Valley Loan Service v. Neal

1951 OK 226, 235 P.2d 932, 205 Okla. 94, 1951 Okla. LEXIS 594
CourtSupreme Court of Oklahoma
DecidedSeptember 18, 1951
Docket34230
StatusPublished
Cited by4 cases

This text of 1951 OK 226 (Valley Loan Service v. Neal) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Valley Loan Service v. Neal, 1951 OK 226, 235 P.2d 932, 205 Okla. 94, 1951 Okla. LEXIS 594 (Okla. 1951).

Opinion

GIBSON, J.

The parties are in the same position here as in the court below, and will be referred to in that order.

Plaintiff alleges that on January 15, 1948, one R. N. Sheffler obtained a loan from plaintiff in the sum of $1,700 and executed a note and chattel mortgage on a Chevrolet car; that thereafter notice of the chattel mortgage lien was filed in the office of the Motor Vehicle Department of California as required by the statutes of that state, and certain sections of the California statutes relating to the filing and registration of chattel mortgages and the transfer of title are set forth. It is further alleged that Sheffler had made default; that he delivered possession of the car to defendant and that plaintiff has a special ownership therein and is entitled to immediate possession.

At the time that the business transactions were had the interested parties were residents of California.

In its brief plaintiff submits its case on a single proposition, as follows:

“The registration requirements of Vehicle Code do not taint with illegality sale and purchase of automobile without compliance therewith but deal solely with registration of ownership and give notice of transfer after consummation of purchase.”

Three dates become important in the consideration of this case.

On January 14, 1948, defendant sold the Chevrolet car to R. N. Sheffler for $2,000 and delivered the car, keys and certificate of ownership and a certificate of registration, both executed by defendant as owner. He received from Sheffler a check for the amount of the purchase price.

On January 15, 1948, Sheffler obtained a loan from plaintiff in the sum of $1,700 giving as security a chattel mortgage on the car. On the same day defendant presented his check for $2,-000 to the drawee bank and payment was refused because of insufficient funds.

On January 16th defendant again presented the check and payment was again refused. Defendant went to Shef-fler’s home and talked to the latter’s wife, telling her the check was not good. That evening Sheffler drove the car to defendant’s home and turned it over to defendant. When defendant asked for the certificates pertaining to the title he was advised by Sheffler that the papers had been sent to the Motor *96 Vehicle Department to obtain the 1948 license tags. No such certificate having been delivered by Sheffler, he did under date of February 27, 1948, mail to defendant a certificate on a California form known as “In lieu of pink”, reciting that he held himself responsible to furnish to defendant a legal ownership certificate not later than April 28, 1948.

Defendant, a former resident of Oklahoma, returned to this state about February 1, 1948, and this action was commenced by plaintiff May 22, 1948.

Under his testimony defendant at no time had any contact with plaintiff prior to the commencement of this action, and he had no knowledge of the chattel mortgage having been given prior to the receipt of a letter from the California Department of Motor Vehicles dated February 16, 1948.

It was stipulated that plaintiff’s application for transfer of title and the chattel mortgage for recordation did not reach the Department of Motor Vehicles until January 29, 1948, which was 13 days after delivery of the car to defendant by Sheffler.

Among other sections of the statute plaintiff pleaded sec. 195, C. 3, Division III of the Vehicle Code of California, which reads in part as follows:

“No chattel mortgage on any vehicle registered hereunder irrespective of whether such registration was effected prior or subsequent to the execution of such mortgage, is valid as against creditors or subsequent purchasers or encumbrancers until the mortgagee or his successor or assignee has deposited with the department, at its office in Sacramento, a copy of said mortgage with an attached certificate of a notary public stating that the same is a true and correct copy of the original, accompanied by a properly endorsed certificate of ownership to the vehicle described in said mortgage . . .”

Section 196 of the same chapter was pleaded by plaintiff as follows:

“When the chattel mortgagee, his successor or assignee, has deposited with the department a copy of the chattel mortgage as provided in Section 195 hereof, such deposit constitutes constructive notice of said mortgage and its contents to creditors and subsequent purchasers and encumbrancers but such mortgaged vehicle shall be subject to a lien as provided in Division VIII hereof.”

Division VIII refers to offenses against Registration Laws and has no application to the case at bar. From the above statutes it is apparent that there was no constructive notice binding upon defendant, when the car was returned to him in payment of the purchase price debt of Sheffler, 13 days prior to the registration.

From the petition filed and the evidence offered it is apparent that plaintiff began this action under the theory that defendant had sold the car to Shef-fler with full knowledge that the buyer was to finance the sale by placing a mortgage on the car. Sheffler in his deposition so testified, and that the arrangement was satisfactory to defendant and that he later told defendant that a mortgage had been given to plaintiff. Defendant denied all such conversations, and claimed that he knew nothing of the chattel mortgage having been given, when the car was returned to him.

The acceptance of the check for the purchase price money, by the defendant, was tentative only and conditional that it would be honored upon, presentation. The title to the automobile did not pass to Sheffler upon his giving of a false or bogus check. The right of possession by plaintiff can rise no higher than that of its mortgagor. Gray Bros. v. Otto, 178 Iowa 854, 160 N. W. 293.

Under the weight of the evidence this was a cash sale. Defendant parted with his automobile and accepted the check of a stranger only on condition that the check be paid. “Where the sale is for cash on delivery, a delivery is generally considered conditional, and no title vests in the 'buyer until he has *97 complied with the terms of the sale.” 24 R. C. L. p. 23, §284, citing Blackwood v. Cutting Packing Co., 76 Cal. 212, 18 P. 248.

Defendant having no actual notice of the chattel mortgage had the right to repossess his car prior to the taking effect of constructive notice. He took possession under a mutual rescission of the contract of sale.

In a sale of goods where buyer gives the seller a check that is dishonored when presented for payment, the buyer does not acquire title. It remains in the seller. First State Bank of Brandon v. Kohl, 79 Colo. 620, 247 P. 571.

“. . . an attaching creditor, seeking to subject the property of a debtor to the payment of his debt, obtains a lien only upon the title or interest which the debtor has, and where no actual interest is shown the attaching creditor gets nothing by virtue of his levy. The lien attaches to the real and not the apparent interest of the debtor.” Henry v. General Forming, Limited, 33 Cal. 2d 223, 200 P. 2d 785.

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Bluebook (online)
1951 OK 226, 235 P.2d 932, 205 Okla. 94, 1951 Okla. LEXIS 594, Counsel Stack Legal Research, https://law.counselstack.com/opinion/valley-loan-service-v-neal-okla-1951.