Lovell, Richard E.

Rogers, J. Paul

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Maryland Law ReviewVolume 19 | Issue 1 Article 10Possession and Recording Under Conditional SalesContracts - Mohr v. SandsRichard E. LovellJ. Paul RogersFollow this and additional works at: http://digitalcommons.law.umaryland.edu/mlrPart of the Contracts CommonsThis Casenotes and Comments is brought to you for free and open access by the Academic Journals at DigitalCommons@UM Carey Law. It has beenaccepted for inclusion in Maryland Law Review by an authorized administrator of DigitalCommons@UM Carey Law. For more information, pleasecontact smccarty@law.umaryland.edu.Recommended CitationRichard E. Lovell, & J. P. Rogers, Possession and Recording Under Conditional Sales Contracts - Mohr v. Sands, 19 Md. L. Rev. 78 (1959)Available at: http://digitalcommons.law.umaryland.edu/mlr/vol19/iss1/10MARYLAND LAW REVIEWconstitutional. This is brought out by the result reachedin People v. Graves,24 where the Court of Appeals of NewYork found a sixteen year retroactive tax on income re-ceived from foreign realty to be a denial of due process.ERNEST J. WEIss, JR.Possession And Recording Under ConditionalSales ContractsMohr v. Sands1Plaintiff, Mrs. A, a resident of Baltimore City, enteredinto an agreement to purchase a new 1955 Nash automobilefrom B Corporation, located in Baltimore County, on June6, 1955, under a conditional sales contract. The contractwas assigned for value to plaintiff, C Credit Corporation,and recorded among the Chattel Records of Baltimore Cityon June 9, 1955. C Credit Corporation was unaware thatMrs. A was not buying the car for herself, but had per-mitted her ex-husband to use her credit in the purchaseof the automobile, which was to be used by him as a demon-strator during his employment as a salesman for B Cor-poration. He was to make the down payment and monthlyinstallments, upon completion of which Mrs. A was totransfer title to him, and Mrs. A testified that she nevercontemplated taking possession of the car, and knew it wasto be used as a demonstrator. The Department of MotorVehicles issued a certificate of title for the car in Mrs. A'sname on July 27, 1955.On July 19th, Mr. D, one of the defendants, purchasedthe same automobile, which was still on display in B'sshowroom, from a salesman other than Mr. A. Mr. D'sconditional sales contract was assigned for value to de-fendant E Credit Corporation and duly recorded. On August10th the Commissioner of Motor Vehicles, acting upon aforged application for a duplicate title and a forged assign-ment from Mrs. A to D, and an application for a new title,purportedly signed by D, but also stated to be forged, issueda new title to D, showing a lien in favor of E Credit Cor-poration.21280 N. Y. 405, 21 N. E. 2d 371 (1939).1213 Md. 206, 131 A. 2d 732 (1957).[VOL. XIXMOHR v. SANDSUpon discovery of the fraud, Mrs. A and C Credit Cor-poration, contending that their recording of the conditionalsales agreement had put the defendants on constructivenotice, sought a declaratory judgment to validate theirclaims to the car. The trial court ruled for the defendants,accepting the defendants' contention that under Article83, Section 432 the recording, though in compliance withArticle 21, Section 66,' was ineffective to give notice ofMrs. A's rights thereunder as against a bona fide purchaserfor value. The Court of Appeals confirmed the trial court'sruling that the recording was ineffective and accordinglyaffirmed, reasoning that under Article 83, Section 43, thedefendants, being bona fide purchasers for value, wereentitled to retain their ownership and lien upon the auto-mobile.4The importance of this case is in the holding that therecording statute for conditional contracts of sale is in-applicable where the vendor remains in possession, eventhough all requirements of the statute had been compliedwith. The Court pointed out that the recording act con-templated an actual delivery of the chattel, the subject ofthe conditional sale, to the vendee and was enacted to pro-tect the interests of the conditional vendor from sales bythe conditional vendee as the latter, having ostensibleownership, was therefore able to transfer good title toa bona fide purchaser for value.'In reaching its decision, the Court was called upon toreview the problem of ostensible ownership as affected bythe Maryland recording statutes. Recording of bills of salehad been required for many years, and the present formof the statute, applicable to both bills of sale and chattelmortgages, is found in Article 21, Section 41.6 However,Dinsmore v. Maag-Wahmann Co.7 held that the recordingact for bills of sale had no application to a conditional salewhere posession was in the vendee, in contrast to the billof sale transaction where possession remains in the vendor.2 7 MD. COD (1957) being §25, of the Uniform Sales Act:"Where a person having sold goods continues in possession of thegoods, . . . , the delivery or transfer by that person, or by an agentacting for him, of the goods or documents of title under any sale, pledgeor other disposition thereof, to any person receiving and paying valuefor the same in good faith and without notice of the previous sale, shallhave the same effect as if the person making the delivery or transferwere expressly authorized by the owner of the goods to make the same."8 2 MD. CODE (1957) (formerly Art. 21 §74 of the 1951 Code).Of. Cottman v. Wagner, 213 Md. 73, 130 A. 2d 749 (1957).See Praeger v. Implement Company, 122 Md. 303, 89 A. 501 (1914).2 MD. CODE (1957).7122 Md. 177, 89 A. 399 (1914).1959]MARYLAND LAW REVIEWTwo years after the Dinsmore8 case, the first recordingstatute for conditional contracts of sale was passed,9 forthe express purpose of protecting third persons who dealtwith the conditional vendee without knowledge of thereservation of title in the vendor." Where the require-ments of the statute were complied with by recording atthe residence of the conditional vendee and possession hadbeen delivered to the conditional vendee, Finance Etc. Co.v. Truck Co."- upheld the reserved title of the vendoragainst the claims of a finance company which had lentmoney to a purchaser from the conditional vendee. It thusremained for the present case to determine what law con-trolled where the conditional vendor remained in possessionafter the execution of a conditional contract of sale whichwas recorded as provided for in the recording statute forconditional sales.Having adopted the view that the purpose of the con-ditional sales recording statute is the protection of theinterests of purchasers from the vendee, by providing con-structive notice through recording in the county (or city)of the vendee's residence or place of business, the courtreached the normal conclusion that, absent some othersecurity device that could be recorded at the residenceor place of business of the vendor (such as a bill of saleor chattel mortgage where the vendor or mortgagor nor-mally remains in possession), the only applicable law wasthe general rule of the Uniform Sales Act, or of commonlaw estoppel, both of which protect the bona fide purchaserfrom the person left in possession. The Court rested itsdecision flatly on the Uniform Sales Act; but, even in itsabsence, the result would have been the same for theopinion states that the Court would "have little difficultyin finding her [Mrs. A] estopped to assert her claim to thecar .... 12Quite suggestively, the Court points out: "Whether, inthe case of chattels so readily movable as motor vehicles,a centralized place for the recordation of liens of all kindsthereon should be established is a matter for legislative'Ibid.Its present form, somewhat changed from that originally enacted in1916 is found In 2 MD. CODE (1957) Art. 21, §66.10 Roberts & Co. v. Robinson, 141 Md. 37, 118 A. 198 (1922). Prior to therecording act, it was held that a conditional sale was valid against all butbona fide purchasers for value from the conditional vendee. See Praeger v.Implement Company, 122 Md. 303, 89 A. 501 (1914)."145 Md. 94, 125 A. 585 (1924).'213 Md. 206, 214, 131 A. 2d 732 (1957).[VOL. XIXRECENT DECISIONSdetermination.' 13 Certainly, the difficulties inherent in theinstant case, which could arise in other similar cases, wouldsuggest the desirability of prompt legislative attention tothis practical solution of the problem. 4RiCHAmD E. LOVELLJ. PAUL ROGERsRecent DecisionsAttorneys' Fees - Standard For Fixing Attorneys' FeesUnder Anti-Trust Laws. Noerr Motor Freight v. EasternRailroad Pres. Conf., 166 F. Supp. 163 (E.D. Pa. 1958). Plain-tiff obtained a judgment in a private action under the Sher-man Anti-trust law. He was entitled under the statute totreble damages ". . . and the cost of the suit including areasonable attorneys' fee." 15 U.S.C.A. (1951) § 15. Gen-erally speaking, a reasonable attorneys' fee in such a judg-ment is within the discretion of the trial court and an appel-late court will intervene only if this discretion has beenabused. Here the District Court suggested a test in whichseven factors are to be considered in determining a reason-able fee. These factors are: (1) whether plaintiff's counselhad the benefit of a prior judgment or decree in a casebrought by the government; (2) the standing of counsel atthe bar - both counsel receiving the award and opposingcounsel; (3) time and labor spent; (4) magnitude and com-plexity of the litigation; (5) responsibility undertaken; (6)the amount recovered; and (7) the knowledge the Courthas of the conferences, arguments that were presented andwork shown by the record to have been done by attorneysfor plaintiff prior to trial. The test is then stated to be"what, in the opinion of the Trial Judge, after consideringall the factors in the case (including but not limited to thoseoutlined above) would be a reasonable charge for the ser-vices of plaintiffs' counsel?" [170].In addition to the test stated in the present case, thecourt pointed out that two other tests have been proposed.Cape Cod Food Products v. National Cranberry Ass'n., 119F. Supp. 242 (D.C. Mass. 1954), set forth the test as to whatconstituted a reasonable attorneys' fee within the meaning-Ibid., 214.1 For example, Virginia has exempted liens upon motor vehicles from thenormal requirements of recording and provides for recordation of such lienswith the Department of Motor Vehicles. The liens as then noted upon thecertificate of title to the particular automobile thereby give notice through-out the entire State. See 7 VA. CODE (1958) §46.1-69, et 8eq.1959]

Possession and Recording Under Conditional Sales Contracts - Mohr v. Sands

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