Untitled Texas Attorney General Opinion

OFFICE OF THE AlTORNEY GENERAL OF TEXAS
Honorable Homer mrriron, Jr.
Dlraotor, Dapartment of PublSo Saiety
Auatln, Texae .
Dear Sir:
or other aoou-
or eridonoe that ruoh
ih has bean 8atlrflsd.
private sale in aa-
oordanoe with the term of the mortgage, and
that suah Oertifloate 0r Title may not nata
the ssoond or inferior llene',;whioh
exl8tad
against said motor vehiole p&r to the time
of repossession and forealoeure of the prior
li0n.
Honorable Homer Harrison, Jr., Page 8
WWe now ask the tollowlng question:
*Shall the Department iesue a
Certifioate of Title against a mo-
tor vehlole upon affidavit of repoa-
session and under the olroumstanoes
outlined above, when there is ot re-
cord a first lien against tires,
radio or other aocsssorles, without
requiring from the applicant either
a notation on the application of
auoh first lien against tires, radio
or other aooassorlss, or rvfdsnae
that such first lien haa been ratis-
fied?”
Thie Department ruled in opinion No. O-1984 as
roilowe t
“By way of 8ummary, it ia the opinion of
this department that where a mortgagee repoa-
se~sea a motor rehfalo and sells the same at
a private sale, whloh prooedurd is in aooord-
anoe with the terms of the mortgage, your Ds-
partment Is authorized to issue a Certifloate
of Title in the name of the purohaser at suah
private forooloeure aale wbioh oertitioate may
not note on the same the aeoond or inrerior
liens which existed againat said motor vehl-
018 prior to the time of repossession and iore-
oloeure of the prior llen.w
In euoh opinion this Department reoognized that
the rule of law stated therein applied only to a forsolo-
sure of the rirst or prior lien and.the efieot of suoh
foreolosure on a second or mubsequent lien. It 1s a rule
or law too well settled to nead the oltation of authority
that where a eeoond or inferior lien is roreoloasd, euoh
foreclosure does not prejudice the right or extinguish
the lien of the first or prior nortga$e holder. Your
question therefore resolves itself down to thls: Ii the
lien whloh the vendor of the tires, radio and other ao-
oeseories takes against euoh artioles is a first lien
against euoh artioles even though they are put on to a mo-
tor vehlole which bears a prior and first lien against
Honorable Homer Oarrison, Jr., Page $
such motor vehicle, then the foreolosure of such lien
on the motor rehiale by the mortgage holder on the came
would not extinguish the first lien whioh the vendor of
the tires, radio or other aooessorles had against suoh
aoaesaorlee. However, on the other hand, if when suoh
tire, radio or other aooessory is attaohed to the mo-
tor vehiole, the party holdtng a first and prior lien
against such motor vehicle gets a first lien against auoh
tire, radio or other aocessory whioh Is superior to the
lien held by the vendor of suoh aoaessory; then in such
0886, the rorsolosure of the lien on the entire motor ve-
hicle would be a foreclosure of the tire, radio or aooes-
sery also, and the rule of law announced in our opinion
No.O-1984 would apply SO that pour Department could not
note on the Certliioate of Title of the new applicant who
purchased the motor vehicle at the foreolorure sale, the
lien which the vendor of the tire, radio or other aooss-
sorg held against suoh artiale. ~180 if the lien of the
vendor of suoh tire, radio or other aooessory is a superior
lien against suoh article over the holder of the original
first mortgage on the motor vehiale, then your question
would have to be answered in the affirmative and the ap-
plioatfon of the party who purohased the niotor vehicle at
the foreclosure sale with suoh tire, radio or other aooes-
sory lnoluded thereon would have to note suoh lien of the
vendor of euah aocessory on suoh applioatlon or show other
etvidonosthat suoh first lien against suoh aooessory has
been satisfied or extinguished.
We are able to find but one ease on this point
in Texas. That Is the oasb of Firestone Service Stores,
Ino., vs. Darden, 98 S. W. (a) 916, San Antonio Court 0r
Civil Appeale, deolded May 0, l.938. The iaots in that oass
were stated by the Court as followsr
'1116.
w. Wrden, or Bexar Oounty, Texas,
on the 7th day or July, 1934 purohasec rr00
the Motor Sales Coapny, a partnership oom-
posed or Lester 0. Fox and Milton welnrield,
one 19Bd Paokard Sedan, 1934, License No.
93,307, 00t0r NO. 67300-A for the sum or
(b.lOS.00, paying therefor b3S.00 in oash and
leaving a balanoe of #lO.OO for whloh the
said Darden exeouted to the Motor Sales Oom-
pany a ohattel mortgage on the automobile,
complete with standard attaobmenta, aooesso-
ries and equipment, The chattel mortgage was
Honorable Homer Garrison, Jr., page 4
duly filed of reoord with the County Clerk
of Bexar County, Texafl,on the 0th day of
July, 1934, a oopy of whioh mortgage ia here-
to attached and marked Exhibit *A”.
mlThereafter, on or about the 15th of AU-
gust, 1934, K. 91.Darden drove to the Flre-
stone Service Storee, Inc., In San Antonio,
Bexar County, Texas, and purohased three au-
tomobile tlree and tubes, size 600x23, being
Firestone Heavy Duty Tires and tubes, bearing
serial No. L-9630054U, L-964526U, and L-
97004itJ. That at the time of the purohase of
the tires and tubes and prior to the delivery
or the aame to M. w. Darden, a ohattel mort-
gage lien was execut6d from k. W. Darden to
the Blrestone Servloe Stores, Ino., to seoure
a balance of $66.00 of the purohase prloe of
said tires and tubes, a copy of said mortgage
1s hereto attached, marked Exhibit eB*. That
the ohattel mortgage was flied of reoord with
the Oounty clerk of Dexar County, Texas, on
the 27th day of August, 1934; that the tires
and tubes when purchased by E. K. Dardan wers
placed on the Packard Sedan above desorlbed
by the employees of the Firestone Servloe
Stores Inc., at the lnstanos and under the
dlreotion of 1yi.w. Darden while the said Paok-
ard Sedan was stl3.1on the premlsea of and at
the plaoe ot buslnese of the Firestone Servlos
Stores, Inc. ; that the old tire8 and tubes were
taken off said Packard Sedan Automobile by
Firestone Servloe Stores, Ino.*a employees and
were delivered by them to X. W. Darden. . . ln
In deoidlng the issue as to who had the superior
lien to those tlrea and tubes in question, the Court held
as r0n0w8:
“It will be noted that appelleeta chattel
mortgage only oovered the automobile and the
standard attaahments, aooessorles, and equlp-
ment dellvered to M. a. Darden, and does not
have any provision that such ohattel mortgage
shall include other accessories and equipment
thereafter placed upon this automobile. There-
fore the only theory on which appeliees 0Oui.d
Honorable Homer Garrison, Jr., Page %
oontend that their mortgage extended to anfin-
oluded the tires purchased rrom appellant by
Darden would be that the tires when plaaed up-
on the autokobile became a part thereof as an
aoaration or aconssion thereto. These tIrea
being easily Identif'iedby serial numF.ers,and
being so attaohed that they are easily removed,
without Injury to the automobile, do not be-
oome a part of the automobile by the rule or
accretion or aocession . . .*
The rule of law announoed by the San Antonio
Court of Civil Appeals In the Firestone oase that tires,
tubes, eto., do not become part of the motor vehiole by
aooeesion, is a rule of law recognized throughout the
United States. See also the oasesof Rotor Credit Company
VS. Smith, 24 S.W. (Sd) 974, (Sup. Ct. Ark.); Rosquet vs.
kiaokMotor Truok Company, 168 N.E. 800, (sup. Jud. Ct.
Ease.); Clarke v. Johnson, 187 P. 510, (Sup, Ct. Rev.)~
Meisel Tire f@ipang v. Edwards Finance Corp., 14 EJ.E.(IZ)
870; Franklin Service Station, Inc., vs. Sterling Motor
Truok Company of W.E., 147 A. 754, (Sup. Ct. R.I.).
You are therefore advised that in a aase where
a motor vehicle I.ssold Andya chattel mortgage taken on
tha same whioh does not aontaln any provision that tha
ohattel mortgage shall include other acoessorles and
aquipment thereafter plaoed upon the automobile, and where
later a tire, tube, radio, or other aoaessory is sold and
the vendor of suoh article retains a lien upon the sama,
that under the authority of the Firestone Servioa Stores
oasa, supra, the lien of the vendor of the aaoessory is
superior against suoh article to the 1%~ placed on the
motor vehiole upon its original sale.
we oall to your attention, however, the faot that
the San Antonio Court of Civil Appeals did not pass on this
question if the original mortga:199 S.E. 775, November 10, 1938, stated aa
rollowe In this oonnsotionr
“The oontraot which retained tho title
to the truok upon which the tires sued for
were subsequently placed, provided that ad-
ditions to the truok ehould become a part or
the truok and be oovered by the oontraot. . .
*Every one who buys a truok knows that
the replaoement of tires and tubes 1s~Inevit-
able rrom a standpoInt of keeping the vehi-
cle in service and from a standpoint of pro-
teotion of life and tha property itself.
Eenoe the ease with whmiahthey are removable.
. . .
*The title to the tiree never did pass to
the owner of the truok, and we can think of
no reason why the seller or the tires and
tubes would be estopped to alaim title to
them unless there was rraud praatioed ,In the
replacement. Surely the eellsr would not be
estopped because he mada traveling sarer for
the truok and Its drivers and mada IWO of the
truok sure and aontinuoue at least for a time.
The seller’s aotion oan not reasonably be aaid
to have oaused the party holding the oontraot
on the truok to have acted to his Injury. So,
W@ conclude that the seller of the tires and
tubes has the superior title and that the judg-
ment of the court below was oorrect. Goodrioh
Silvertown Stores v. Caesar, 214 N.C. 85, 197
5.2. 698; 2 Berry on Automobiles, 6th Ed. SlSO6;
Linooln Road Equipment Co. v. Bolton, 127 Neb.
224, 864 N.W. 884; Goodrich SilVertovPnStOrQn
V. A. h A. credit 8ystem, Ino., 200 Idinn.866,
Honorable Homer Garrison, Jr., page V
874 N.W. 178r Firestone Servioa Stores, Ino.,
v. Darden, Tax. cit. App., 90 S.W. 86 313;
Goodrioh Silvertown Storea v. Pratt Motor CO.,
198 Minn. 8bO, 869 N.W. 464; Ksirsl Tire (lo.
v. Ear-Be1 Trading co., 155 Miso. 664, 2SO x?.
Y.S. 335, and cit.; 98 A.L.R. 427, and cit.’
The 8ame faot aituatloa oonfrontsd the Supreme
Court of Rhode Island in the ease or Franklin Servloa
Station, Inc., va. Sterling Motor Truak clompany of N.X.
147 A. 764, deoided November IS, 1929. The original
chattel mortgage in that oese oontalnad an after-aoqulred
property olaure. The vendor of the tires sold the same
under a oonditlonal sale oontraot, In which ease title
reaained in the vendor. The 00urt held the righta of
the oonditlonal vendor ot the tires superior to that of
the original ohattsl mortgagee and stated as follower
WTha automobile to-day is orten assem-
bled with parts bought iron dirreront dealera,
which are separable and replaceable. Thlr
praotloe and oourae or the business met be
considered on the questfon at aooession us ap-
plied ta automobllsr .
*we are or the op%nion, as,alrsady es-
pressed, that the mortgage@ did not have title
to the tires in que~tlon.*
The same rule or law was announoed by the supreme
court 0r in the ease or D. Q. ssnios
calirornia tMrpora-
tion vs. Seourities Loan and Dlsoount Ooapany, 292 P. 497.
Tha rule or law announoed above in a ease where
the original ohattel mortgage contained an a?ter-aoqulred
property olauae and the vendor of the tire or other aoo8s-
eory retained title to suoh aoorasory under a aonditional
sales oontraot has also been extended to oases where the
vendor 0r the tire or aocessory retained only a lion against
suoh aooessory, The rule has been established that the
original mortgagee Mdar the after-a@gUimd pTOp@Sty tthUSe
has his mortgage attached against suoh after-adquired tir6
or other aocessory only to the extent of the title of the
purohaser in said artiole. The Supreme court 0r Errors or
315
Honorable Homer Garrison, Jr., page S
CoMaatiaut aMoUW3ed this rule or law In the aaLseof
Tire Shop Y. Peat, 161 A. 96, June 21, 1932. The Court
stated as r0li0w88
*While the authorltiee are not in harmony,
we regard the weight of reason to be with those
who hold, at least in the abeenae of express
provision oonoernlng after-aoquired equipment,
that the conditional vendor of a car, on repos-
sessing it, takes only suah title as the pur-
chaser had in parts or equipment sold to him
under a oonditlonal bill of sale, which are as
easily and readily detaoheble as tires and tubes
. . .
nThe defendant makea a broader claim, that,
by the terms 0r the sale 0r the automobile to
Carney, the tirea and tubas baoeuna subjeot to
the provfelon that ad&~& or eubatituted parts
or aqulpaent plaood upon 6he ear are to beoome
a oomponent part of it and are lnoludad in the
term *oar* as used fn the bill of sale, and that
therefore the pleintiff, when the tires and
tubes were attaohed to the oar, lost all right
or intareat in them. But while the dsiandant
and Carney were tree to make thie agreement be-
tween themselves, they oould not by its terms
bind third persons not parties to it. Davis Y.
Blies , supra. Title to the tires and tuber oould
pass to the derendant only through carney, and
he oould pass only ruoh title as he aoqulred in
them by their purohaae. Wood Y, Holly Mfg. Co.,
suprat United State8 y. New CMeans k 0. R. Do.,
suprat Ho&es y. Mooney, supra. But Carney never
did aopuire any property in them which waa not
subordinate to the piaintiwa rights. It neaes-
sarily rollows that the derendant oould only ao-
quire a property in them subjaot to those rights.
The doatrine of title by aaoeasion doee not ap-
ply to the -equipment oi a oar whioh the buyer
and seller do not intend to be merged into its
struature and whioh is olaarly df8tlnguishable,
and as readily detaohable from lt as are tires
and tubes. Franklin SerYiOe StattOM, InO., Y.
Sterling Motor Truok Co., SO R.S. 336, 147 A.
734; BouSquet Y, Maok k?otor Truak Co., 869 Mass.
800, 160 N.E. 000, . .*
Honorable Homer Oarrison, Jr., ~6s g
An exarupleof a aasa where the vendor of the
tires took only a chattel mortgage on #al& tires and was
held to hare a prior lien over and agalnst the original
ohsttel mortgagee of the motor vahiola whloh ahattel
mortgage oontained an after-aoquired property olause wue
the Ooodrioh Silvertown Stores Y. Caesar, 197 S.E. $98,
;&he Supreme Court of Worth Carolina, deaided JUIO 82,
The question before the court was atated as fol-
low&
"The question presanted for deoialon is:
Where the seller of automobile tires in6 tubas,
at the tIma of the sale, takes a ohattal mort-
gage on the tires and tubas, and also on a truok,
to seaure the balanoa of the purohaeo price of
the tires and tubes, and tharaafter the tire8
and tubes are placed on the truck, is the seller
of the tires and tubas, upon derault in tha pay-
ma&s, entitled to recover them, or their value,
from the seller or tha truok who has repossessed
It, with the tires and tubas on It, undsr a prior
aonditional sales oontraot on the truck whloh
oontains an after-acquired property olause?
In answer to the question, the court etatad an
r0u0ws :
“The dootrine of aoaarsion is inapplloa-
ble in oases where personal property Is plaoed
upon other personal property ii the property
so plaoed had not become an Integral .part Or
the property to which it was attaahed and oould
be oonvenlently detaahed. . .
“The oonditional sales agreement was be-
tween the defendant Paul BeMutt Motor (fompny,
as seller, and (juittle C. Caesar, aa buyer, and
the agreement by the buyer *that any equipment,
repairs, replacements or accessories plaaed up-
on said oar shall be at the buyer’s expense and
shall become a component part thereof and in-
oludad In the terma of this agreement’ inured
to the benerlt of the xotor Company only to the
extent of’whatever property Caesar may have had
in any aoaessories, lnaluding tires and tubas,
plaoad upon the truak, and Caesar never had any
property In the tires and tubes not subjeot to
the purchase priae ohattel mortgage exeauted by
Honorable Homer Oarriaon, Jr., age 10
him to the plaintiff. Therefore, the plaintirf,
as holder of a past due ohattel mortgage thereon,
had a right to the posseesion of the tires and
tubes, unless they had become so attaohed to the
automobile so as to become suoh an integral part
thereof'aa not to be removable without detriment
to the automobile. . .*
The aame rule of law was aMounaed by the Suprw
Court of Yinneaota, in the case of Goodrich Silvertom
Stores of B. 8. Ooodrioh Co. V, A. & A. Credit System,
IRO., 274 N.W. 172, decided June 11, 1937. The oourt 8tated
the rule as hollows:
"It is the rule in this state that, oom-
plianoe with registry lawe aside, artlolee at-
taohed to an automobile or other prinoipal
artiole oi personal property, when easily de-
taohable without injury to either, do not parr
by aoosrrrion to the one having a prior mortgage
or lien on the prinoipal artiole, ae against
the conditional vendor of the aoceasoriea, even
if the lien inetrument on the principal article
has an after-aoquired property olause. 000&-
rioh Bilvertown Btorea v. Pratt Motor Co., 198
Minn. 269, 269 N.W. 464. Thfs la on the theory
that a mortgage or other lien reaohing aiter-
aoquired property can only attaah to euah prop-
erty in the oondition as to title in which it
comes into the hands of the mortgagor. St. Paul
Xleo. Co. v. Baldwin Engineering Co.,~l29 Nina.
221, 199 N.W. 9; Sohnirring v. Stubbe, lT7 Minn.
441, 225 N.W. 989. Since Vader got only a quali-
tied title, whioh oould not beoome more without
payment of the full purohaee prioe, defendant
could take no greater right than Vader."
This rule of law applicable in a oase where the
vendor of a tire or acoeaeory passea title to the purohaeer
and retains only a lien was perhaps best stated by the Su-
preme Court of South Carolina in the case of Qooarioh Sil-
vertown, Ino., vs. Rogers, et al, 200 S.W. 91, Deoeaber 9,
19328. The oourt stated as f'ollowst
*The rf20t that the mortgage or the de-
fendant Rotor Company contained a olause oov-
ering after aoquired property is not oontrol-
ling. Before the sale of the tirea to Rogera,
Honorable Homer Garrison, Jr., Page 11
title thereto was in the plaintltf, It passed
to Rogers simultaneously with the taking ef-
fect of the mortgage to the plaintiff, it be-
ing in eff'eata single transaction and Rogera
only aoquired title subject to the title re-
tention contract, this being the true inten-
tion of ths parties. He was never, therefore,
able at any time, either prior or subsequent
to the purchase, to pass any grehter rights
than he had . . .
Yonder the rule in the Cash X;illsCase, a
mortgage intended to cover after aoquired prop-
erty can only attach itaelr to euoh property
in the oondition in which it oomes into the
mortgagor's hands. In the oase at bar, the
tires were subleot to the interest of the seller.
who by virtue & its sales oontraot retained a '
epeozfio lien thereon. . ." (Underscoring ours)
Our Oonol~sion based on the above disoussed oases
is as r0il0ws:
The lien of the vendor of the tire, tube, or other
aoceesory is a first lien against suoh artiole and is eu-
perior to the lien of original vendor of the motor vehiole
YO which eaid accessory is attached. This is true even
though the original mortgage on the motor vehiole oontalns
an wafter-aaquired property" clause.
It la the opinion:of this Department, therefore;
that the Department of F%blio Safety may not issue a oer-
tirioate of title on a motor vehicle upon aff+idavltof
repossession without noting on said Certificate of Title
the rirst lien or the vendor of the tire, radio, or other
accessory whioh la attached to the motor vahiale unle8s the
applloant ror the new certifioate of title who is the pur-
abaser at the foreolosure sale produces evidence betore
your department that auoh rlrst lien against suoh sutomo-
bile aooessory has been satisfied.
Yo,urs very truly
AFFF.C)VEGJUL
2, 1940 ATMRNBY GEMShAL OF TPrXAS
BY