294 N.W. 650 | Minn. | 1940
On June 9, 1937, plaintiff repaired Caldwell's automobile and surrendered possession of it to him without having been paid therefor. On July 9, 1937, plaintiff duly filed a lien statement under the statute claiming a lien for $49.95.
On November 29, 1937, plaintiff commenced an action in the district court to foreclose the lien and on May 26, 1938, recovered a judgment for the foreclosure of the lien. The automobile was described with such full particularity in the *504 lien proceedings that it could be readily identified. The judgment among other things directed a sale of the automobile and the satisfaction of plaintiff's lien out of the proceeds. Plaintiff and Caldwell were residents of St. Paul. Although diligent search was made, neither Caldwell's nor the automobile's whereabouts could be ascertained. Service of process upon Caldwell was made by leaving copies thereof with a person of suitable age and discretion at his house of usual abode. The automobile was at all times either in the possession of Caldwell or members of his family within the state of Minnesota until it was seized on January 10, 1939, by the finance company under a chattel mortgage to be presently mentioned.
On September 17, 1938, defendant loaned Caldwell $100, taking as security therefor a chattel mortgage on the automobile, which it duly filed. Caldwell represented that the automobile was free and clear of other encumbrances except a small balance on a chattel mortgage to another loan company. Prior to making the loan defendant had actual knowledge of the lien statement filed by plaintiff, obtained by an examination of the records in the office of the city clerk of St. Paul showing the filing thereof. The record did not show that the lien had been paid or satisfied or that a foreclosure had been commenced. Defendant assumed that "the lien was outlawed." It did not examine the records and files of the clerk of the district court to ascertain whether or not an action to foreclose the lien had been commenced.
Caldwell having defaulted in his payments, defendant on January 10, 1939, seized the car under a power contained in the mortgage. Notice of mortgage foreclosure was given on February 2, and the sale was held on February 16, 1939, at which defendant bid in the car. There was no redemption from the sale, and consequently defendant got title.
Plaintiff learned that defendant had seized the car for the purpose of foreclosing its chattel mortgage, but asserted no *505 claim until after the foreclosure sale. He then demanded the car. Being refused possession, he had the sheriff levy upon and seize it on February 28, 1939, under the judgment for the foreclosure of his lien for the purpose of selling it. Defendant demanded possession of the car as third party claimant under 2 Mason Minn. St. 1927, § 9340. Plaintiff being unable to furnish an indemnity bond, the sheriff released the levy and surrendered the automobile to defendant, which repaired and then sold it in the course of its business. Later defendant repossessed the car and sold it to another purchaser.
Defendant contends that it was a bona fide encumbrancer and purchaser of the automobile without actual or constructive notice of plaintiff's claimed lien rights; that plaintiff is estopped from claiming any rights under the judgment for the foreclosure of his lien by his failure to assert his rights thereunder while the car was in defendant's possession after seizure and before the chattel mortgage foreclosure sale; and that the question has become moot by the sale of the automobile by defendant to a third party. Other points are raised but they do not merit consideration.
1. Decision below was upon the ground that defendant was not a bona fide subsequent encumbrancer. The court found that defendant had actual notice of plaintiff's lien at the time it took the chattel mortgage. The finding aside, defendant's chattel mortgage was subject to plaintiff's lien. The construction of the motor vehicle lien law that a subsequentbona fide purchaser or encumbrancer of an automobile takes subject to a motor vehicle lien is settled by our decision in Pratt v. Armstrong,
2. Plaintiff is not estopped to enforce the judgment for the foreclosure of his lien by his failure to claim the automobile before the chattel mortgage foreclosure sale while *506 it was in defendant's possession for purposes of such foreclosure.
Proceedings for the foreclosure of a motor vehicle lien commenced within the period allowed need not be brought to final adjudication within such period. Fletcher Tire Co. v. Mahler,
Defendant's contention is that it had no notice or knowledge of the judgment for the foreclosure of the lien and that by plaintiff's silence it was misled to purchase at the chattel mortgage foreclosure sale.
A party cannot claim an estoppel unless the truth was unknown to him at the time he acted. Macomber v. Kinney,
The finding is that defendant had actual notice of plaintiff's lien. Defendant admitted knowledge of the filing of the lien statement, but denied knowledge of the lien. The lien appeared unsatisfied of record. The parties had no contact with each other. Plaintiff said and did nothing except that he engaged counsel to look after his interests. Defendant proceeded upon the assumption that it had made such inquiry as it was bound to make under the circumstances and that it had the right to sell the automobile at the foreclosure of the chattel mortgage.
The record of an unsatisfied and undischarged lien, which was filed and upon which foreclosure was commenced within the time allowed by statute, is notice not only of the lien but of the action to foreclose it, although the statute does not require the filing of a notice of lis pendens and none is filed, for the reason that the record puts an interested party on inquiry, which if conducted with reasonable diligence would disclose whether or not an action to foreclose the lien had been begun. Empire Land Canal Co. v. Engley,
Estoppel is based on the proposition that the party estopped is at fault. Bausman v. Faue,
The facts in this case bring it within the general rule. The record disclosed the truth with respect to plaintiff's lien. No one could have been misled thereby. The record put defendant on inquiry and charged it with actual knowledge of the facts which a reasonable inquiry conducted *508 with ordinary diligence would have disclosed. Such an inquiry here would have disclosed that plaintiff had recovered judgment for the foreclosure of his lien and was trying to find Caldwell's automobile so that it could be seized and sold under the judgment.
Plaintiff was not bound to take affirmative measures to protect himself against the chattel mortgage foreclosure sale. He had already done all that the law required to preserve and enforce his lien. The chattel mortgage foreclosure sale was as a matter of law subject to his lien rights. The holder of a lien which is superior to a chattel mortgage is not estopped by his mere silence to assert his superior right against a purchaser with notice at the foreclosure sale under the chattel mortgage. Endreson v. Larson,
The case of Wilson v. Sherffbillich,
3. The question of the respective rights of the parties has not become moot by the sale of the automobile by defendant after it acquired title at the chattel mortgage foreclosure sale. Its title was subject to plaintiff's lien. Plaintiff may hold the defendant in conversion for selling the car *509
in exclusion and defiance of his lien rights. Nichols Shepard Co. v. Minnesota Thresher Mfg. Co.
Affirmed.
Section 8525 provides that "the lien shall cease at the end of 60 days after the furnishing of the last item" of such labor, material, or storage unless the lien claimant shall file for record a lien statement as therein required.
Section 8526 relates to procedure for foreclosing such liens. It provides for foreclosure by action within six months after the statement is filed, and "upon the commencement of the action to foreclose the lien, the lien claimant shall be entitled to the possession of the motor vehicle for the purpose of foreclosing the lien thereon, and may maintain an action of replevin therefor, against the owner or possessor thereof * * *."
There is no provision requiring that a notice of lis pendens be filed upon foreclosure of the lien.