Finance & Guaranty Co. v. Defiance Motor Truck Co.

Offutt, J., delivered the opinion of the Court. The appeal in this case is from a judgment of the Superior Court of Baltimore City in favor of the appellee, in an action of replevin brought by it against the appellant, for the recovery of a motor truck which it had sold under a conditional sales agreement to the Allegany Motor Company, which had sold it to one Whitacre under a similar agreement, which it assigned to the appellant. The Defiance Motor Truck Company is an Ohio corporation engaged in the manufacture and sale of motor trucks, and on January 31st, 1923, it sold the truck involved in this ⁹⁶ c'a'se to the Allegany Motor Company, a corporation, and a licensed automobile dealer with offices and show rooms in Cumberland, engaged in the business of buying and selling automobiles, and on the same day the vendor and the vendee executed a conditional sales agreement to secure the payment of a balance of $1,975.54 due on account of the purchase price of the truck, which was on January 31st, 1921, recorded among the Miscellaneous Records of Allegany County. The agreement, which was duly acknowledged on behalf of the vendee, was in the following form: “In consideration of the Allegany Motor Co., Inc., of the City of Cumberland, State of Maryland, to pay the seller or their assigns the sum of one thousand nine hundred and seventy-five and 54/100 dollars on or before the fourteenth day of March, 1921. “The Defiance Motor Truck Company, of Defiance, Ohio, hereby sells to Allegany Motor Co., Inc., and Allegany Motor Co., Inc., purchases, 1 Model ‘D’ 1 %- ton chassis; cab complete with curtains and windshield, regular pneumatic tires.

Prest-O-Lites and Kellogg Tire Pump. 1 5 ft. 9 in. by 10 ft. flare side express body. Truck No. 2009. “It being understood and agreed that the title to the said property shall remain in The Defiance Motor Truck Company until it is fully paid for, and that upon failure to pay for the same as agreed, The Defiance Motor Truck Company or its assignee may take possession of the property wherever found and sell the same at private sale without notice, paying the purchaser the balance, if any, after deducting the amount due The Defiance Motor Truck Company, with costs and reasonable attorney’s fees. “Dated this twentieth day of January, 1921.” The Allegany Motor Company bought the truck for resale and, when it secured possession of it, it was pl'a'ced in its show or store room in Cumberland, and on March 12th, 1921, it sold it to William F. Parsons, and the company took from him a conditional sales agreement to cover the unpaid bal ⁹⁷ anee of the purchase price, amounting to $2,861.33. It assigned that agreement to the appellant in this case, and later that company reassigned it to the Allegany Motor Company. Parsons defaulted in his payments on the truck, and it came again into the possession of the Allegany Motor Company, which then sold it to John T. Whitacre for $2,645, of which $1,058 was paid in cash and the balance secured by a conditional sales agreement which was likewise assigned to the appellant.

Whitacre also defaulted in his payments, and the appellant, in April, 1922, took possession of the truck and thereafter sold it for $425. In September, 1922, the Defiance Motor Company, in order to learn where the truck was, through its sales and service departments, addressed to the appellant the following two letters: “Sept. 13, 1922. “Finance & Guarantee Co., “Baltimore, Md. “Gentlemen: “We are endeavoring to check up our service records as to the ownership of truck No. 2009, engine No. 103. “Our original records indicate that this truck was sold to the Allegany Motor Sales at Cumberland, Md., but we since have learned that it has passed through a number of hands, and the last transfer was taken care of through some Baltimore finance house. “We would greatly appreciate your checking into your records to see if your company has ever financed this truck, and if so, can you tell us the owner of same? “A stamped, addressed envelope is enclosed for your information. “Yours very truly, “The Defiance Motor Truck Company. “G. N. Bruggner, “Sales Department.” ⁹⁸ “September 21, 1922. “Finance & Guaranty Co., “Sun Life Bldg., “Baltimore, Md. “Gentlemen: “We have learned rather indirectly that you may be in position to tell us who is the. present owner of truck No. 2009, engine No. 103, Model 1%-ton Defiance. . “We maintain within this department a complete and accurate record as to the ownership of all trucks of our manufacture, so that in case of service and the replacement of parts these matters can be handled promptly and efficiently. “In order to maintain this record accurately, we would like to inquire if you can tell us the present owner and his address. “We enclose herewith stamped, addressed envelope, and would greatly appreciate this favor. “Yours very truly, “The Defiance Motor Truck Company. “A. Haviland, “Service Manager.” To those letters the appellee sent this reply: “September 23, • 1922.- “The Defiance Motor Truck Co., “Defiance, Ohio. “Gentlemen: “In reply to your communication under date of September 21st, in regard to Defiance Truck, Serial No. 2009, Motor No. 103, Model D, 1% ton, wish to state that this truck was repossessed from Mr. John F. Whitacre, Cumberland, Md. The sale of this truck to Mr. Whitacre was made by the Allegany Motor Company. “We now have this truck in our possession and there is balance on same of $1,269.60. If you can suggest any way in which we can dispose of this truck for anywhere near the amount we have involved, we would certainly deem it'a great favor. The truck has .been ⁹⁹ thoroughly overhauled and practically rebuilt and is in excellent shape. “Kindly let us hear from you at your earliest convenience and oblige, “Yours very truly, “Special Representative.” Default having been made in payments of the balance covered by the conditional sales agreement between the motor company and the Defiance Motor Truck Company, the appellee demanded of the appellant that it return the truck.

The appellant refused to comply with the demand on the ground that it had had no actual notice of the conditional sales agreement, and that, as an innocent purchaser for value without notice, it was not affected hy any equities growing out of the relations between the Defiance Motor Truck Company and the Allegany Motor Company. The appellee then brought this suit against the appellant to secure possession of the truck, and the verdict and judgment being against the defendant, it took this appeal. The only exception found in the record relates to the court’s rulings on the prayers, and it rests upon the proposition that the appellee, having no actual knowledge or notice of the conditional sales agreement between the appellee and the Allegany Motor Company, was not in any way hound or affected thereby. In support of that proposition it contends that, regardless of any statute in force in this State relating to conditional sales agreements, it would he contrary to public policy to permit a manufacturer to retain a lien under such an agreement on a truck sold to a dealer who might resell it, - because tbe existence of such a lieu is inconsistent with tbe dealer’s right to resell, and might result in loss to innocent purchasers for value.

The plain answer to that contention is that the public policy of a state is the policy which its people speaking through their legislature adopt, and where a legislative act is clear and explicit, the courts are bound by and must obey it unless it contravenes some provision of. the Constitution. And in 'answer to the suggestion that the ¹⁰⁰ operation of the statute under circumstances such as those involved in this case may result in loss to an innocent purchaser for value, it is sufficient to say, first, that if that is so, then it must be corrected by the legislature and not by the courts, and second, that it is without substantial merit, because where such an agreement is spread on the public records under the provisions of a public general law, any person of ordinary prudence would, by the exercise of reasonable care, learn of its existence before purchasing property affected by it. Section 53 A, Article 21, O. P. G-. L. of Md. provides: TEvery note, sale or contract for the sale of goods and chattels, wherein the title thereto, or a lien thereon, is reserved until the same be paid in whole or in part, or the transfer of title is made to depend upon any condition therein expressed, and possession is to be delivered to the vendee, shall, in respect to such reservation and condition, be void as to third persons without notice until, such note, sale or contract be in writing, signed by the vendee, and be recorded in the Clerk’s Office of Baltimore