Vanover v. Bank of Alexandria

Full title: Gary VANOVER and Carol Vanover, Appellants, v. BANK OF ALEXANDRIA, now…

Court: Court of Appeals of Kentucky

Date published: Feb 4, 1983

644 S.W.2d 948 (Ky. Ct. App. 1983)

Opinion

February 4, 1983.

Appeal from the Campbell Circuit Court, Thomas F. Schnorr, J.

Carl J. Melcher, Northern Kentucky Legal Aid Soc., Inc., Covington, for appellants.

Marcus S. Cary, Newport, Michael L. Baker and Portia F. Schaefer, Covington, for appellees.

Before HAYES, C.J., and HOWARD and LESTER, JJ.

HOWARD, Judge.

This is an appeal from a judgment holding that the appellee Bank had properly perfected its lien against a mobile home prior to the appellants' purchase of it.

On February 17, 1978, appellee Mark Webster ("Webster") obtained a 1977 certificate of title and registration for a mobile home owned by he and Rose Ann Webster, who was, at that time, his wife. On August 5, 1978, the Websters borrowed the original amount of $4600.00 from Northern Kentucky Bank Trust Co., formerly Bank of Alexandria ("Bank"), securing the loan with their mobile home. On August 10, 1978, the Bank filed its security agreement and financing statement with the Campbell County Court Clerk.

On June 19, 1979, Mark Webster sold the mobile home to the appellants, Gary and Carol Vanover, for $4,000.00. Webster gave the Vanovers the 1977 certificate of title as evidence that he owned the mobile home clear of encumbrances. The Vanovers relied on this misrepresentation and were unaware of the Bank's interest in the mobile home until February, 1980, when the Bank informed them of the existence of the security agreement.

The Websters subsequently became delinquent with their payments on the loan to the Bank and on August 7, 1980, the Bank filed an action to foreclose on its security interest in the mobile home. The Bank sought payment on the note from the Websters or repossession of the mobile home from the Vanovers.

On November 21, 1980, the trial court granted judgment by default against Mark Webster in favor of the Bank. The Websters had divorced and Rose Ann Webster (Steffen) filed a response. The Vanovers counterclaimed against Mark Webster for fraud. The case was referred to the Master Commissioner on June 24, 1981, for an evidentiary hearing and a report was made to the court on August 7, 1981. The trial court found that the Bank had a valid lien against the mobile home as security property and ordered that it be sold, pursuant to the original agreement between the Bank and the Websters. We affirm.

The Vanovers brought this appeal to attempt to retain their home for which they paid the Websters in full and where they have lived for more than three years. Their argument is that since the Bank failed to perfect its security agreement under the provisions of K.R.S. 186.045(2)(a), its lien is unenforceable against a bona fide purchaser without knowledge. K.R.S. 186.045(2)(a) states in pertinent part:

Whenever a financing statement required by KRS chapter 355 relating to any vehicle registered or required to be registered in Kentucky for use on the highway is presented to a county clerk for filing, such clerk shall also immediately note information required by the department relative thereto on the owner's copy of the registration or transfer receipt issued for the current registration period as noted in subsection (2) of KRS 186.170, which the secured party must obtain and present to the county clerk, along with the financing statement. . . .

The Vanovers contend that since the Bank did not have the relevant information noted on the 1977 registration which they received from the Websters, then the Bank did not properly perfect its interest and cannot now assert a valid claim against the mobile home. There are several reasons why this argument fails.

First, the mobile home was not required to be registered for "use on the highway" under the provisions of K.R.S. Chapter 186. K.R.S. 186.045 only applies to "vehicles" as defined in K.R.S. 186.010 which does not include mobile homes. Further, K.R.S. 186.650, which contains the definitions pertaining to the registration of trailers, specifically excludes a house-trailer being used "in one location as a permanent dwelling." The mobile home in this case clearly falls within that exclusion as it had a permanent location, was connected to water and sewage, had a driveway and porch and was obviously intended as a permanent home and not a vehicle or temporary dwelling. Therefore, the mobile home purchased by the Vanovers from the Websters was not, at any time, required to be registered under the motor vehicles provisions.

However, the Vanovers emphasize that even if the registration was not required, it did in fact occur when Mark Webster registered the mobile home in 1978. Therefore, they contend that registering the mobile home brought it within the constraints of K.R.S. 186.045(2) requiring any liens to be noted on such registration. Even if this voluntary registration is construed as activating the filing statute, the registration here was invalid as it was expired by the time the Vanovers purchased the mobile home. Once an owner has registered under the applicable statute, "he shall register his trailer, semitrailer, or house-trailer on or before April 1 of each year." K.R.S. 186.665(4). Webster registered his mobile home in February, 1978, but failed to register the following year. When the Vanovers bought the mobile home in June, 1979, the certificate they received as evidence of clear title was nothing more than an expired registration.

It is unfortunate that the Vanovers relied on the worthless registration, but the fact remains that the Bank complied with the filing provisions of K.R.S. Chapter 355 and as such had perfected their security interest by filing in the County Clerk's office.

The judgment of the trial court is affirmed.

All concur.