C. I. T Corporation v. . Burgess

Adams, J. T. B. Drake is not a party to this action. He bought the car on credit from the plaintiff, secured the deferred payments by a note *26 and chattel mortgage on the property, made default, and used the vehicle for the unlawful transportation of intoxicating liquor. The chattel mortgage was not registered in Buncombe or in any other county; there was no' irregularity in the sale; and the defendant was a purchaser without actual or constructive notice of the plaintiff’s claim. Both before and after his conviction Drake told the judge of the recorder’s court and the sheriff that there was no lien on the car. In these circumstances has the plaintiff a lien which is enforceable against the defendant Burgess? The sale was made under the provisions of section 3411(f) of Michie’s Code of 1927. A few minor changes eliminated, this section is a copy of section 26 of the National Prohibition Act. 41 Stat., 315; U. S. Compiled Sts., 10138% mm. The Supreme Court of the United States has construed the language of section 26 as mandatory, and has held that, whenever the vehicle seized by the arresting officers is discovered in use in the prohibited transportation, literal compliance with the requirements of section 26 would compel the forfeiture of the vehicle with the consequent protection of the interests of innocent lienors. Richbourg Motor Co. v. United States (decided 19 May, 1930). We see no reason why section 3411(f) should not be subject to the same interpretation. If the statute is mandatory and the vehicle is forfeited, what provision is made for the protection of innocent lienors ? Upon conviction of the arrested offender the court shall order the liquor destroyed and shall direct a sale by public auction of the seized vehicle, unless the claimant can show that it is his property and that it was used in transporting liquor without his knowledge and consent. There is no express provision for giving notice to a lienholder to appear at the trial; but he is permitted to establish his lien by intervention or otherwise at the hearing if he has notice; or he may establish it by other proceedings brought for the purpose. But the lien must have been taken in good faith and must have been created without the lienor’s knowledge or notice that the carrying vehicle was being used for the illegal transportation of liquor. The proceeds arising from the sale of the forfeited property, after the expense of keeping it, the fee for the seizure, and the cost of the sale are deducted, shall be applied in payment, according to their priorities, of all liens which are established by intervention or otherwise at the hearing or by other authorized proceedings. The lienor is further protected by the provision that all liens against property sold under this section shall be transferred from the property to the proceeds of the sale of the property. If no claimant of the forfeited property is found the taking of the property and a description of it shall'be duly advertised, and if no claimant shall appear within ten days after the last publication of the advertisement the property shall be sold, and the proceeds less the *27 expenses and costs shall be paid to the treasurer or officer in the county who receives fines and forfeitures, and shall become a part of the county school fund. In this case the latter course was pursued. No claimant, other than Drake, was found; the sale was advertised under the foregoing provision; the car was sold, and the proceeds, less the expenses, were paid to the treasurer of Iredell County. It is agreed that the price paid by the defendant at the sale was the actual value of the car at that time. If by virtue of its unrecorded mortgage the plaintiff had a valid lien on the property as against Drake, the mortgagor, its lien was transferred to the proceeds of the sale. The object of transferring the lien was not only to protect the lienor, but to clear the title of the purchaser. When transferred to the proceeds of the sale the lien no longer attached to the forfeited property. It follows that the car, released from the lien and now in possession of an innocent purchaser for value, is not subject to the plaintiff’s claim. The appellant contends that section 3411(f) is in conflict with Article I, section 17, of the Constitution of North Carolina, which provides that no person ought to be deprived of his property but by the law of the land, and in conflict with the Fourteenth Amendment of the Constitution of the United States, which provides that no State shall deprive any person of his property without due process of law. We are unable to concur with the appellant in this suggestion. In Richbourg v. United States, supra, it was said that “the objective of section 26 (National Prohibition Act) is not the prosecution of the offender, elsewhere provided for, but the confiscation of the seized liquor and the forefeiture of vehicles used in its transportation, to the limited extent specified in the section. . . . The provision that The court upon conviction of the person so arrested shall order a sale by public auction of the property seized’ is mandatory and requires the forfeiture to proceed under this section.” The officer’s appropriation of the property is repeatedly referred to as a forfeiture. If it is a forfeiture under section 26 it is a forfeiture under section 3411(f), although the interests of innocent third .persons are protected by each statute. The forfeiture is not a taking without due process of law. The owner or lienor of an automobile who entrusts it to another with authority to use it is not deprived of his property without due process of law by a statute authorizing its forfeiture if it is used by the person to whom it is entrusted in the unlawful transportation of intoxicating liquor, although such use is without the. knowledge or consent of the lienor or owner. Goldsmith-Grant Co. v. United States, 254 U. S., 505, 65 Law Ed., 376; Van Oster v. Kansas, 272 U. S., 465, 71 Law Ed., 354. *28 But as we interpret the statute the lienor is not deprived of his property. If the property is forfeited and sold the lien is transferred; it no longer attaches to the subject of the forfeiture; and in any event the demands of the due process clause are met by giving notice by publication to unknown claimants of the seizure, and of a description of the property. The mode of giving the notice is prescribed by the statute, this being peculiarly a legislative function. We may note in concluding that section 3411(f) differs materially from section 3403, which whs construed in S. v. Johnson, 181 N. C., 638, and in Motor Co. v. Jackson, 184 N. C., 328. Judgment Affirmed.