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Huber Pontiac, Inc. v. Wells







APPEAL from the Circuit Court of Sangamon County; the Hon. I.J. FEUER and the Hon. JAMES T. LONDRIGAN, Judges, presiding.


Rehearing denied May 16, 1978.

These consolidated appeals arise out of two proceedings in the circuit court of Sangamon County, the subject matter of which was a used 1974 Pontiac automobile. The auto was sold by Huber Pontiac, Inc., to James Wells on June 4, 1975. Wells financed the car by signing the usual form of conditional sales contract which the dealer, Huber Pontiac, afterwards discounted with a Springfield bank. The genesis of all this litigation was the failure of Huber Pontiac to note on the certificate of title to the car the lien of the bank.

On November 21, 1975, Wells sold the car to Don Huston and delivered to Huston the certificate of title endorsed in blank. Meanwhile, Wells had defaulted on his payments under the contract to the assignee bank, and upon its demand, Huber Pontiac paid off the contract and brought a replevin action against Wells and Huston for the return of the car. The trial court dismissed Wells from that suit and rendered summary judgment for Huston. Appeal No. 14428 is from that judgment.

On January 20, 1976, approximately 60 days after his purchase of the car from Wells, Huston caused the title, bearing Wells' signature, to be notarized and then, in the idiom used by the parties "walked it through" the Secretary of State's office. We take this to mean that Huston handcarried Wells' title to the office and remained there personally until a new title was issued in his name. This was accomplished. The replevin suit was pending at the time, but the record indicates that service had not yet been made on Huston.

On March 25, 1976, after some evidence had been taken in the replevin suit but before the trial court had rendered judgment, Huber Pontiac filed a petition with the Secretary of State to revoke the title "walked through" and issued to Huston. On March 30, 1976, summary judgment was entered for Huston in the replevin action.

The title revocation proceeding was heard by a hearing officer attached to the Secretary of State's office. He recommended revocation and the Secretary adopted his findings and on July 16, 1976, revoked the title issued to Huston.

On August 20, 1976, Huston filed in the circuit court of Sangamon County an administrative review action asking for review of the revocation. On the same day he filed a motion to reconsider with the Secretary of State. This motion was denied by the Secretary on September 28, 1976, but the record is clear that notice of the denial was not served on Huston's counsel until December 17, 1976. Thereupon, on January 17, 1977, within the 35 days limited by statute under section 4 of the Administrative Review Act (Ill. Rev. Stat. 1975, ch. 110, par. 267), summons in administrative review was issued by the clerk of the circuit court. On May 4, 1977, the trial court affirmed the Secretary of State. Appeal No. 14540 is from that judgment.

While the parties had exhibited a natural, albeit inaccurate, tendency to intermingle the two proceedings in their briefs and arguments, our view of the cases compels us to consider them separately. We believe that the revocation proceeding was nothing more than a tactical ploy by Huber Pontiac when it became convinced that it could not prevail on the replevin suit.

The replevin action: As noted above, the trial court entered summary judgment for Huston. Huber Pontiac has filed in this court a motion for summary judgment in its favor. We have taken the motion with the case and it is denied for reasons hereinafter more fully set forth. In passing, we note some inconsistency in Huber Pontiac's position: It argues that summary judgment for Huston was improper because of the existence of triable issues of fact, but by filing the motion on its own behalf, it appears to be saying that such issues apply to Huston only. We fail to comprehend how an issue of fact can relate to one party only.

• 1, 2 At the outset we note two principles of law which are so elementary as to require no citation of authority: (1) In a replevin suit the plaintiff must prevail on the strength of his own title and not on any conceived weakness in the title of the defendant; and (2) the original contract between Huber Pontiac and Wells cannot bind Huston who was not a party to that agreement.

A summary of the positions taken by the parties is as follows: Huber Pontiac claims that Huston took title with notice of the lien, even though it did not appear on the face of the instrument and therefore he is not a subsequent transferee without notice; he did not obtain superior title from Wells and therefore must surrender up the property. Huston claims that he is entitled to rely on the written instrument of title and in the absence of any notation of lien, he takes title free and clear; he had no burden of informing the Secretary of State of the existence of any lien, if indeed he knew of one.

Section 3-207 of the Illinois Vehicle Code (Ill. Rev. Stat. 1975, ch. 95 1/2, par. 3-207) provides the exclusive means for perfecting and giving notice of security interests in motor vehicles. Therefore, references by Huber Pontiac to the Uniform Commercial Code (Ill. Rev. Stat. 1975, ch. 26, par. 1-101 et seq.) are inappropriate. Section 3-202 of the Illinois Vehicle Code prescribes the mechanics for perfecting the lien. It is obvious that this was not done in this case and Huber Pontiac admits that the security interest never came into existence by reason of its failure to note it on the certificate of title.

Two questions then pose themselves: (1) To what extent may a transferee rely on the information contained on the certificate of title at the time of transfer? and (2) will knowledge of the security interest on the part of the transferee dehors the certificate operate to preserve that interest? Nearly all of the reported cases tend to intermix the questions, but the consensus appears to be that the certificate may be relied upon and knowledge of the unrecorded lien will not give it vitality in the hands of the transferee.

At the outset it must be borne in mind that the focus must be kept on events occurring on November 21, 1975, the date of sale to Huston. Huber Pontiac would have us look to the date of issuance of certificate of title, January 20, 1976, and events subsequent thereto, and by some relationback theory perceive that the lien was in existence at all times. Such is not the law. Section 3-112(e) of the Illinois Vehicle Code provides in part as follows:

"(c) Except * * * as between the parties, a transfer by an owner is not effective until the provisions of this Section * * * have been complied with; * * *." (Ill. Rev. Stat. 1975, ch. 95 1/2, par. 3-112(e).)

In Perry v. Saleda (1975), 34 Ill. App.3d 729, 737, 340 N.E.2d 314, 321, the court said, in speaking of the effective date of transfer:

"The fact that no application for transfer of title was mailed on Mrs. Carr's behalf until November 20, 1967, would not delay the ...

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