166 N.E. 808 | Ohio | 1929
Lead Opinion
The judgment in the court of common pleas and the affirmance of the judgment in the Court of Appeals in cause No. 21364 were rendered upon the theory that the failure to execute a bill of sale in favor of Seymour at the time of his purchase, and the consequent failure to file a bill of sale with the clerk of the court within three days thereafter, gave Seymour no title to the automobile, and therefore gave no validity to the chattel mortgage executed by him, and that the Central Ohio Peerless Compay was therefore free to give a bill of sale to Schreyer at a later date.
This case turns entirely upon the legislative intent in the enactment of Sections 6310-3 to 6310-14, inclusive, General Code. Those sections were enacted April 29, 1921, (109 Ohio Laws, 330), and the purpose of the act was, as expressed in its title: "To prevent traffic in stolen cars, require registration and bill of sale to be given in event of sale or change in ownership of motor vehicles." Section 6310-4 declares it to be "unlawful to sell, convey, give away, transfer, exchange, receive, purchase or obtain any 'motor vehicle' or 'used motor vehicle' within this state, except in the manner and subject to the conditions hereinafter provided." Section *573 6310-5 declares it to be unlawful to sell or give away a motor vehicle unless the vendor or donor shall at or before such sale or gift execute in the presence of two witnesses a bill of sale in duplicate, delivering both copies to the purchaser. That section also provides in detail what the bill of sale shall contain. Section 6310-9 requires such bill of sale to be verified by the seller before a notary public or other officer before the delivery. It further provides that any bill of sale not verified before delivery "shall be null and void and of no effect in law." Section 6310-10 provides for filing a bill of sale with the clerk of courts "within three days immediately thereafter." Section 6310-13 provides: "No person residing in this state shall drive, use or operate, a motor vehicle or 'used motor vehicle' upon the public highways thereof, without having a 'bill of sale' for the motor vehicle as defined in this act, or without having first filed, with the clerk of courts, of the county in which his residence is established, a sworn statement containing the name," etc., and having obtained from said clerk a certified copy of such statement. Section 6310-14, as amended in 1923, 110 Ohio Laws, 402, provides severe penalties for violation of the provisions of the act, the minimum penalty being a fine of $25, and the maximum $5,000, or imprisonment for not more than five years, or both.
The problem in these cases is one of interpretation of statute. There is no question of legislative power. It is not doubted that the legislature in the exercise of the police power may impose severe restrictions, not only upon the manner of executing contracts, but also upon the right to enter into certain *574
kinds of contracts at all. The most familiar example of the latter is the prohibitions against gambling contracts, and, of the former, the statute of frauds and perjuries. We are here concerned with a question of legislative intent to be determined by applying well-settled canons of interpretation. There is no language of doubtful meaning to be construed, or contradictory provisions to be reconciled. We need only ascertain the policy and purpose of the act, the occasion and necessity of its enactment, and the mischief to be suppressed. Fortunately the legislature has furnished an aid in stating in the title that it is to prevent crime and to require registration as a means to that end. While the title is no part of the substantive law, it is proper to look to the title to ascertain the legislative purpose and intent, and, if the body of the act contains no language which is in conflict with that expressed purpose, the inquiry is greatly facilitated. The force to be given to a title as a factor in interpretation of a statute in the state of Ohio surpasses that to be given in some of the states, because Section 16, Article II, of our Constitution, requires: "No bill shall contain more than one subject, which shall be clearly expressed in its title." This rule is declared in United States v. Fisher,
The purpose expressed in the title to the act of 1921 is in perfect harmony with the text of the act. The act requires vendors and purchasers of motor vehicles to observe certain prescribed formalities in transferring and registering such vehicles, and imposes severe penalties upon non-observance. It is therefore in every sense a penal statute, and yet it relates to a subject-matter which is highly respectable and a business which employs more capital and labor than almost any other kind of property or business. The statute does not seek to discourage or limit or control the volume or character of the business, but rather to encourage it by affording additional protection from fraud and theft to those who deal in such property. Being a penal statute, it must be strictly construed. That is to say, it should be construed according to its exact and technical meaning, recognizing nothing that is not expressed, and limiting its application to cases clearly described within the words used. A careful study of the act shows that it does not declare any contract to be unlawful, but that it shall be unlawful to proceed in any except a prescribed way in executing the contract. The authorities divide such statutes into two classes: First, those which forbid certain contracts to be made, or certain acts to be done; and, second, those which prescribe a certain mode and manner of doing the act, or the procedure to be followed in making the contract. The greater weight of authority holds that, if the act or contract *576
is not prohibited, and the act is done otherwise than in the manner prescribed, or if the contract is made in form other than that provided, the unlawful manner may be punished, but the transaction itself is held to be legal. This court has rather recently had occasion to deal with this subject in the case of Warren People's Market Co. v. Corbett Sons, 114 Ohio st., 126,
There is another rule of interpretation applicable to these cases. Ordinarily a contract of purchase and sale of a motor vehicle is not different from a contract relating to any other kind of personal property. At common law, a motor vehicle can be bought and sold by parol contract. Any statute, therefore, which limits, or prescribes a different form of contract, or a different procedure, is in derogation of common right and of the freedom of contract, and for that reason the statute is subject to the rule of strict construction. The former decisions of this court clearly establish this rule.Wright v. Munger, Wright, 614; State, ex rel. Whiteman, v.Chase, Gov.,
Nowhere in the act do we find any express provision or any language which may fairly be interpreted to mean that a sale or gift otherwise than in compliance with the act shall render the sale void and of no effect. Nowhere in the act do we find an express provision or language capable of being interpreted to prohibit sales or gifts otherwise than in compliance with the statute, or creating any civil liability for such failure. The act is in every sense a penal statute imposing severe penalties, and for the avowed purpose, as expressed in its title, to prevent crime. This court has considered the provisions of this act in three previous decisions.
The first was the case of Ohio Farmers' Ins. Co. v. Todino,
The third case to be considered by this court wasMetropolitan Securities Co. v. Warren State Bank,
We have examined the decisions of other states having automobile registration laws and find that the courts of California, Colorado, Iowa, Texas, Minnesota, and Montana have placed a liberal interpretation upon their laws and hold the contracts not to be void, even though an omission to comply with the laws is an unlawful act and therefore punishable. The states of Kansas, Missouri, New Jersey, and Oregon have held to a more strict interpretation of their statutes. It will be found, however, that the statute in Missouri declares the sale to be fraudulent and void unless the statute is complied with. The New Jersey statute is strictly a penal statute, and, while it is held that the instrument is not effective to convey title, it has nevertheless enough vitality to be the basis of an action for specific performance. The Oregon courts hold the sale to be invalid, yet hold that the vendor may *580
replevin and recover the value of its use, though he could not recover on the note given to evidence the purchase price. The decided weight of authority in the decisions of other states is in favor of interpreting the statutes as penal statutes, but not affecting the title or right of possession. The state of Colorado, having a statute quite similar, in Forney v. Jones,
In Harris v. Runnels,
That case involved a Mississippi statute which provided that slaves should not be brought into the state without a previous certificate signed by two freeholders, with a certificate of the clerk of the courts from which they came certifying that the signers were reputable freeholders. Slaves were brought in without such certificate and sold, and it was held that the contract was not void, but that the purchaser could be compelled to pay his note given for the purchase money.
The state of Texas has a statute similar to the Ohio statute, and it was held in Shipp Buick Co. v. Tolbert (Tex.Civ.App.),
In Hennessy v. Automobile Owners' Ins. Assn., (Tex.Civ.App.),
In Security Finance Co. v. Hendry,
The same court in Carolina Discount Corp. v. Landis MotorCo.,
Notwithstanding the former decisions of this court already referred to, in the retrospect of the last five years and in the light of the results of the decisions of the lower courts which have followed the decisions of this court, the majority of this court at this time are constrained to the view that the court's former decisions have not expressed the true legislative intent. The automobile has revolutionized twentieth century civilization in many ways. Those influences have progressed so rapidly and have permeated so many fields of endeavor that they have increased the difficulties of legislation and at the same time the difficulties of the interpretation of legislation. When the act of 1921 was adopted, the evil of the theft of automobiles was so acute that the legislature doubtless felt justified in resorting to extreme measures to remedy the evil. When the Todino case was decided it seemed best to this court to place a strict interpretation on that statute and to give the application of the statute the widest range. The situation in matters of insurance did not seem hard to remedy, and it did not seem that any great hardship would be imposed upon owners of automobiles in requiring them to have a bill of sale properly executed in order to obtain valid insurance. Each case which has come before the court since that time has presented much greater difficulties. The courts are now frequently confronted with the problem of determining the conflicting rights of ownership, and the rights of creditors, and it has presented situations of a very different character. *584
The decisions of the lower courts in the instant case have held that omissions to faithfully comply with the statute at the time it should have been complied with cannot be cured. If the statute should be so construed at this time as to deny validity to any transfer of title, where the statute has not been faithfully complied with, and if being so construed the statute should be literally and strictly enforced, many curious situations and entanglements would occur. If the bill of sale should not be executed until after the sale, or, being executed, should not be filed within three days immediately thereafter, and if it should be held that time is of the essence of this provision of the statute, then the title would rest nowhere. The seller has received the equivalent and no longer has any just claim. The purchaser has paid full consideration. He has received nothing in return. By the provisions of Section 6310-13 he cannot license or use the car on the highways. If the Todino case is to be followed, he cannot insure it against fire or theft. Under such circumstances he would not be required to pay taxes. The car would become a bit of flotsam cast adrift upon the sea of senseless legislation. The purchaser could not convey it back to the dealer, because immediately upon the first sale it becomes a used motor vehicle under the definition of that phrase in Section 6310-3, and Sections 6310-8 and 6310-10 require that he must make delivery of the duplicate bill of sale obtained from the clerk of the court, which of course he would not have.
Having the benefit of the experiences of the past eight years, and having observed this law in operation for that period, and having observed the difficulties *585 which have grown out of the interpretation of that statute by the former decisions of this court, the majority of this court are of the opinion that the Todino and Helwig cases should be overruled. In so doing we lay down a few propositions all of which apply to these cases.
The act of 1921 had a definite purpose, which is expressed in its title. It is a penal statute which was not intended to affect the validity of contracts, or titles, or rights of property. It was not designed to repeal or interfere with the statutes relating to conditional sales, chattel mortgages, or the uniform law of sales in transactions relating to motor vehicles. Its provisions apply only to the statute relating to the sale of chattel property by making special procedure to govern the transfer of title to motor vehicles. By virtue of its provisions purchasers of motor vehicles may unreservedly rely upon the files in the office of the clerk of courts in ascertaining the title to motor vehicles. But a failure to execute bills of sale concurrently with the making of sales of motor vehicles, or failure to file a bill of sale within three days immediately thereafter, will not ipso facto render a transfer void. A sale of a motor vehicle not accompanied by a bill of sale executed in compliance with the act of 1921 is not void, but is effective between the parties. If a bill of sale is executed in proper form, though not executed at the time of making the sale, it is nevertheless a valid instrument when executed. A bill of sale properly executed either at the time of sale or at any time subsequent thereto becomes effective as against subsequent purchasers from the time of filing in the office of the clerk of courts, even though not filed within three days immediately thereafter. *586
From the foregoing principles it follows, in cause No. 21364, that possession of the automobile having been delivered to Seymour, and Seymour having paid part of the purchase price, and having executed and delivered his note and chattel mortgage for the balance, the contract became valid between the parties. The Central Ohio Peerless Company having negotiated the note and the mortgage to the Commercial Credit Company, and no rights of creditors having intervened, the Commercial Credit Company became a valid purchaser of the mortgage, and a record of that mortgage would be constructive notice to all subsequent purchasers and mortgagees. Seymour having received a bill of sale properly executed on November 1, 1925, and having filed the same in the office of the clerk of courts of Franklin county on May 18, 1926, and the rights of no other purchasers having intervened, his title became good as to all persons except the mortgagee. When Schreyer purchased the automobile on June 10, 1926, he had constructive notice of the sale made by the Central Ohio Peerless Company to Seymour, by reason of the bill of sale which was filed in the office of the clerk of the courts of Franklin county on May 18, 1926. Having that notice, he was put upon inquiry concerning chattel mortgages given by Seymour, and was therefore bound to examine the files in the office of the county recorder of Franklin county, and must therefore be held to have constructive notice of the chattel mortgage held by the Commercial Credit Company. The issues joined between the Commercial Credit Company and Schreyer must therefore be resolved in favor of the Commercial Credit Company, and the judgments of *587 the Court of Appeals and of the common pleas must therefore be reversed.
In cause No. 21530, one additional question arises.
Section 6310-9 provides: "Any bill of sale not verified before delivery as hereinbefore provided shall be null and void and of no effect in law." This is the only provision in the Automobile Registration Act which affects the validity of the transaction. That portion of the statute being very specific, it must be held that the bill of sale, as it existed at the time of the levy of execution, was wholly invalid, and the transaction stood as though no bill of sale had been executed or delivered. Though a defectively executed bill of sale, which by the terms of the statute is absolutely void, adds nothing to the title of Mrs. Anderson, it does not follow that she had no title. In accordance with the principles herein declared, a bill of sale was not necessary as between the parties, and the court therefore erred in holding that she had neither the right of possession nor ownership.
At the trial of this cause issue was joined upon the right of Anderson to transfer his automobile to his wife, by reason of his claimed insolvency, and therefore in violation of rights of creditors. It is evident that both the trial court and Court of Appeals have followed the principles declared in the Todinocase. That case having been declared to be unsound, the ruling of the common pleas court on the question of possession and ownership is likewise unsound, and the cause should therefore be remanded to be again tried upon the question of bona fides in the transfer from Anderson to his wife.
*588Judgments reversed.
KINKADE, ROBINSON, MATTHIAS and ALLEN, JJ., concur.
JONES, J., concurs in the judgment.
Dissenting Opinion
I am unable to concur in the reversal of the Todino case,
The paramount question is what was the legislative intent in the passage of the act under consideration.
In order to ascertain that intent, a consideration of the title is proper. The same provides: "An act to prevent traffic in stolen cars, require registration and bill of sale to be given in event of sale or change in ownership of motor vehicles." 109 Ohio Laws, 330.
In the first place, the interpretation placed upon the title in the majority opinion is far too narrow, in that it attempts to establish that the sole purpose of the act was to prevent traffic in stolen cars, and thus to reach a conclusion that the statutes in question are exclusively penal in nature. An examination of the entire act discloses that the bill related to the single subject of the manner of acquiring and transferring title to motor vehicles. The language of the title is broad enough to sustain a construction that such was its purport, for no reference is made in the act itself to stolen cars, although the bills of sale and registration required by the act would tend to prevent such traffic.
Again, these sections are found in Part Second of the General Code, Title II, to wit, Police Regulations, *589 appertaining to a wide range of matters relative to social and economic conditions upon which the state, in the exercise of its police power, finds it necessary to legislate. It is conceded that this act is a proper exercise of police power by the legislature, and, as indicated, it is placed in that portion of the General Code which affects civil rights and liabilities, even though a penalty may be provided, as shown by a wide range of subjects referred to in Part Second, Title II, Chapters I to 34, of the General Code.
When the legislature desired to make a purely penal section with reference to motor vehicles, the same is found in the Penal Code, being Part Fourth, Title I, Chapter 5. It is evident that the legislature intended to distinguish between the exclusively penal sections with reference to motor vehicles, such as 6310-1 and 6310-2, relative to lights on automobiles, and 6310-3 to 6310-14, having to do with thesale of motor vehicles, because a special provision was made in the Penal Code by the enactment of Section 12614-1, which specifically relates to Sections 6310-1 and 6310-2 and provides a penalty for the violations thereof; whereas, Sections 6310-3 to 6310-14 have no provision for their violation made in the Penal Code, but the penalty is found in the act itself, to wit, Section 6310-14. If the legislature was not satisfied with this assignment of section numbers by the attorney general, opportunity has been afforded to change or alter the same.
That the legislative intent was to make sales in disregard of this act (Sections 6310-3 to 6310-14) not only unlawful, but void, is evidenced by Section 6310-4, which provides, "It shall be unlawful to sell, *590 convey, give away, transfer, exchange, receive, purchase or obtain any 'motor vehicle' * * * within this state, except in the manner and subject to the conditions hereinafter provided," and by Section 6310-9, providing: "Each bill of sale shall be duly verified by the seller or other person as defined in section 1 [G. C. § 6310-3] of this act. * * * Any bill of sale not verified before delivery as hereinbefore provided shall benull and void and of no effect in law."
It is hardly to be presumed that the legislature intended that a bill of sale not verified before delivery should be "void and of no effect in law," but that the sale itself should be lawful and enforceable which had ignored the requirement of giving any bill of sale at all. It is claimed that the act makes no provision declaring sales in violation thereof to be void, hence such sales are enforceable. Such provision was unnecessary, as it is a generally accepted doctrine that a statute, which penalizes an act prohibits it; that a penalty implies a prohibition. An illegal sale is a void sale.
The early eighteenth century case of Bartlett v. Vinor, Carthew's English King's Bench Reports, 251, 90 Eng. Rep., 750, concludes with a note by Lord Chief Justice Holt that "Every contract made for or about any matter or thing which is prohibited and made unlawful by any statute, is a void contract, tho' the statute itself cloth not mention that it shall be so, but only inflicts a penalty on the offender, because a penalty implies a prohibition, tho' there are no prohibitory words in the statute."
This doctrine has been quite generally followed in America, as evidenced by the following decisions: *591
"A contract is void if prohibited by statute, though the statute only inflicts a penalty, because such penalty implies a prohibition." Vanmeter v. Spurrier,
"If the statute imposes a penalty upon the act done, this will make the contract void, in like manner as if it were in terms prohibited, because a penalty implies a prohibition."Miller v. Post, 83 Mass. (1 Allen), 434.
"It is an established rule of law, supported by uniform authority, that when a statute goes no further even than to impose a penalty for the doing of an act, a contract founded on such act as a consideration is void, although the statute does not pronounce it void, nor expressly prohibit it."Dudley v. Collier Pinckard,
" The rule * * * is that where a statute pronounces a penalty for an act, a contract founded on such act is void, although the statute does not pronounce it void, nor expressly prohibit it." Berka v. Woodward, Treas.,
"A forfeiture or penalty imposed * * * by * * * statute [upon specified contracts] implies a prohibition against such a contract, although there were no prohibitory words to that effect to be found in it." Cook v. Pierce, 2 Houst. (Del.), 499.
"Contracts intended to promote, or requiring the performance of acts forbidden by statute are void, and this is so though the statute does not so declare, but only inflicts a penalty for its violation upon the parties forbidden to do the acts."Dillon v. Allen,
"Where a penalty is imposed by statute upon a party for entering into a contract, the imposition of the penalty, in law, amounts to an implied prohibition of the act for which the penalty is inflicted, and the contract is thereby rendered illegal and void." Brackett v. Hoyt,
Other cases might be cited to the same effect, but the foregoing will announce the principle. It is quite true that other jurisdictions have reached different conclusions upon the question under consideration, and the decisions are not harmonious; each state being controlled, of course, by its own statutes. However, the following well-considered cases may be cited as illustrative of the view sought to be expressed in this minority opinion:
In Michigan, where the statute is not essentially dissimilar to our own, it was held, in a late case (December, 1928), that the failure of a seller of a motor vehicle to comply with the mandatory requirements of Section 3, Act No. 46, Pub. Acts of 1921, as amended by Act No. 16, Pub. Acts of 1923, relating to delivery of certificate of title and registration invalidates the contract of sale for motor vehicles. Ittleson v. Hagan,
The case of Endres v. Mara-Rickenbacker Co. (1928),
"The decisive question is, Which of the defendants *593 owned the car? Is the sale void for the dealer's violation of the statute (Section 3, Act 16, Public Acts of 1923), in failing to deliver to Pushkin 'an affidavit of conveyance or assignment in such form as the secretary of state shall prescribe, to which shall be attached the assigned certificate of title received by such dealer'? By section 4 of Act No. 46, Public Acts of 1921, it was a crime punishable by fine or imprisonment, or both, to sell a motor vehicle without complying with the provisions of section 3 above quoted from. The legislature provided penalty for such violation, fine or imprisonment, or both. It did not expressly provide that the sale or transfer without such compliance be void or fraudulent. If the courts are to add such penalty, further than that specifically given by the legislature, it must clearly appear from the statute that the legislature so intended. SeeDunlop v. Mercer (C.C.A.), 156 F., 545, and 13 Corpus Juris, 422.
"Among other things, the title of Act No. 46, Public Acts of 1921, declares its purpose 'to regulate purchase and sale or other transfer of ownership' and 'to facilitate the recovery of motor vehicles * * * stolen.' The act is designed to discourage and to prevent stealing of automobiles, to protect the public against crime. It states definitely a rule of sale or transfer of automobiles, and it provides the stated penalty for violation thereof. In Cashin v. Pliter,
"See, also, Edward v. Ioor,
"In view of the purpose and language of the statute, we think it was the intent of the legislature that a sale or transfer of an automobile in violation of the provisions of the act should be void * * *."
The Kansas statute is very similar to that of Ohio, the Supreme Court of that state, in Hammond Motor Co. v. Warren,
See, also, State, ex rel. Connecticut Fire Ins. Co. ofHartford, Conn., v. Cox et al., Judges,
The rule as expressed in the cases above cited, to which others might be added, seems to me highly salutary and so clearly within the intent of the legislature that I feel it my duty to express my regret that the case of Ohio Farmers' Ins.Co. v. Todino *595 should not be adhered to by this court. It construed a statute in existence for over eight years, and, since its decision five years ago, it has been followed by the lower courts of this state and elsewhere. It announced a rule of property which was safe, sound, and in the interest of the public good.
In Morris v. Firemen's Ins. Co. of New Jersey,
The case of Helwig v. Warren State Bank,
However, Helwig purchased with constructive knowledge of the filing by the bank of its bill of sale, and he could get no better title than Snyder, the seller, had a right to give; and when he purchased the car Snyder had already sold to the bank. Thus Helwig had constructive knowledge of the filing by the bank of its bill of sale, and he had no standing in court against a claimant who had complied with Section 6310-10, General Code, by filing prior to his purchase or filing, and the statutes afforded opportunity for Helwig to have protected himself as above indicated. The facts are so dissimilar in either of the cases at bar that we see no purpose in reversing the Helwig case.
The case of Warren People's Market Co. v. Corbett Sons,
The plain purpose of the Motor Sales Act was to provide for transfer of title to motor vehicles by duly executed bills of sale and the filing thereof in the office of the clerk of courts, to protect the public in the possession of its motor vehicles, now that *597 transportation of freight and passengers by motor has practically superseded all other means of local transportation, such act affecting nearly every individual in the community; while the sale of stocks, bonds, etc., of corporations and similar organizations is a vastly different matter and affects a much more limited number and class of people. The records of corporations as to stocks and bonds, etc., the method of dealing therein, are all so different from motor sales that the legislature may well have had a very different intent in passing the Motor Sales Act and the so-called Blue Sky Act. Under the latter act, certain stocks are exempt from its operation; while under the Motor Sales Act there are no exemptions whatsoever. The two acts are so dissimilar in subject-matter, operation, and purpose that I cannot find the case of Warren People's Market Co. v. Corbett Sons, supra, controlling in determining the legislative intent as disclosed in the Motor Sales Act. I quite agree with the syllabus above quoted, which gives the rule that the legislative intent is to be the determinative factor; but that by the passage of the Motor Sales Act the legislative intent was to create exclusively an addition to the Criminal Code, I cannot concede.
A void contract is one which has no legal force and which for that reason cannot be enforced. An unlawful contract is one to do an act which the law forbids or to omit an act which the law enjoins, and for that reason is non-enforceable. The object of all laws is to protect life, property, and legal rights, to enforce legal obligations, and to promote justice and honest dealing. It is the business of the law and its administration to enforce the performance *598 of contracts that are not forbidden by law. There are classes of contracts the enforcement of which will not be promotive of the general welfare, and these contracts the courts, following the maxim that "the general welfare is the highest law," refuse to enforce. The sovereign power of the state, acting through the legislature, has provided that the transfer of motor vehicles without the formalities required in Sections 6310-3 to 6310-14 is unlawful, and, such being without the pale of the law, it does not lie in the power of the courts by construction to make that lawful which the law plainly says is unlawful. Under such circumstances, the courts should leave the parties where they have placed themselves.
In my judgment, it was not the intent of the legislature, in the passage of the Motor Sales Act, to establish the principle that an enforceable title in the sale or transfer of a motor vehicle may be obtained by the performance of an unlawful act. *599