First National Bank of Hays City v. Sprigg

[259]

STONE, J.

*

The First National Bank of Hays City, Kansas, brought a complaint in two counts: one for claim and delivery of an automobile, and a second for damages for conversion of the vehicle. This appeal is taken from a judgment for defendants.

Defendant Sprigg bought a used automobile from one Geiber, at Hays City, Kansas. Geiber owed money on the ear, and plaintiff bank agreed to loan Sprigg the money to satisfy the lien and to pay Geiber for his equity. In turn, the bank required a note and chattel mortgage on the automobile as security. The transfer took place in the offices of the bank. The Geiber loan was satisfied by the bank, Geiber was paid off, and an assignment from Geiber to Sprigg was typed on the back of the title certificate by an employee of the bank, who also notarized Geiber’s signature. The bank did not insert a record of its lien on the certificate, although there was a space provided for this notation in the assignment form on the back. Plaintiff bank delivered the certificate of title to Sprigg, and recorded its chattel mortgage in the office of the county registrar of deeds.

Kansas law does not condition validity of motor vehicle liens upon registration with the Department of Motor Vehicles; the only requirement is that they be recorded in the proper county. It is the duty of a new owner, however, to endorse all liens against his vehicle in a space provided on the back of the certificate before applying to the Director of the Kansas State Highway Commission for a new certificate of title.

Although the bank handled the transaction, including preparation of the certificate of title for transfer, it delivered the certificate to Sprigg without endorsing its own lien thereon. Apparently the bank either neglected to note its lien through an oversight or it made the mistake of trusting Sprigg to endorse its lien in the proper place on the back of the certificate before obtaining a new certificate of title. Sprigg violated this trust and secured a new certificate showing clear title in him without liens or encumbrances of any kind.

After making three monthly payments to plaintiff bank, Sprigg drove the car to the State of California, where he sold it to the City Chevrolet Company in San Diego, a dealer in automobiles and one of the defendants in this action. The other defendants are subsequent purchasers and lienholders.