the security interest was perfected under the law of the jurisdiction where the vehicle was when the security interest was attached, the following rules apply:

“(b) If the name of the secured party is shown on the existing certificate of ownership issued by that jurisdiction, the security interest continues perfected in this state. The name of the secured party shall be shown on the certificate of ownership issued for the vehicle by this state. The security interest continues perfected in this state upon the issuance of such ownership certificate.”