Franklin National Bank v. Ramsey , 252 N.C. 339 ( 1960 )

113 S.E.2d 723 (1960) 252 N.C. 339

FRANKLIN NATIONAL BANK
v.
Sudie Jewell RAMSEY, Rocky Mount Motors, Inc., and Planters National Bank & Trust Company.

No. 243.

Supreme Court of North Carolina.

April 13, 1960.

L. L. Davenport and Roy A. Cooper, Jr., Nashville, for plaintiff, appellant.

T. A. Burgess, Rocky Mount, for defendant Sudie Jewell Ramsey, appellee.

W. S. Wilkinson, Rocky Mount, for defendant Rocky Mount Motors, Inc., appellee.

Calvin W. Bell, Rocky Mount, for defendant Planters Nat. Bank & Trust Co., appellee.

BOBBITT, Justice.

The briefs deal largely with whether the stipulated facts and testimony suffice to support Judge Bone's findings of fact to the effect that the automobile acquired a situs in this State within the meaning of Sections (a) and (b) of G.S. § 44-38.1 (1959 Cumulative Supplement.) In this connection, see Home Finance Co. of Georgetown, Inc. v. O'Daniel, 237 N.C. 286, 74 S.E.2d 717. The basis of decision, stated below, renders consideration and discussion of this question unnecessary.

In Mack International Truck Corp. v. Wilkins, 219 N.C. 327, 13 S.E.2d 529, it was held that title retention contracts, properly executed, registered and indexed in the State of Florida, on personal property then located therein, had priority over the liens of attachments subsequently issued against the same property in this State. The basis of decision is stated by Schenck, J., as follows: "The general rule of comity, in the absence of a modifying statute, protects the lien of a retention title contract or chattel mortgage on personal property duly registered and indexed in the State wherein it was executed and the property was then located, after the removal thereof to another state without registration in the latter state." Also, see Applewhite Co. v. Etheridge, 210 N.C. 433, 187 S.E. 588; General Finance & Thrift Corp. v. Guthrie, 227 N.C. 431, 42 S.E.2d 601.

Under Chapter 1190, Session Laws of 1953, now codified as G.S. § 47-20 in the 1959 Cumulative Supplement, "No * * * conditional sales contract of personal property in which the title is retained by the vendor, shall be valid to pass any property as against * * * purchasers for a valuable consideration from the * * * conditional sales vendee, but from the time of registration thereof as provided in this article." (Our italics.) The 1953 Act, in substance, consolidated the provisions theretofore included in two statutes, to wit, G.S. § 47-20 and G.S. § 47-23 in G.S. Vol. 2A, recompiled in 1950. These statutes, in respect of conditional sales contracts, modified the rule of the common law. Friendly Finance Corp. v. Quinn, 232 N.C. 407, 61 S.E.2d 192; Universal C. I. T. Credit Corp. v. Walters, 230 N.C. 443, 53 S.E.2d 520, 10 A.L.R. 2d 758.

While G.S. § 47-20 and G.S. § 47-23 (G.S. Vol. 2A, recompiled 1950) did not relate expressly to a factual situation involving property moved into this State when subject to a chattel mortgage or conditional sale contract properly executed and filed for registration in the state from which the property was removed, the question was raised as to whether these statutes required registration in this State in the event the property came to rest or acquired a situs in this State. General Finance & Thrift Corp. v. Guthrie, supra; Associates Discount Corporation v. McKinney, 230 N.C. 727, 55 S.E.2d 513.

The cases heretofore cited, except Home Finance Corp. of Georgetown, Inc. v. O'Daniel, supra, were either decided or related to factual situations occurring prior to the enactment of Chapter 1129, Session Laws of 1949, thereafter codified as G.S. § 44-38.1 (G.S. Vol. 2A, recompiled 1950), which provided: "No mortgage, deed of trust, or other encumbrance created upon personal property while such property is located in another state is or shall be a valid encumbrance upon said property which has been, or may be, removed into this State as to purchasers for valuable consideration without notice to (sic) creditors, unless and until such mortgage, deed of trust, or other encumbrance is or was actually registered or filed for registration in the proper office in the state from which same was removed."

Chapter 251, Session Laws of 1951, effective July 1, 1951, provides in Section 1 thereof: "Chapter 1129 of the Session Laws of 1949 is hereby amended by rewriting Section 1 to read as follows:" The 1951 Act then sets forth the provisions which, as amended, are now codified in the 1959 Cumulative Supplement to the General Statutes as G.S. 44-38.1.

If the automobile here involved acquired a situs in this State within the meaning of Sections (a) and (b) of G.S. § 44-38.1, plaintiff's conditional sale contract would be valid as against a purchaser for a valuable consideration from the conditional sale vendee "only upon fulfilling all of the following conditions: (1) That such encumbrance was properly registered in the state where such property was located prior to its being brought into this State; and (2) That such encumbrance is properly registered in this State within ten days after the mortgagee, grantee in a deed of trust, or conditional sale vendor has knowledge that the encumbered property has been brought into this State; and (3) That such registration in this State in any event takes place within four months after encumbered property has been brought into this State." The stipulations and unchallenged findings of fact disclose that plaintiff's conditional sale contract did not fulfill these conditions.

On the other hand, if the automobile did not acquire a situs in this State within the meaning of Sections (a) and (b) of G.S. § 44-38.1, as plaintiff contends, Section (c) of G.S. § 44-38.1 applies. Section (c) provides: "When personal property covered by a deed of trust, mortgage or conditional sale contract is brought into this State and no situs is acquired in this State, the encumbrance is valid as against lien creditors of, or purchasers for valuable consideration from, the grantor, mortgagor or conditional sale vendee only from the date of due registration of such encumbrance in the proper office in the state from which the property was brought."

When Rocky Mount Motors, Inc., purchased the automobile from Levine, the conditional sale vendee, for a valuable consideration, plaintiff's conditional sale contract had not been filed for registration in the State of New York.

Section 65 of the New York Personal Property Law, McKinney's Consol.Laws, c. 41, provides: "Every provision in a conditional sale reserving property in the seller shall be void as to any purchaser from or creditor of the buyer, who, without notice of such provision, purchases the goods or acquires by attachment or levy a lien upon them, before the contract or copy thereof shall be filed as hereinafter provided, unless such contract or copy is so filed within ten days after the making of the conditional sale. This section shall not apply to conditional sales of goods for resale." Plaintiff contends that, since it was filed for registration within the ten-day period, the conditional sale contract must be treated as filed for registration as of the date of the execution thereof.

It is noted that the quoted New York statute contains the provisions of Section 5 of the Uniform Conditional Sales Act. (The last sentence appears only in the New York statute.) 2 Uniform Laws Annotated 6.

While, in respect of transactions within the State of New York, the quoted New York statute may provide absolute protection to a conditional sale vendor for a period of ten days after the making of the contract as against a person who purchases for a valuable consideration from the conditional sale vendee within the tenday period, this provision of the New York statute is not controlling in North Carolina if in conflict with G.S. § 44-38.1.

"* * * comity is not permitted to operate within a State in opposition to its settled policy as expressed in its statutes, or so as to override the express provisions of its legislative enactments." Universal C. I. T. Credit Corp. v. Walters, 230 N.C. 443, 53 S.E.2d 522, supra; Associates Discount Corporation v. McKinney, supra; 13 A.L.R. 2d 1312, 1341 et seq.

Under Section (b)(1) of G.S. § 44-38.1, a conditional sale contract is valid against a purchaser for a valuable consideration from the conditional vendee only if "properly registered in the state where such property was located prior to its being brought into this State." (Our italics.) Under Section (c) of G.S. § 44-38.1, a conditional sale contract is valid as against a purchaser for a valuable consideration from the conditional sale vendee "only from the date of due registration of such encumbrance in the proper office in the state from which the property was brought." Under G.S. § 47-20, a conditional sale contract is not valid as against a purchaser for a valuable consideration from the conditional sale vendee "but from" the registration thereof as provided therein. Our registration statutes contemplate that a purchaser for a valuable consideration from a conditional sale vendee acquires title free and clear of an unrecorded conditional sale contract.

The provisions of G.S. § 44-38.1, in this respect, modify and supersede the general rule of comity; and Rocky Mount Motors, Inc., having purchased for a valuable consideration from the conditional sale vendee before the conditional sale contract was actually filed for registration in New York, acquired title from the conditional sale vendee free and clear of the then unrecorded conditional sale contract.

Since the other defendants derive their title from Rocky Mount Motors, Inc., it follows that plaintiff may not enforce its conditional sale contract as against them. "After property has passed into the hands of a bona fide purchaser, every subsequent purchaser stands in the shoes of such bona fide purchaser and is entitled to the same protection as the bona fide purchaser, irrespective of notice, unless such purchaser was a former purchaser, with notice, of the same property prior to its sale to the bona fide purchaser." 77 C.J.S. Sales § 296d, quoted with approval by Ervin, J., in Handley Motor Co. v. Wood, 238 N.C. 468, 475, 78 S.E.2d 391, 397.

Frequently, in cases of this kind, loss falls upon an innocent victim, either the owner of the conditional sale contract or the purchaser for a valuable consideration from the conditional sale vendee. Their respective legal rights must be determined in accordance with the provisions of G.S. § 44-38.1.

For the reasons stated, the judgment of Judge Bone is affirmed.

Affirmed.