Untitled Texas Attorney General Opinion ( 1940 )

Zionorabls Xoaar Oarrts~n, Jr., ~Direotor
Department oi Public Saroty
Austin, Tezaa
Dear Sir: Attsntlont Yr. Ralph L. Buall
6: 188uuaoe or a certirloateor
0 motor vshlolo to
title ~011
a aortgugos who rspoame8se8
a motor vehfcle and sell8 the
uuder P power
snzm to hlm.cr1.i
of prlrata sale contained in the
mortgafp.
#a are in rnoeipt'oryour letter of &woh 89, I.940,
ln~~hlehyou re2u4st am opiaion:ef this depnrtmsnt 0~ tha
followingquestion aontalned thermin: .
?Vfhana mortgagor ropomronm488 rotor To-.-
tiol0(holding pc~amw~i4ntharsor a8 a trustee)
may bhe mortgaagoo(truStee)aaL the rehielo to
hinrselfes a I;riratapurokumorand thus ao-,uiro
ownarshlp or the rebiele aad bearme entitled to
a Certlllcateor Title agaknst thenvcrhioleVa
This d~puxtmuit ruled in Opinion No. O-1984,.that
uhsre a mortgagee repostmsao8u motor vahiole and sells the
same et a private sale, whioh procedure Is in eoeerdaao~
with the terms ef the mortgage, Four departmmt is author-
ized to lesus 0 Certifioata0r Title in the 0111100r the pur-
ohaaer at suoh ;u4vate ioreolosurs s61e. In your question
here you are conca~nrrdwith the oituatfon#hero the mort-
e&se hlmielt purahams the -ptopextyet such private roru-
closure sale and applies for B Certificate of Title in his
Eouoreble HoiuerGarrison,Jr., ?age S
own name.
In our Opinion No. 4 viepointed out that the
right to foreolose by private Bale la oontraotual and that
suoh a provision oontainedin a mortgage ie not against
public policy. In line with thie authorltles iuthie state
hold that where under the term of a martgage the uortgagee
18 permitted to be a purchaser at a sale oonduoted by hl~U
under the power of private sale contained thereiu that auoh
l?rovisionis not against public polioy and 1s not void. The
SUPremS Court of Texas in the oase or The Hoards T. m~ls,
6 Ter. 173, held that the mortgagee muId be a purclhaser at
a sale oonduoted under the power or sale oontained in the
mortgaage.This rule of Law was again announced by the Suprams
Court in the oa6e of Soott v. Xanu, 33 Tex. 786, To the sama
dr4hti a44 the 0888 of Goodgame v. Rueh+g, 36 TAX. 7e3, by
the supreme Court or Texae.
It is to be note& that the&e old Supreme Court oa~e&~
reoognize that a mortgagee may purchase at a rorealoeure sale
aonduoted under the power of sale eoutaided~l.nthemrtgage.
ID each of those oases, however, It ia mntcsplated thatthe
8ale conductednil.Ibe a public and open one. The rule as
to the ri&d or the mortgaageeto purohaee would or ueoesslty
have to be extended to a puraimae at private sale beoause he
acts h.exaotlp the Saae uapaoity under the law ln selling
property.ata private foreoloeure 8ale as he does at publlo
roreolomre sale, each of whioh la Ifade.uuler the ,termeof
the power ol,saIe aontaiued 5.athe mortgage. The rule Is
stated in 5 Barb. C. L. 490 as tollorsr
Yt is generally recognizedthat the mort-
gagea rmy purchase at the oale with the oonaeut
or the mortgagor given orally or In the mart-
gage itself. It ha8 been ruled that a mortgagee
nraypurohase the mortgaged ohattels, even iu the
absence 0r 4X5W488 ooneent b the mortpfor, Onl{
where the aale is oonduoted 1XIgood ia,t and no
iu fraud or the rights of the mortgagor. . . .v
Iu the 0886 0r Davenport 0. San Antonio Mailaohfae
a
supply co., 59 S. W. tea) 807, the an m0ni0 GOU* 0r civil
AppeaIs'heldthat a corpcmatlonin which the mrtga@e va8 a
atookholderoould purehaae at a publio sale made ander the
pcwer or sale oontainea in the mortgage.
Tha oaBe whioh oomea nearer to covering the question
you ask thau any other 16 the ease of GampbeII v. Eaateru Seed
iicnorable Earner GBrrlson, Jr., Pug4 3
6, GitSlR CO., 109 S. Vi.(Zd) 997. ln,thia case the mortegse
repoaseaasdthe yroperty and made a yrlvate sala without
sotioe to the mortgagor cud the aortgaeee was the purolessr
at such givate *do. .Ths &en @onlo Cowt Of Clvll Appeals
sustained the ea&e and stated as icllower
*It was exprsssly providsb in the mcft-
gge thatthe mortgages nsad nat &ve notice
of the exeroise of Its option to forealcse, but
ens authorized to sell at public or private sale
in *Rayaondvllle,or elsov&ere, UlthOUt deaund
ror.yerrormanos*;there was no reguimuuent,ex-
;rreeuor by nac~ssary i5pllC6tiOn,thatnotics
of Intention to .sellbe given the mcrtgngor prior
to sale. It was provided in the mortgage that
the mortgegee 'nay purchase at auoh sale in tie
onms rammer, and to the baas eifeot, es any per-
eon not interestedhers&a.*
*The rule goverslng sales under roreeloauro
upon perscual property 18 that the power to rore-
0106s through ssle8, other than under court crder',
is pursly contraotual.0 Tex. fur. p. 189 Su~seo. 05."
,It is the oplnlor~of thin departsect,therefore,
that where the mortpgs by its torah allows the sortga&ee tc
bedome a purchaser et e priveta foreclosuresale that he may
80 purchase the reposssasodproperty. In ,the foreolosurs
under the terse of a 5ortMe it is neoossarp that the ssm
be striotly ccsplled with. Thla is the holding ct the Corn-
aiseion of Appeals of Texas in the aase of Piramen*s Fucd
Insurance Cc. v. Wleon, ES4 S. pi.980. The Court held that
in CLcase whem sele wa8 s&a under the ten&s of the scrt-
gage end such tenss were not colrpliedwith the same was void
cud thet the p9roheser ao%ut~rod uo ri&ts either ~~~~~~
equlteblo in the property by meana of the sale.
advised, however, thet In aaee the tams of the mortgage are
oom,72iedwith end under the ;nort$ayethe aort~;oges1% eutaorlsed
to be a purchaser that ho mey so purchasle the yroperty
and set legal tit.10to the name, nnd you would be authorized
to iesue a Certificateof Title la such slortgapgee'e 116LIpe.
Certainlyan express yrovislon in the aortgage suah a8 was
oonteinad in the mort&age in the Cs5pbel.lcaseto the sffeot
that the mortgagee dould be ths purohane: at the private
'foreclosuresale oould be sutfioiont to autt;orlzehis pur-
ohme of'the motox vst.ialeof such sals. 6n the other hand,
if the mortgage was silent on this prcpcsitioo,but merely
provided th;stthe raortgagee05~14 sell the property at a
piivate esle, it is cur opinion that l2.eecurts would say
in sac.9a ease that it was conLem;,latedbtitweenthe jzaarticla
ti;the mortgage thst th? sale would be mada to a'third zarty
not th(lmortgagae. In suck a ease the sale by the aortgagee
would be V4IU. AS tc ghethar or sot Other word-
t.4iils!aelf
ing of a testicularmortgage is s\ichtinto ahw the parties
reasonably 6onteapla~t.Uthat the mortgage6 might jmrohase
at the private aals wo.Al depend in each ua6e 00 the language
used.
Tkle'rals OS lmw was ahaouhced Ln the cram of Clark
v. Ztudebaker Corporationor America, 171 K. k. 608, a8 fol-
lows:
-... . Ths mortgage by its terms &ave the
moftgagee the right to take poansseionof tha
mwtgaged oar and aoll it at private sale with-
out riotice,and also provided t&t the mortgagee
could beowe ttiepurebe~nr at such asle. It ro1-
lnws th--1; ii the mortgagee or an agent of the mprt-
gag**, or anyone also),bought it at:auoh uale, the
sale would be valid and the purchaser would get a
~good
'. title. ~. . .*
Far your further lhfor-matioa we call your attontlon
to the ~mse of Tidslity Union Fire iaSuv@fkCe CO. v. BallW-
gattsrfieldCo., 10 9. 3. (Zd) 165. in this cam the plain-
tiff aold a motor vnhiele t4 an indlvldualnamed Barber. Bar?
bat then sxscuted aartaln natea eeoursd by e mortgage to the
AutOiQObiha Fi.n6IlCs COar~Sny Of ~lVeOtOn. The plaintifr en-
uossed and 'guarantaedtbe jmymeat or raid notee to saSd fl-
name company. ThereafterBarber defaulted in~the payment of
5ome of the notas and the finance comyony though its agent
took possession of ths oar and by private sale aol~dt&c same
to the xlaintitf. ;cnholding 5uOt; a sale valid, ths Court
etated aa followa:
"Tha ckattel mortgeage whioh Barber em-
outed uutharized tha mortgagee in ease of do-
fault to repossess tx c:r and sell it at pub-
lic or prlvatpr nc4l.e. mie 00iirt*5 rinsings in-
cori;orafedin the ju:gmunt dro to the affect
that the sale wss privetaiymade in accordance
with t&s ternr, or t&e snO~qp3. The avidezma
laustefm this finUi~&, and tha legal effect of
tke sale waa to Yeat a~pollws with the sole and
unc4adltionaltitle to the yroperty."
You zra, thorafota,sdrrfsedthat In sUoh a situ+
b 6uthorlzsd tu laaue 6 Cartlfi-
tio3 your dspartaknt wR4uli'
cate ot Title fwitha ziotorY-fdcls in the name of the plrctmser
at suei: t~orerloauresale.
Your8 vary truly
OF TE&&S