Blackwell v. 2002 KIA 4 DOOR STL SEDAN

RANDALL, Judge

(dissenting).

I respectfully dissent. On these facts, this case should be reversed outright and a bona fide security interest declared in appellant’s mother, Onetta Viera. This case, as the majority agrees, is governed by Stanton v. Mazda 2001, 660 N.W.2d 137 (Minn.App.2003). In Stanto n, her granddaughter was arrested for DUI and served with a notice of intent to forfeit her vehicle, a 2001 Mazda. That is the same as our facts, only we are dealing with Viera’s daughter, Sharon Blackwell, rather than a granddaughter. In Stanton, Stanton appeared by an affidavit, stating that the Mazda was collateral for her granddaughter’s loan. Stanton also had evidence that she had guaranteed her granddaughter’s loan with her savings account and she had a letter from her granddaughter pledging the Mazda as collateral.

In this case, the district court had as unchallenged evidence, an amortization schedule of payments that as to amounts and dates and times exactly correlated with Viera’s in-court testimony that she loaned Blackwell $9,500 to purchase the 2002 Kia. (Oral argument revealed that the total purchase price was between $11,000 and $12,000.) In the record are cancelled checks naming Viera as payee in the exact amount needed to comply with the monthly payment schedule (five years/60 months). Blackwell’s checks to her mother were numbered one through four with each check noting that it was a payment for the car loan. Appellant’s counsel claims that these facts are even stronger than the facts in Stanton. I do not know if that is the case. But I can only observe that the undisputed facts in Stanton and in this case do not show a dime’s worth of difference in terms of documentation of record to support an unperfected bona fide security interest.

The district judge did not have the benefit of Stanton, so the trial judge went off on a non sequitur, as the majority acknowledges. The trial judge opined that since this was an unperfected security agreement and, therefore, no formal notice was sent to Onetta Viera, that Onetta Vi-era’s claim must fail for that reason.

In its “Findings of Fact, Conclusions of Law, Order and Judgment,” the district court stated in Findings of Fact VI, “Ms. Viera was not served with notice of this proceeding.” The court then went on in its Conclusion of Law No. 4 to state,

“For those vehicles required to be registered under chapter 168, the notification to a person known to have a security interest in the vehicle is required only if the vehicle is registered under chapter 168 and the interest is listed on the *25vehicle’s title.” Minn.Stat. § 169A.63, subd. 8(b). Thus, the requirements of the notification statute have been satisfied because Onetta Viera’s claim to the car in question does not appear on the car’s title.

The court used this as a basis to deny Viera’s claim.

The issue of lack of notice to Mrs. Viera is a nonissue. Neither party raised it, and both parties at the oral hearing agreed that notice was not an issue. Appellant did not argue that his client had improperly not been sent a notice of the hearing (she learned about it in another way and made an appearance and was allowed by the court to give her full testimony) and respondent does not argue that since she did not get a formal notice, she is estopped from presenting a claim. Rather, after agreeing that lack of notice was not an issue, both sides simply argued the merits.

The majority concedes that the district court missed the whole point of Stanton and points out that the state’s attempt to link the forfeiture statute with chapter 168A “is exactly the approach we rejected in Stanton.” The majority acknowledges that under Stanton you need only a bona fide security interest, not a perfected security interest or even a “security interest.” It simply has to be “in good faith.” The majority attempts to distinguish Stanton and deprive Viera of her security interest, arguing that in Stanton, there was a letter and an affidavit both indicating that the word “collateral” was used, whereas on our facts, although the written documentation points exactly to a car loan (and the state does not challenge that), the magic words “collateral” do not appear in the Blackwell/Viera documents. It is true that if Blackwell and Viera had had an attorney draft the car loan, all the right buzz words would likely have been used; the loan documents might even have been recorded, thus, making this entire case moot. But this court wrote Stanton for exactly that reason! There are times when close friends and family members loan each other money for vehicles and Stanton made it clear that you don’t need any particular magic words or any particular recording or any particular essential document; rather the package of evidence needs only to indicate a good faith security interest — and as stated, something less than a perfected security interest.

To accept the majority’s reasoning, the following hypothetical has to be assumed. After making her four payments religiously, and noting on each check either “car payment” or “car note,” first, second, third, and fourth, Blackwell gets tired of the car and sells it to someone for about what she paid for it, meaning several hundred dollars over the $8,951 balance she owed her mother, Mrs. Viera. Blackwell keeps the entire purchase price and goes to her mother and says, “Gee, Mom, I sold my Kia for $11,000. I am going to keep the entire amount and not pay you off. The way I see it, you just made me a personal loan totally unrelated to the car. We never had any understanding that the car was collateral for what I owe you. I will simply string out the balance for another 46 months at the amortization schedule rate of $183 per month.”

Onetta Viera says, “You know, daughter, come to think of it, you are right. Even though you put car payment number 1, number 2, number 3, and number 4 on the first four $183 checks, and that is exactly the payment schedule we agreed upon, it really never was our intent that the car was to be collateral, and I just meant to give you an out-of-pocket loan for your own personal use for the next five years. So you go ahead and keep the money, and just string out the payments over the next four years and eight months.”

*26Unless you believe that was really the intent of Blackwell and Viera, you cannot distinguish this case from Stanton. The Stanton explanation of the term “bona fide” carries the not indirect, but direct implication that buzz words and magic words are not needed as long as the totality of the evidence points to a bona fide interest.

Part of appellant’s evidence of record, copies of the four cancelled checks, are telling. They make it undisputedly clear that Viera’s loan to Blackwell was not just a generic personal loan, but was a loan for the car.

The check ($183) dated March 19, 2002 has written on it, “# 1 car payment;” the check ($184) dated May 13, 2002 has written on it, “2nd car note;” the check ($208) dated June 10, 2002 has written on it “car note — cash;” and the check (183) dated July 15, 2002 has written on it “4th car payment.”

Some time prior to June 10, Blackwell had borrowed $25 from her mother and used the third check to pay that $25 personal loan back plus a regular $183 car payment. She was careful to put on the memo portion of the check, “car note— cash.” If this was really just a personal loan and not tied to the car, why did Blackwell make it a point to spell out both “car note” and “cash” when she deviated upward from the payment schedule in the amount of $25?

The majority states that the result is “harsh.” I agree! Then why are we going against the rules of law surrounding forfeitures and penal statutes? The law is settled that penal statutes are construed strictly against the state and in favor of the defendant. See State v. Serstock, 402 N.W.2d 514, 516 (Minn.1987) (citation omitted) (stating that where doubt exists as to legislative intent of a penal statute, doubt must be resolved in favor of the defendant). With the government getting completely out of hand on forfeitures several years ago, the United Stated Supreme Court stepped in and starting with Austin v. U.S., 509 U.S. 602, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993) pointed out that excessive “civil forfeitures” can and will run afoul of the U.S. Constitution when the government gets greedy. The case expressly pointed out that the Eighth Amendment is not limited to criminal cases. Austin, 509 U.S. at 602, 113 S.Ct. at 2802. In addition to that law, this punishment by forfeiture goes not against Stanton, admittedly guilty of DUI, but against an innocent third party, her mother. Viera stands in the same shoes as any bona fide lender, e.g., a bank or GMAC. They have no control over the driver’s actions and no responsibility for the driver’s actions. There is already sufficient punishment laid on Blackwell because she will lose her own equity in the car in addition to being subject to the severe penalties for multiple DUIs.

In sum, we are today artificially narrowing our own case, Stanton v. Mazda, the only precedent out there, and we are artificially limiting Stanton, not to help somebody, but to affect a harsh forfeiture on an innocent third party. This is all done in the face of the rule that penal statutes are to be construed strictly against the state and in favor of the defendant. This is not a good result. We are going against the law and the facts to visit a harsh result on an innocent third party — why? We are doing it in a case where the district court did not have the benefit of Stanton and so decided the case against Blackwell on a nonissue, the lack of entitlement by Onetta Viera to a formal written notice.

I dissent, and would reverse outright in favor of Blackwell so that Viera’s unpaid *27car loan is recognized and the only forfeiture is Blackwell’s equity. At a minimum, I would reverse and remand to the district court to reconsider the facts and the law in light of our holding in Stanton.