In this case involving an issue of first impression, we hold that the specific provisions of the Mobile Home Commission Act (mhca), MCL 125.2301 et seq.; MSA 19.855(101) et seq., supersede the general provisions of the Uniform Commercial Code, MCL 440.1101 et seq.; MSA 19.1101 et seq., regarding the transfer of title to mobile homes.
Defendant Ford Consumer Finance Company, Inc., (Ford) appeals as of right the order granting summary disposition in favor of plaintiffs David D. Ladd and NBD Bank, N.A., and vacating the court’s previous order.
I. underlying facts and procedural history
Colony Homes Center, Inc., operated a mobile-home dealership in Flint, Michigan. To obtain its inventory, Colony entered an inventory financing agreement* 1 with Ford in May 1988. Under this agreement, Colony would submit an invoice or other docu ment to Ford describing the mobile-home unit that it desired to acquire. Ford would then advance funds directly to the mobile-home manufacturer to purchase the unit on Colony’s behalf. Ford obtained a security interest in Colony’s entire inventory as well as all proceeds and accounts pertaining to the inventory.
Ford required the manufacturer to deliver the certificate of origin to it as a condition of financing Colony’s purchase. The certificate of origin identified the manufacturer, model and serial number of the mobile home, and the original purchaser. It provided temporary evidence of ownership. Colony agreed that upon the sale of a mobile home, it would immediately repay any sum that Ford had advanced for the purchase. Colony further agreed to hold the proceeds from the sale of the homes in trust for Ford’s benefit. After Colony paid in full the amount due on a mobile home, Ford agreed to release the certificate of origin to Colony to attach to the title application. Possessing the certificate of origin gave Ford additional security because Michigan law requires the certificate of origin to accompany the title application submitted to the Department of Commerce before the department issues a certificate of title. 1985 AACS, R 125.1232(1).
Plaintiff Ladd purchased a mоbile home that cost $27,856.80 from Colony. Under a separate arrangement with Colony for consumer loans, plaintiff NBD financed Ladd’s “out of trust”* 2 purchase, without veri fying whether Ford held the certificate of origin and without requiring Colony to pay off Ford. Colony “cashed out” its contract with NBD, without informing Ford of the out of trust sale or paying off the balance due. Colony delivered the mobile home to Ladd, along with an application for a certificate of title for filing with the Department of Commerce. Colony itself never filed the application for certificate of title. However, because Colony never repaid Ford, Ford refused to relinquish the certificate of origin. Consequently, Ladd could not obtain a certificate of title for the mobile home and NBD could not perfect its security interest in the mobile home.
Predictably, Colony ceased doing business and had no assets. Ladd and NBD thereafter sued Ford, alleging a claim and an interest in the certificate of origin. Plaintiffs alleged potential losses because plaintiff Ladd could not obtain title to the mobile home and plaintiff NBD could not perfect its security interest in the mobile home. NBD also alleged that Ford was liable for conversion because it had wrongfully retained the certificate of origin, and sought declaratory relief regarding six other allegedly similar purchases.
The trial court initially granted Ford’s motion for summary disposition under MCR 2.116(C)(8) and (C)(10), ruling that no sale of
On rehearing, the court held that plaintiff Ladd was a buyer in the ordinary course of business under the UCC, MCL 440.1201(9); MSA 19.1201(9), who was protected by MCL 440.9307; MSA 19.9307. The trial court reasoned that title to the mobile home passed from Colony to Ladd upon physical delivery of the home under MCL 440.2401(2); MSA 19.2401(2). The trial court further opined that plaintiff Ladd’s status as a buyer in the ordinary course of business protected plaintiff NBD’s security interest. Finally, the trial court determined that plaintiff NBD had not proved its claim of conversion against defendant Ford and denied declaratory relief regarding the six other purchases.
H. TITLE TRANSFER: DOES THE MHCA OR THE UCC GOVERN?
Ford initially contends that the trial court erred in holding that Colony validly transferred ownership to plaintiff Ladd under the UCC, MCL 440.2401(2); MSA 19.2401(2), at the time Ladd accepted delivery of the mobile home. We agree. This Court reviews de novo a trial court’s ruling on a motion for summary disposition,
Johnson v Wayne Co,
A motion for summary disposition under MCR 2.116(C)(8) tests the legal sufficiency of the complaint. It should be granted only if the claims are so clearly unenforceable as a matter of law that no factual development could possibly justify recovery.
Gazette v Pontiac,
The MHCA subjects all mobile-home sales or transfers to the certificate of title provisiоns of the act, except for any new mobile home owned by a manufacturer or a licensed mobile-home dealer and held for sale. MCL 125.2330(1); MSA 19.855(130)(1). Thus, a manufacturer or dealer need not apply for a certificate of title while holding the home for sale. However, upon a sale, a new owner must apply for a certificate of title with the assistance of the dealer. The effective date of the transfer of title is the date of execution of either the application for title or the certificate of title. MCL 125.2330c(2); MSA 19.855(130c) (2): MCL 125.2330(3); MSA 19.855(130)(3) specifically provides that “a mobile home shall not be sold or transferred except by transfer of the certificate of title for the mobile home pursuant to this act.”
The Department of Commerce issues certificates of title for mobile homes. MCL 125.2330b; MSA 19.855(130b). Under the rules promulgated by the Mobile Home Commission under authority of the MHCA, a mobile-home dealer must prepare and file an application for a certificate of title with the Depart ment of Commerce. 1991 AACS, R 125.1217(2). The manufacturer’s certificate of origin must be attached to the original application for the certificate of title. 1985 AACS, R 125.1232(1). To facilitate the attachment of the certificate of origin to the application for title, a lender holding the certificate of origin must surrender it to the mobile-home dealer upon request. 1985 AACS, R 125.1232(2).
The provisions of the UCC governing transfer of ownership differ radically from the MHCA. Under the ucc, without regard
No Michigan case has considered this precise question. However, this Court has considered similar issues involving the transfer of title to automobiles and watercraft and held that the title transfer provisions of the watercraft certificates of title act (WCTA) and the Michigan Vehicle Code (mvc) preempt the UCC.
Jerry v Second Nat’l Bank of Saginaw,
Later, in construing the wcta, MCL 281.1201 et seq.] MSA 18.1288(1) et seq., currently MCL 324.80301 et seq.] MSA 13A.80301 et seq., in Jerry, supra at 93, this Court held that the WCTA preempts the UCC regarding the transfer of title to watercraft. 4 The wcta provides:
A person acquiring a watercraft from the ownеr thereof, whether the owner is a manufacturer, importer, dealer, or otherwise, shall not acquire any right, title, claim or interest in or to the watercraft until that person has issued to him a certificate of title to the watercraft, or delivered a manufacturer’s or importer’s certificate for it. [MCL 281.1204(1); MSA 18.1288(4)(1), currently MCL 324.80305(1); MSA 13A.80305(1).]
The mhca’s provisions, although different in some respects, are analogous to the title transfer sections of the MVC аnd the wcta. Applying Whitcraft, Messer, and Jerry, we conclude that the specific certificate of title provisions of the MHCA control over the general provisions of the ucc. The MVC, the wcta, and the mhca are more than mere recording devices; all three acts reflect the Legislature’s intent that strict statutory compliance is essential to transfer ownership.
Generally, when two statutes conflict and one is specific to the subjеct matter while the other is only generally applicable, the specific statute prevails.
Frank v William A Kibbe & Associates, Inc,
The transfer of title must also conform to regulations promulgatеd by the Mobile
The purchase of the mobile home was thus void. Under the mvc, the sale of a motor vehicle without an accompanying certificate of title will not transfer ownership of a vehicle to the buyer.
Goins, supra
at 13-14. Further, sale of a motor vehicle without the delivery of a certificate of title is void.
Michigan Mutual Auto Ins Co v Reddig,
m. WAS PLAINTIFF LADD A BUYER IN THE ORDINARY COURSE OF BUSINESS?
Defendant Ford also contends that the trial court erroneously determined that plaintiff Ladd acquired title to the mobile home as a buyer in the ordinary course of business under the ucc, MCL 440.9307; MSA 19.9307. Again, we agree. Plaintiff Ladd did not qualify as a buyer in the ordinary course of business because he did not first acquire title to the mobile home in conformity with the MHCA.
In
Larson v Van Horn,
On appeal, this Court determined that Bloomfield and Larson both violated the mvc by failing to apply for a new certificate of title with the Secretary of State.
Id.
at 379. Nonetheless, thе Court concluded that title to the Rolls Royce was transferred to Larson when Bloomfield Leasing signed and delivered the certificate of title to him.
Id.
Because Oceanside failed to perfect its security interest and because Larson purchased the car without actual knowledge of Oceanside’s security interest, Larson took title free and clear of Oceanside’s security interest. Larson was a buyer in the ordinary course of business under MCL 440.9307(1); MSA 19.9307(1).
Id.
at 379. Thus,
Larson
indicates that title must pass under the titling act before a buyer in the ordinary course of business can
take the
In Jerry, supra, this Court considered the conflict between the certificate of title provisions of the wcta and the provisions regarding a buyer in the ordinary course of business. The defendant in Jerry argued that the ucc entrustment provision, MCL 440.2403(2); MSA 19.2403(2), permitted a merchant to transfer the rights of an entruster of a boat to a buyer in the ordinary course of business, even though the merchant did not transfer a certificate of title to the boat to the buyer in conformity with the title transfer provision of the WCTA, MCL 281.1204(1); MSA 18.1288(4)(1) (currently MCL 324.80304; MSA 13A.80304). Jerry, supra at 92-93. This Court rejected the defendant’s argument and held that the UCC entrustment provision could not preempt the certificate of title provisions of the wcta where titlе to a watercraft did not transfer by delivery of a certificate of title under the WCTA. Id. at 94. The UCC entrustment provision could not be reconciled with the plain meaning of MCL 281.1204(1); MSA 18.1288(4)(1) (currently MCL 324.80304; MSA 13A.80304), which effects transfer of title by issuance or delivery of a certificate of title. Id. Jerry did not address whether the buyer in the ordinary course of business takes title to a watercraft free of any security interest under MCL 440.9307; MSA 19.9307. The ucc entrustment provision is the Article II analoguе to MCL 440.9307; MSA 19.9307, because both provisions are designed to protect good-faith purchasers from certain priority interests. See White & Summers, Uniform Commercial Code, (3d ed) § 24-16, p 1175. Jerry thus provides controlling authority on this issue.
As our decisions in Larson and Jerry provide, title must first transfer under the acts before a buyer in the ordinary course of business can take free and clear of a security interest not known to the buyer under the provisions of the UCC. Like the defendant in Jerry, Ladd cannot take advantage of the protections given a buyer in the ordinary course of business under MCL 440.9307; MSA 19.9307, unless the certificate of title to the mobile home was transferred to him. Likewise, Ladd could not have acquired title to the mobile home under the ucc entrustment provision. Without transfer of the certificate of title, title to the mobile home did not pass to plaintiff Ladd. MCL 125.2330; MSA 19.855(130). The sale was void and Ladd does not qualify as a buyer in the ordinary course. 6 Therefore, the trial court erred in finding that Ladd was a buyer in the ordinary course of business.
Despite our sympathy for these innocent plaintiffs, this Court is bound to follow the clear and unambiguous language of the title transfer provisions of the MHCA, MCL 125.2330; MSA 19.855(130). See
In re Schnell,
IV. DECLARATORY JUDGMENT
On cross appeal, plaintiff NBD contends that the trial court erred in denying a declaratory judgment regarding the rights of six other purchasers of Colony mobile homes, who, like plaintiff Ladd, could not obtain title to their homes because Ford held the certificates of origin. MCR 2.605, the
(A) Power to Enter Declaratory Judgment.
(1) In a case of actual controversy within its jurisdiction, a Michigan court of record may declare the rights and other lеgal relations of an interested party seeking a declaratory judgment, whether or not other relief is or could be sought or granted.
A circuit court’s decision whether to grant declaratory relief under MCR 2.605 is reviewed for an abuse of discretion.
Allstate Ins Co v Hayes,
The trial court did not abuse its discretion in denying NBD’s request for declaratory judgment. The six other purchasers were not parties in this case. The trial court stated that it was not familiar with the facts surrounding the six other mobile-home purchases and did not know whether the litigants had been properly notified of the instant proceedings. The court reasoned that nothing would preclude it from considering these six cases in due course. The trial court did not abuse its discretion by denying declaratory relief regarding the six other purchases.
V. CONVERSION
Finally, plaintiff NBD contends that Ford wrongfully converted the certificate of origin by refusing to deliver it to Colony. We disagree. NBD has an unperfected security interest in the mobile home. NBD asserts a proprietary interest in the certificate of origin under a Mobile Home Commission rule, 1985 AACS, R 125.1232(2), that requires the lender holding the certificates of origin immediately to surrender the certificates upon request of the mobile-home dealer.
A conversion is any distinct act of dominion wrongfully exerted over the personal property of another and occurs at the point that wrongful dominion is asserted.
Attorney General v Hermes,
Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.
Notes
Under a floor-plan financing arrangement, the creditor loans the debtor the necessary funds to purchase the inventory or finance the business’ operating expenses. The inventory is then pledged as collateral to secure the loan. As inventory is sold, the debtor applies a set percentage of the purchase price to the floor plan in satisfaction of that account.
Yamaha Motor Corp, USA v Tri-City Motors & Sports, Inc,
NBD and Colony entered into an agreement under which NBD agreed to finance the consumer retail purchase of Colony’s mobile homes. NBD received credit applications from customers of Colony. If the credit appliсation was approved by NBD, the purchaser would sign a promissory note and security agreement at Colony’s office. Once the purchaser signed the installment loan contract at the mobile-home dealership, the mobile-home dealer took the agreement to an NBD branch for “cashing.” The sale of a mobile home under this arrangement is referred to as an “out of trust” sale.
A mobile home is arguably a “good” under thе ucc because a mobile home is a moveable thing at the time of identification to the contract. MCL 440.2105(1); MSA 19.2105(1).
After the
Jerry
decision, the Legislature repealed the wtca in
The same conclusion was reached by the United States Bankruptcy Court for the Western District of Michigan in In re Superior Ground Support, Inc, 140 Bankr 878, 883 (1992). The bankruptcy court concluded that under Michigan law, the “protection afforded to a buyer in the ordinary course of business of motor vehicles does not rеsult without compliance with the Michigan Vehicle Code’s provisions on the transfer of ownership.” Id.
The ucc does not define the term “buyer,” although courts usually focus on whether a completed sale has occurred in order to give a buyer the protection of MCL 440.9307; MSA 19.9307. White & Summers, Uniform Commercial Code, (3d ed) § 24-13, p 1165, n 2. Because Ladd did not receive title to the mobile home from Colony, a completed sale did not occur and Ladd did not qualify as buyer of the home.