The opinion of the court was delivered by: YOUNGDAHL
Smith-Kirkpatrick and Company, Inc., a New York Corporation engaged in the financing of import and export trade, has brought suit against Continental Motors, Ltd. and others, for the replevin of eighty-seven automobiles. Maryland Credit Finance Corporation, a Maryland corporation engaged in the financing of automobile sales by retail dealers, holds conditional sales contracts on five of these eighty-seven automobiles and has been granted leave to file a complaint in intervention to demand judgment for possession of and the title documents to these automobiles.
The case is before the Court on a motion by Maryland Credit for summary judgment. The facts are stipulated.
Early in 1959, Smith-Kirkpatrick and Continental agreed to a 'floor-plan' arrangement for the financing by Smith-Kirkpatrick of a number of automobile purchases by Continental. Under this 'floor-plan' arrangement, Smith-Kirkpatrick would advance funds to Continental for the purchase of automobiles and would take back from Continental promissory notes secured by chattel mortgages on the automobiles along with the automobiles' title documents.
The mortgages would then be recorded in the District of Columbia pursuant to the general recordation statute, D.C.Code, § 42-101 (1951 ed.).
When Continental repaid Smith-Kirkpatrick, the latter would send Continental the title documents.
The Goliath was placed in Continental's regular stock for sale to the public and a few months later was sold to Marcus M. Henson. Henson paid a small amount in cash, was given an allowance for a trade-in and executed a conditional sales contract for the balance.
Continental then sold this contract to Maryland Credit, under an arrangement whereby Maryland Credit would purchase a conditional sales contract from Continental who would then pay Smith-Kirkpatrick, secure from it the title document, present the title document along with the conditional sales contract to the title office, receive from the title office the certificate of title with Maryland Credit's lien noted thereon, and then send the certificate along to Maryland Credit. Thus, Maryland Credit's lien would be recorded in compliance with D.C.Code, § 40-702.
In Henson's case,
after he took possession of the Goliath, his contract was assigned to Maryland Credit but Maryland Credit did not receive the title certificate because the dealer, Continental, had financial difficulties; Continental did not pay Smith-Kirkpatrick the $ 2,000 which it owed and so Smith-Kirkpatrick did not release the certificate of origin. No certificate of title has issued and Maryland Credit's conditional sales contract has not been recorded.
Maryland Credit and Smith-Kirkpatrick have stipulated that 'the sole question of law presented in connection with the present Motion for Summary Judgment is whether recordation of a chattel morgage upon an automobile held by a car dealer for sale to the public constitutes notice of the mortgagee's rights under D.C.Code, § 42-101 as to a subsequent purchaser from the dealer of a conditional sales contract covering the same automobile.' But the agreed upon facts and the nature of the case belie the stipulation -- its formulation of the 'sole question of law' is, in the Court's opinion, incorrect. A stipulation as to the facts involved is one thing; a stipulation as to the legal issues, quite another -- the litigants cannot impose upon the Court their concept of the legal issues involved.
This is a replevin action and it is basic that the plaintiff in such an action cannot recover on the weakness of the defendant's title; to recover, the plaintiff must have a right to immediate possession of the property at the commencement of the action. D.C.Code, § 16-1801; Notes v. Snyder, 1925, 55 App.D.C. 233, 234, 4 F.2d 426, 427, 41 A.L.R. 1052.
It is agreed that the purchaser of the automobile, Henson, had no actual knowledge of Smith-Kirkpatrick's lien at the time of his purchase. Further, Smith-Kirkpatrick's recordation of its lien under § 42-101 did not invest Henson with constructive knowledge; as against Henson, Smith-Kirkpatrick is estopped from asserting its lien. Fogle v. General Credit, 1941, 74 App.D.C. 208, 122 F.2d 45, 136 A.L.R. 814.
Smith-Kirkpatrick appears to agree with this much but goes on to say that as far as Maryland Credit is concerned -- it being a finance company, well aware of the floor-plan practice -- Fogle does not obtain and therefore it (Smith-Kirkpatrick) has priority over Maryland Credit. But priority for what? This is not a bankruptcy action; nor is it a case where the conditional vendee has defaulted and the conditional vendor has repossessed the automobile. It has not been suggested that the purchasers are in default. That being so, they are entitled to the use and enjoyment of their automobiles which is not possible without registration. D.C.Code, § 40-102 (1951 ed.). Registration is not possible without the documents now in the possession of Smith-Kirkpatrick. Traffic and Motor Vehicle Regulations for the District of Columbia §§ 7, 18(d). There is no authority for Smith-Kirkpatrick to withhold these documents and thus prevent the purchasers from using their automobiles. 'Title to the car, acquired by estoppel, carries with it a right to possession of the certificate.' Associates Discount Corp. v. Hardesty, 1941, 74 App.D.C. 44, 45, 122 F.2d 18, 19.
As to each automobile, therefore, the certificate must be surrendered to Maryland Credit so that the automobile may be registered and Maryland Credit have its lien recorded on the certificate of title -- the only lien which is presently valid against the purchaser. Maryland Credit would then be permitted to retain the certificate until its lien is satisfied. D.C.Code, § 40-710 (1951 ed.); Traffic & Motor Vehicle Regulations for the District of Columbia § 8(b).
Motion granted. Counsel shall ...