67 S.W.2d 717 | Ky. Ct. App. | 1934
Reversing.
The Cargill Motor Company of Ashland, Ky., engaged in the automobile business at Ashland, sold a truck to Ralph Mollett, at the price of $628.44, payable in 12 monthly installments of $52.37, on the 5th day of each consecutive month after date. He executed and delivered a note therefor and a conditional sales contract of even date, the latter carrying a provision that, if any one payment was not made when due, all of them should become due. The conditional sales contract recited that, "for the purpose of securing to the said seller the payment of the purchase price, the seller should retain title to the truck." The contract also gave to the Cargill Motor Company the right to take possession of the truck and sell it in case Mollett defaulted in the payments or breached any term of it. It was acknowledged and recorded in the Boyd county clerk's office, the county in which Mollett resided. The note and the conditional sales contract were transferred by indorsement by the Cargill Motor Company to the Ashland Finance Company on the day they were executed. Mollett made two payments of $52.37, one in May and the other in June, 1929, making a total of $104.74. No other payments were made. He "swapped" the truck for another to M.C. Ward, Martin county, Ward paying him $400 difference between the valuations of the trucks. Mollett orally represented to Ward that his truck was free from incumbrances and mortgages. He executed and delivered to him a bill of sale, in which it was recited that *493 the truck was transferred "free from any mortgage or other encumbrance." In the fall of 1929, the Ashland Finance Company located the truck in the possession of Ward; exhibited to him the conditional sales contract and demanded possession of the truck or the payment of $523.70, the balance of the purchase price. Ward refused to do either. Ward had had possession of the truck from July 22 to October 26, 1929, under his purchase.
After a correspondence between the Ashland Finance Company and Ward, on the 11th day of December, 1929, it filed this action against him to enforce its lien against the truck and also to recover the difference between the value of the truck when possession was demanded and the amount it might bring at a sale under the orders of the court, alleging that the value of the truck at the time Ward took possession of it, and at the time of the demand for the possession of it, was more than $523.70.
At the time the Cargill Motor Company sold it to Mollett, it delivered to him a bill of sale which did not show the existence of the lien retained in the conditional sales contract. Ward, after he took possession of it, added equipment and supplies of the value of $144. His defense is that he is an innocent purchaser for value without notice of the existence of the lien of the Ashland Finance Company by virtue of the conditional sales contract and its recordation, and therefore his title is superior to its lien, but, if he only has a lien on the truck, it is superior to the lien of the Ashland Finance Company, at least to secure him in the payment of the cost of the added equipment and supplies. A personal judgment was rendered against Mollett in favor of the Ashland Finance Company. Its petition was dismissed as to Ward with a judgment declaring a superior lien on the truck in his favor to satisfy $100 of the $144. The execution and delivery of the note and conditional sales contract, its terms and provisions, and the fact that it was recorded in Boyd county, are not controverted. The conditional sales contract and the bill of sale, signed by Mollett, to Ward, recited that "he was a resident of Boyd County"; the correspondence between Mollett and the Ashland Finance Company shows his address was Ashland, Ky. There was no evidence that he resided elsewhere. His residence being in Boyd county at the *494
time of the execution and delivery of the conditional sales contract and note, that county was the proper county in which to record the instrument showing the lien on the truck to secure the note for the purchase money. Sections 495 and 523a-2, Ky. Stats. Coppage v. Johnson,
In Munz v. National Bond Investment Co., it was held that a conditional sales contract must be recorded to be valid against an innocent purchaser, and, when recorded, it constitutes constructive notice to all the world of a lien on the property therein described to secure the debt shown by it to be in existence. The recordation of the conditional sales contract in the pending case was constructive notice to Ward of the existence thereunder of the lien sought to be enforced by the Ashland Finance Company. The lien thereby created, and existing of record, to secure the debt of the Ashland Finance Company, evidenced by Mollett's note, was not affected by the oral declaration of Mollett or a like recitation in the bill of sale executed and delivered by him to Ward. The conditional sales contract expressly authorized the Ashland Finance Company to demand and regain possession of the truck, because of Mollett's failure to meet the payments of the monthly installments. Its recordation in the county of the residence of Mollett was constructive notice to Ward of this provision. It vested in the Ashland Finance Company the same rights against Ward as it conferred upon it as to Mollett. General Motors Acceptance Corp. v. Shuey,
Judgment is reversed for proceedings consistent with this opinion.
