WACHOVIA BANK & TRUST COMPANY
v.
WAYNE FINANCE COMPANY.
No. 306.
Supreme Court of North Carolina.
November 4, 1964.*482 Sasser & Duke, Goldsboro, for defendant appellant.
Taylor, Allen & Warren, by John H. Kerr, III, Goldsboro, for plaintiff appellee.
RODMAN, Justice.
G.S. § 47-20 provides: "No * * * mortgage of * * * personal property * * * shall be valid to pass any property as against lien creditors or purchasers for a valuable consideration from the * * * mortgagor * * * but from the time of registration thereof * * *." This statute has been interpreted in multitudinous opinions. The conclusions reached are consistently to the effect that where a mortgagor is permitted to retain possession of chattels, the mortgagee acquires no lien as against purchasers or creditors, but from the registration of the instrument.
The word creditor, as used in the statute, does not mean a general creditor; *483 it means a lien creditorone who has a recorded mortgage, or has possession of the chattel for the purpose of securing mortgagor's debt, Community Credit Co. v. Norwood, 257 N.C. 87, 125 S.E.2d 369; M. & J. Finance Corp. v. Hodges, 230 N.C. 580, 55 S.E.2d 201. Since plaintiff's mortgages were first recorded, and it had physical possession of the chattels when defendant filed its mortgages for record, it had, if the provisions of G.S. § 47-20 were here controlling, a prior claim to the fund. Fleming v. Burgin, 37 N.C. 584; Robinson v. Willoughby, 70 N.C. 358; Todd v. Outlaw, 79 N.C. 235; Hodges v. Wilkinson, 111 N.C. 56, 15 S.E. 941, 17 L.R.A. 545; Collins v. Davis, 132 N.C. 106, 43 S.E. 579; McHan v. Dorsey, 173 N.C. 694, 92 S.E. 598; Cowan v. Dale, 189 N.C. 684, 128 S.E. 155; Eaton v. Doub, 190 N.C. 14, 128 S.E. 494, 40 A.L.R. 273; Jordan v. Wetmur, 202 N.C. 279, 162 S.E. 610; Glass v. Lynchburg Shoe Co., 212 N.C. 70, 192 S.E. 899; M. & J. Finance Corp. v. Hodges, supra; McCreary Tire & Rubber Co. v. Crawford, 253 N.C. 100, 116 S.E.2d 491.
The Legislatures of 1923 and 1937 required the owner of a motor vehicle to register it, and to obtain a certificate of title showing all liens thereon, G.S. § 20-52, G.S. § 20-57. But these statutes did not repeal or modify our recording laws. Priority, where the mortgagor retained possession of the chattels, was determined by priority in filing for record in the proper office. Carolina Discount Corporation v. Landis Motor Co., 190 N.C. 157, 129 S.E. 414.
The 1961 Legislature, by the enactment of Chapter 835 of that Session, revolutionized the laws of this State as they relate to chattel mortgages on property for which it is necessary to have a certificate of title.
It is not necessary and, in fact, unusual, for an act of the Legislature to carry a preamble explaining the reason for its enactment, but Chapter 835, S.L.1961, does. It says that:
"WHEREAS, the present motor vehicle certificate of title law provides for a declaration of all existing liens at the time of application for registration, but does not require that liens given thereafter be declared and entered on the certificate of title; and
"WHEREAS, the certificate of title, often regarded as absolute, is not conclusive as to liens and may not be relied upon to show good title for purpose of sale or encumbrance, except as it relates to lien perfection under Section 213 of the Interstate Commerce Act; that is, liens on equipment of interstate common and contract carriers; and
"WHEREAS, the present certificate of title law does not meet the requisites of the Uniform Title Code because the certificate of title is not in and of itself adequate notice to third parties of existing liens; and
"WHEREAS, a certificate of title that can be relied upon as a ready means by which all legal interests in motor vehicles may be determined would be to the public interest."
This statute, effective January 1, 1962, G.S. § 20-58.10, made important changes in our registration laws as they relate to automobiles. The place where the lien is to be recorded is changed from the office of the Register of Deeds to the Department of Motor Vehicles, G.S. § 20-58.2. Now the lien, if the agreement to pay is filed with the Department within ten days from its date, relates back to the day the lien was created, G.S. § 20-58(b). To that extent, the 1961 law adopts the philosophy of our earliest recording acts, sec. 1, c. 7, Laws of 1715, Potter's Revisal 104.
May a creditor, having actual possession of an automobile, acquire a valid lien without having the pledge noted on the certificate of title? By uniform interpretation, our recording statutes have been limited to those cases where the mortgagor retained possession of the chattel. They *484 have no application when the creditor takes actual possession of the chattel which secures payment of the debt. Doak v. Bank of State, 28 N.C. 309; Cowan v. Dale, supra; Bundy v. Commercial Credit Co., 202 N.C. 604, 163 S.E. 676; M. & J. Finance Corp. v. Hodges, supra; McCreary Tire & Rubber Co. v. Crawford, supra.
No language of the 1961 statute expressly prohibits the creation of a pledge; nor does the reason given for the enactment lead one to conclude the Legislature intended to prevent the creation of a valid lien by delivering possession of the chattel to the creditor. People do not normally purchase or lend money on second hand automobiles merely upon the exhibition of the certificate of title. They want to see the vehicle itself. They neither purchase nor loan without such an examination. There is, we think, clear implication in G.S. § 20-58(a) that the Legislature did not intend to prevent a mortgagee who has actual possession of the pledged vehicle from acquiring a lien having priority over liens not then perfected.
Neither party had a perfected lien prior to June 19, 1963. On that date, Long surrendered possession of the automobiles to plaintiff to hold as security for the sums loaned. It acquired a valid lien from the moment it took possession. Cases cited, supra; 15 Am.Jur.(2d) 309.
Plaintiff, having acquired a lien by taking possession of the chattels, is not now estopped to assert that lien against defendant. Plaintiff had neither actual nor constructive knowledge of the fact that Long was also borrowing from defendant. Plaintiff did nothing to prevent defendant from perfecting its lien. Had it transmitted the certificates to the Department of Motor Vehicles within ten days of the dates of the loans and mortgages, defendant would have the prior lien. The priority here declared results from defendant's negligence. Estoppel is not available to protect one against his own negligence. Peek v. Wachovia Bank & Trust Co., 242 N.C. 1, 86 S.E.2d 745; Hawkins v. M. & J. Finance Corp., 238 N.C. 174, 77 S.E.2d 669; Ramsey v. Nebel, 226 N.C. 590, 39 S.E.2d 616; 31 C.J.S. Estoppel, § 103, p. 529.
We find no merit in defendant's contention that it should be adjudged the owner of the proceeds of the sale on the theory of marshalling of assets. It says plaintiff should call on Cobb, the limited partner, who has guaranteed payment; such payment would discharge plaintiff's lien, leaving the fund subject to defendant's claim. This argument ignores the fact that Cobb, if required to pay, would be subrogated to all of plaintiff's rights, 83 C.J.S. Subrogation § 54, p. 683, 24 Am. Jur. 955.
Affirmed.