#### H. H. JOHNSON v. T. B. YATES et al.

(Filed 22 February, 1922.)

1. Liens — Artisans—Common Haw — Statutes—Police Powers.

O. S., 2435, is within the police power of the State and in addition to the common-law lien given artisans on personal property repaired by them, while in their possession, for the reasonable value of the repairs, provides for its enforcement by foreclosure in accordance with its stated terms.

2. Same — Vendor and Purchaser — Contracts—Mortgages—Priorities.

C. S., 2435, giving to artisans a lien for the reasonable value of their work done on personal property while retained in their possession, with a prescribed method of foreclosure for the enforcement of the lien, enters into every contract of sale of personal property, whether by chattel mortgage to secure the balance of the purchase price or other, made between the vendor and purchaser, and when enforceable, is superior to the vendor’s lien or that created by the mortgage.

3. Same — Legal Possession — Rights Implied.

The requirement of C. S., 2435, that the lien in favor of the artisan making repairs on personal property shall attach under the provisions of the statute, only where made at the instance of the owner “or the legal possessor of the property,” includes within its terms all persons whose authorized possession is of such character as to make reasonable repairs necessary to the XDroper use of the property, and' which were evidently in the contemplation of the parties.

4. Same — Automobiles.

Where the vendor of an automobile takes a purchase-money mortgage and transfers the possession to the vendee for an indefinite period, it is with the implied authority in the vendee that he may use the machine and keep it in such reasonable and just repair as the use will require; and *25where, at his instance, a mechanic has repaired the same, his reasonable charge for such repairs creates a lien on the automobile, retained in his possession, superior to that of the vendor’s mortgage.

Claek, O. J., dissenting.

Appeal by defendants from Bond, J., at tbe Pall Term, 1921, of Waice.

Civil action, beard on case agreed.

Tbe following are tbe facts submitted :

“1. Plaintiff is, and was at tbe time tbis controversy arose, a citizen and resident of Franklin County, N. C., and defendants were at said time and are citizens and residents of Wake County, N. C., and engaged as a partnership in business as mechanics and artisans in expert automo-' bile repairing under tbe name of Auto Repair and Welding Company, with their place of business in Raleigh, N. C.

“2. On or about 22 May, 1920, plaintiff sold one J. W. Stewart a liberty Six automobile, motor No. 7K27580, model 1919, taking from said Stewart a chattel mortgage and note in tbe sum of $500 as balance purchase money for said automobile.

“3. Tbe chattel mortgage, a copy of which is attached hereto and made part of this agreement, was duly recorded on 22 May, 1920, in Book 323, page 323, in the registry of Franklin County.

“4. Yarious payments have been made on said note by J. W. Stewart, and the balance now due and unpaid is $117.

“5. On 3 December, 1920, subsequent to the recording of said chattel mortgage and note, J. W. Stewart, without the actual knowledge and without the actual consent of plaintiff, and without notifying plaintiff, drove the said automobile to the shop of defendants in Raleigh, Wake County, N. C., and at the request of said Stewart certain repairs were made on said automobile by defendants, which increased the value thereof, and a just and reasonable charge for the work done and material furnished in making said repairs is $460.55, and bill for said amount was rendered to J. W. Stewart and not paid by him within more than ninety days after the repairs were made, and said bill has never been paid.

“6. That at the time said repairs were made, defendants had no actual knowledge of the existence of the mortgage from J. W. Stewart to plaintiff, and had no actual knowledge of any indebtedness of said Stewart to plaintiff.

“7. That at the time of making said mortgage and at the time of the driving of said automobile to the shop of defendants in Raleigh, J. W. Stewart was a resident of Franklin County, N. C.

*26“8. Tbe repairs to said automobile were made by tbe defendants without actual knowledge or actual consent of plaintiff.

“9. At tbe time said repairs were made, J. W. Stewart was in possession of said automobile as mortgagor under tbe mortgage beld by plaintiff as mortgagee, and said Stewart bad been in possession of said automobile at all times since tbe execution of said mortgage, and was using and driving same witb tbe knowledge and without objection on tbe part of tbe mortgagee.

“10. That after tbe repairs were made, and as soon as plaintiff ascertained that said automobile was in possession of tbe defendants, be made demand for tbe possession of same for tbe purpose of foreclosing bis mortgage and thereby collecting tbe balance due on tbe note of J. W. Stewart, but defendants refused, and still refuse, to deliver tbe automobile to plaintiff, claiming tbe right to bold said automobile and sell it under tbe provisions of O. S., 2435, and apply tbe proceeds to tbe payment of their bill for repairs ahead of plaintiff’s claim for balance due on tbe note of J. W. Stewart secured by mortgage. .

“11. Plaintiff claims the right to tbe possession of said automobile under bis mortgage and tbe right to sell same under tbe mortgage and apply the jnoceeds to the satisfaction of balance due on note of J. W. Stewart ahead of payment of the bill of defendants for repairs.

“12. That said automobile is now in possession of defendants, and has at all times been in their possession since it was first left at their shop by J. W. Stewart' to be repaired.

“13. That tbe purpose of tbe submission of this controversy is to determine whether tbe plaintiff, by virtue of bis mortgage, is entitled to tbe possession of said automobile and has right to sell same under said mortgage and apply tbe proceeds of sale first to tbe satisfaction of balance due on note of J. W. Stewart, or whether the defendants have tbe right to retain possession of said automobile and sell same under tbe provisions of C. S., 2435, and apply tbe proceeds first to tbe payment of tbe charge of defendants for repairs.”

Submitted by consent of plaintiff and defendants.

Upon tbe facts judgment was entered for plaintiff, and defendants excepted and appealed.

William II. and. Thomas W. Ruffin for plaintiff.

Murray Allen for defendants.

Hoke, J.

c. S., 2435, provides as follows: “Any mechanic or artisan who makes, alters, or repairs any article of personal property at tbe request of the owner or legal possessor of such property has a *27lien on snob property so made, altered, or repaired for bis just and reasonable charge for bis work done and material furnished, and may bold and retain possession of the same until such just and reasonable charges are paid; and if not paid for within thirty days, if it does no.t exceed $50, or within ninety days if over $50, after the work was done, such mechanic or artisan may proceed to sell the property so made, altered, or repaired at public auction, by giving two weeks public notice of such sale by advertising in some newspaper in the county in which the work may have been done, or if there is no such newspaper, then by posting up notice of such sale in three of the most public places in the county, town, or city in which the work was done, and the proceeds of the said sale shall be applied first to the discharge of the said lien and the expenses and cost of keeping and selling such property, and the remainder, if any, shall be paid over to the owner thereof.” This statute, passed in the valid exercise of the police powers of government, is applicable to any and all contracts by mortgage or otherwise subsequently made and entered into, and affects their interpretation to the extent that its provisions are pertinent. House v. Parker, 181 N. C., 40; White v. Kincaid, 149 N. C., 415; Brine v. Ins. Co., 96 U. S., 627; Bishop on Contracts, sec. 437. In its effect and purpose the law is in affirmance of the common-law lien given to artisans who have altered or repaired articles of personal property and are in possession of same, with the superadded right of foreclosure by sale in order to make the lien effective, and from a perusal of the terms, it clearly appears that where such a claim is allowed to prevail it is, and is intended to be, a primary lien, superior to that by an existent mortgage or others. The statute providing that the mechanic or artisan may hold and retain possession till his reasonable cost and charges are paid, and the power of foreclosure conferred being by sale of “the property” itself and not of any special interest therein. A further consideration of the statute will disclose that the lien provided for can only arise when the alterations or repairs are made at the instance of the “owner or legal possessor of the property.” And from the meaning and purpose of the statute, and under the authoritative and better-considered decisions dealing with the subject, both in the application of the common-law principles involved and in the construction of statutes of similar import, these terms must be understood and interpreted to include all owners of the property and all persons in possession and use of same with the knowledge and assent of the owner and under circumstances giving express or implied authority from him to have such reasonable and necessary repairs made as may be required in the use of the property contemplated by the parties. Smith Auto Co. v. Kaestner, 164 Wis., 205; *28 Mortgage Securities Co. v. Pfaffman, 177 Cal., 109; Peeves & Co. v. Russell, 28 N. D., 265; Watts, Trustee, v. Sweeney, 127 Ind., 116; Broom & Son v. Dale & Sons, 109 Miss., 52; Case v. Allen, 21 Kan., 217; Drummond Carriage Co. v. Mills, 54 Neb., 417; Hammond v. Danielson, 126 Mass., 294; Ruppert v. Zang, 73 N. J. L., 216; City Nat. Bank v. Laughlin (Texas Court of Appeals), 210 S. W., 617; Williams et al. v. Allsup (10 C. B.), 142 Eng. Reprints, p. 514; 1 Jones on Liens, see. 744; 6 C. J., p. 1138. In illustration and support of tbe position as it prevailed at common law in case where a dray wagon, under a duly registered valid mortgage, was left with tbe mortgagor for use in tbe latter’s business, and tbe same was repaired at tbe instance of tbe mortgagor, on a question of priority of tbe mechanic’s lien, it was held that where a mortgagee permits tbe mortgagor of chattels to retain and use them, authority is impliedly conferred upon tbe mortgagor to have necessary repairs done on tbe chattels and tbe lien of an artificer for repairs done under employment of tbe mortgagor will have priority over tbe lien of a mortgage, although tbe latter be duly recorded. And in tbe case from tbe English court of Williams et al. v. Allsup, a mortgagor in possession and use of a ship, with assent of tbe mortgagee, bad certain necessary repairs done thereon, it was claimed that a certain statute bad modified tbe common-law principle giving tbe mechanic’s lien tbe preference. In rejecting tbe position contended for Byles, J., speaking to tbe instant question said: “Tbe mortgagees have permitted tbe mortgagor to be in tbe uncontrolled possession of tbe vessel; and it should seem to have been a mortgage for an uncertain and undefined period. Now, as it is obvious that every ship will from time to time require repairs, it seems but reasonable, under circumstances like these, to infer that tbe mortgagor bad authority from tbe mortgagees to cause such repairs as should become necessary to be done upon tbe usual and ordinary terms. Now, what are the usual and ordinary terms? Why, that tbe person by whom tbe repairs are ordered should 'alone be liable personally, but that tbe shipwright should have a lien upon tbe ship for tbe work and labor be has expended on her.” And on statutes enacted in affirmance and extension of tbe common-law principle and expressed in terms exactly or substantially similar to tbe one before us, in Broom v. Dale, 109 Miss., supra, tbe Court held: “Under Code 1906, sec. 3075, which is merely declaratory on tbe common law, and which provides not only that a mechanic may retain, in bis possession, any article which be repairs until tbe price of bis labor and material furnished shall be paid, but also provides for tbe enforcement of tbe lien, where a mechanic repaired an automobile, tbe repairs being ordered by tbe person in possession, who was apparently authorized to contract for *29same. Sucb mechanic has a lien for bis labor, wbicb takes precedence over the rights of the vendor of the machine who sold it, reserving title to secure payment, but transferred the possession to the party ordering the repairs.” And in Securities Co. v. Pfaffmann, 177 Cal., supra, the Court held: “Under sections 3050-52 of the Civil Code, the possessory lien of the improver or' repairer of personal property is superior to the preexisting lien of a chattel mortgage.” And in Smith v. Kaestner, 164 "Wis.: “The mechanic’s lien, given see. 3343, Stats., for repairs upon personal property is superior to the lien of a duly filed prior mortgage upon the property.” This was an action of replevin by the vendor holding a mortgage for the purchase price, which had been left in possession of purchaser for use, and which had been repaired at her instance, Vinje, J., delivering the opinion, after stating that there was conflict of opinion in claims dependent upon the common-law principles alone, said: “In view of the provisions of our statutes we need not consider the question of the priority of the common-law lien over an antecedent mortgage. Section 3343 expressly gives the mechanic a prior lien when he has made the repairs at the request of the owner or legal possessor of the property, for it says that in such case he may retain possession of the property, until his charges are paid. In the case the defendant (the purchaser) was the legal possessor and the repairs were made at her request. The clause 'and may retain possession of such property until such charges are paid’ contains no exception in favor of prior-lien claimants, and the court can make none. When the repairs are made at the request of the owner or legal possessor of the repaired property, the statute insures possession thereof in the mechanic till his just and reasonable charges are paid.” And speaking generally to the question of priority in Jones on Liens, sec. 744, the author says: “It is certain that the mortgagor cannot by contract create any lien which shall have priority over the mortgage. But the mortgagee’s authority for creating the lien may be implied, and the implication arises from the mortgagor being allowed to remain in possession of the property and to use it for profit.” There are eases apparently to the contrary in some of the other states, but we do not consider it necessary or desirable to make extended reference to these decisions. Some of them proceed on the principle that the lien claimed, not being made dependent on retention of possession, was entirely statutory, and as the statute in terms established no priority, the mortgage of prior registry would hold its preference. • This seems to be the position approved in Shaw v. Webb, 131 Tenn., 173. In others interpreting the common-law principle it has been held that the right to incur the charges claimed to the owner’s prejudice was not implied from the possession and use allowed by the owner to the person *30wbo made tbe contract for tbe services rendered. Thus, in Storms v. Smith, 137 Mass., 201, it was decided that a claim for storage of furniture incurred by tbe mortgagor in possession should not prevail as against tbe mortgage of prior registry, tbe right to incur such a charge not being implied from tbe possession allowed to tbe mortgagor. But tbe same Court, in Hammond v. Danielson, 126 Mass., supra, held that in case of repairs to a back tbe artisan’s lien bad priority, it appearing that tbe use of tbe back was contemplated. But in none of these cases, so far as examined, was tbe priority of tbe artisan’s lien denied, where, as in this instance, tbe statute in affirmance of tbe common law gives to tbe artisan tbe right to retain tbe property till tbe reasonable repairs are paid for, with tbe further right to sell tbe property for same, and, where tbe repairs in question are made at tbe instance of tbe owner himself, or legal possessor, that is, one to whom tbe owner has given possession, and under circumstances clearly contemplating that tbe property should be kept in use by tbe possessor and tbe necessary and reasonable repairs made. It is clear that on tbe facts presented and on others in like case, tbe vendor of an automobile taking a purchase-money mortgage, and wbo transfers tbe possession to tbe vendee for an indefinite period, does so in contemplation that tbe machine is to be used and kept in use, and with tbe implied authority to have such reasonable and just repairs made as will be required by tbe purpose contemplated. It is urged upon our attention that on authority with us, where a vendor takes a purchase-money mortgage which is duly registered, tbe title is considered as never having passed to tbe vendee, but that tbe vendor remains continuously tbe owner, and for tbe purpose of shutting off existent liens this is undoubtedly true. Furthermore, it is tbe recognized principle in this jurisdiction that a mortgagee, after default, is regarded as tbe owner, with tbe right of taking possession of tbe property at will. Hinson v. Smith, 118 N. C., 503. But tbe principle we uphold and apply- in this case is not in contravention of these rulings. Here tbe statute, as stated, gives tbe prior lien for repairs, whenever they are made at tbe instance of tbe “owner or legal possessor,” and our decision rests upon tbe position that tbe mortgagor is such legal possessor, having implied authority from tbe owner, tbe mortgagee, to contract for repairs and subject the machine to tbe lien as provided. Again, we are referred to various decisions in this State to tbe effect that in order to a valid mechanic’s lien there must be a personal debt upon which it may be based. Tbe cases where this principle has been upheld were those involving claims for a mechanic’s lien of real estate, coming under other provisions of other laws, C. S., 2433, et al., as in Kearney v. Vann, 154 N. C., 311; Weathers v. Borders, 124 N. C., 613, *31or if against personalty tbe property was in tbe position of fixtures and tbe-artisan was never in possession of same. Tbus, in Baker v. Robbins, 119 N. C., 289, tbe claimant bad made repairs on a stationary boiler used in operating- a sawmill, and was never in possession of tbe boiler witbin tbe purview and meaning of tbe statute we are now considering. While some of tbe expressions in tbis opinion may militate against tbe validity of tbe defendants’ lien, a perusal of tbe opinion will sbow tbat it proceeded upon tbe theory tbat tbe claimant was not in possession of tbe property, and bad never been-.

On tbe facts set forth in tbe case agreed, we are of opinion, and so bold, tbat defendant’s claim for reasonable repairs made at tbe instance of tbe legal possessor and under tbe implied authority of tbe mortgagee, has tbe prior lien, and tbis will be certified tbat judgment may be entered and enforced pursuant to law.

Reversed.

Clark, C. J., dissenting:

Tbe sole question presented by tbis appeal is whether tbe plaintiff, who retained title to an automobile by virtue of a chattel mortgage, executed at tbe time of tbe sale, for tbe balance due on tbe purchase money, which was duly recorded in tbe resident county of tbe mortgagor and mortgagee, is entitled to priority in tbe payment of balance due on bis debt secured by said mortgage, over tbe lien of a mechanic for repairs on said automobile made in a county other than tbat of tbe mortgagor’s residence without tbe knowledge or consent of tbe mortgagee. Tbe trial court rendered judgment in favor of tbe mortgagee, and tbe defendant, claiming tbe mechanic’s lien, appealed.

Baker v. Robbins, 119 N. C., 289, is practically on “all fours” with tbe present case. In tbat instance tbe mortgagor of a sawmill boiler, without tbe consent or knowledge of tbe mortgagee, employed tbe plaintiff mechanic to repair tbe boiler. Tbe latter filed bis lien for repairs, claiming priority over tbe recorded mortgage. Tbe Court held: “Tbis case falls under tbe doctrine laid down by the Court in Hanch v. Ripley, 127 Ind., 151, where it was held tbat tbe lien of a mortgage is superior to a subsequent lien created by statute.”

In Smoak v. Sockwell, 152 N. C., 503, tbis Court held tbat where a chattel mortgage for tbe purchase money of a mule was properly registered in tbe county of tbe mortgagor’s residence as required by Rev. 1905, sec. 982 (now C. S., 3311), tbe mortgagee could recover tbe mule wherever found. Tbe plaintiff in tbis case, simultaneously with tbe conveyance of tbe automobile, having taken a mortgage, tbe title was never for an instant out of tbe plaintiff. Bunting v. Jones, 78 N. C., 242, and tbe numerous citations to tbat case in 3 Anno. Ed. There is no release *32or waiver even alleged against tbe vendor, wbo bas remained at all times tbe owner of tbe legal title to tbe property sold.

There is no implied waiver, from tbe mere fact tbat tbe purchaser is allowed to use and operate tbe machine, of tbe owner’s right to take possession of tbe property on nonpayment of tbe balance due. Tbe vendee was not tbe agent of tbe vendor. He was tenant at will and bad no more right to give a lien for repairs thereon than to sell it or to mortgage it. He could not “improve tbe owner out of bis property.”

It is true tbe defendant bas placed bis work upon tbe machine, but be bas acquired thereby a lien only on tbe mortgagor’s interest thereon. It was exactly tbe case as if a party in possession of a stolen or borrowed mule bad placed him in a livery stable to board without tbe knowledge or consent of tbe owner. In such case be would lose bis lien fpr tbe feed. Tbe defendant was negligent in tbat be did not make proper inquiry as to tbe ownership or did not take tbe precaution to wire to tbe county-seat of tbe owner’s residence. If be did not take this trouble it was bis own fault.

On tbe other band, tbe owner of tbe machine bad bis money invested therein, and be was guilty of no negligence whatever. He took bis mortgage for tbe purchase money, and bad it recorded in tbe manner required by law. He bad no means by which be could prevent tbe mortgagor from driving tbe machine into another county, and could give no notice beyond tbe registration of tbe mortgage, whereas tbe mechanic could and should have ascertained tbe ownership before placing tbe repairs on tbe machine.

Tbe owner bas done all tbat tbe law required, and bas a right to recover tbe money due him on tbe property, to which be still bolds tbe legal title until tbe purchase money is paid in full. Tbe mechanic has put bis labor on tbe machine, but be took no care to ascertain beforehand tbe ownership of tbe property. As between tbe two claims, tbe owner bas complied with tbe law in every respect and been negligent in nothing, and should not lose bis lien in favor of tbe subsequently accruing claim for repairs to a pqrty wbo was negligent.

This doctrine bas always been observed as to mules and other animals wbo can be carried from county to county, and it is doubly essential tbat it should be enforced in tbe case of automobiles, which can be moved rapidly not only to other counties but to other states, and as to which tbe registration plate gives a better opportunity to inquire as to the ownership of tbe property than could be ever afforded to tbe owner of a mule or horse, as to which, as in Smoak v. Sockwell, supra, it was held in an opinion by Hoke, J., that “tbe mortgage having been duly' registered according to tbe statute, was a valid lien on a mule wherever tbe same could be found.”

*33Tbe importance of tbe priority claimed by tbe defendant in tbis case is clear from tbe fact that tbe amount of repairs claimed as a lien by tbe mechanic is $460.58 on an automobile tbat cost $500 originally, and tbe assertion of tbe priority of the lien for repairs will wipe out tbe balance due on tbe mortgage of $117.

Registration of tbe mortgage upon a proper probate is notice to all tbe world of tbe existence thereof and tbe nature and extent of tbe charge created by it. Harper v. Edwards, 115 N. C., 246.

Tbe laws of tbis State recognize tbe priority of a recorded mortgage, and tbe plaintiff should be allowed to take possession of tbe automobile and sell it to satisfy tbe balance due on bis mortgage. If tbis is not done, it will upset tbe entire law of registration, so clearly understood and strictly adhered to in tbis State. To exempt an automobile from tbis rule would be in violation of tbe well settled doctrine by which owners or mortgagees can protect themselves against subsequently accruing claims. Tbe defendant has been careless; tbe plaintiff has strictly followed tbe law, and has done nothing to waive bis rights in tbe property, and should be entitled to recover tbe balance due.