Commerce Acceptance of Oklahoma City, Inc. v. Press
428 P.2d 213, 4 U.C.C. Rep. Serv. (West) 417 (1967)
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Rule of Law:
Under UCC § 9-310, a statutory possessory lien for services or materials furnished in the ordinary course of business takes priority over a previously perfected security interest, unless the statute creating the possessory lien expressly provides otherwise.
Facts:
- Plaintiff held a recorded chattel mortgage on an automobile.
- Defendant, a garageman, furnished services including towing, repairs, and storage for the automobile.
- The owner of the automobile agreed to pay Defendant for these services, which protected, improved, and safe-kept the vehicle.
- Defendant retained possession of the automobile for the unpaid charges.
Procedural Posture:
- Plaintiff commenced an action in replevin against Defendant in the trial court to recover possession of the automobile.
- The trial court held that Defendant's possessory lien for towing, repairs, and storage had priority over Plaintiff's previously perfected chattel mortgage, and rendered judgment for Plaintiff for possession of the automobile, subject to Defendant's lien.
- Plaintiff filed a motion for a new trial, which the trial court overruled.
- Plaintiff appealed the order overruling its motion for a new trial to the Oklahoma Supreme Court.
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Issue:
When a garageman acquires a valid lien for towing, repairing and storing an automobile, and retains possession of it for the unpaid charges, does such lien have priority over a previously perfected security interest while the automobile is in the possession of the garageman?
Opinions:
Majority - Irwin, Vice Chief Justice
Yes, a garageman's possessory lien for towing, repairing, and storing an automobile has priority over a previously perfected security interest while the automobile is in the garageman's possession. The court affirmed the trial court's decision, relying on Section 9-310 of the Uniform Commercial Code (UCC), which became effective in Oklahoma on January 1, 1963. This section explicitly states that when a person in the ordinary course of business furnishes services or materials regarding goods subject to a security interest, a statutory possessory lien for such services takes priority over a perfected security interest, unless the statute establishing the lien expressly provides otherwise. Oklahoma's 42 O.S.1961 § 91, which grants a special lien for services like towing, repair, and storage dependent on possession, does not contain any language concerning the priorities of liens or expressly provide that it is subordinate to prior liens. Therefore, under the clear language of UCC § 9-310, the garageman's possessory lien took priority. The court distinguished prior case law, such as United Tire & Investment Co. v. Maxwell, which had held that the first-in-time rule applied, noting that these cases predated the 1955 amendment to § 91 and the effective date of the UCC, which changed the statutory landscape for lien priorities. The court also found no error in the trial court's grant of a lien for storage, despite no specific stipulation, given the owner's request for storage.
Analysis:
This case is significant for clarifying the interaction between Article 9 of the UCC and state statutory possessory liens. It establishes a strong presumption of priority for garagemen and other service providers who enhance or preserve the value of collateral and retain possession, thereby protecting these businesses. The decision emphasizes the importance of the 'unless the statute expressly provides otherwise' clause in UCC § 9-310, instructing that state legislatures must be explicit if they intend for possessory liens to be subordinated to prior perfected security interests. This ruling ensures a consistent application of the UCC's priority rules for statutory liens across the state, impacting how lenders assess risk and how service providers handle unpaid accounts.
