PEOPLE v. Dean and Company, Claimant and Respondent.*

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District Court of Appeal, First District, Division 1, California.

PEOPLE of the State of California, Plaintiff and Appellant, v. ONE 1953 FORD VICTORIA, Motor B3PV 102617, Texas License EY 8613, Defendant, Dean and Company, Claimant and Respondent.*

No. 16916.

Decided: November 30, 1956

Edmund G. Brown, Atty. Gen., Clarence A. Linn, Asst. Atty. Gen., Raymond M. Momboisse, Deputy Atty. Gen., for appellant. Severson, Davis & Larson, James B. Werson, San Francisco, for respondent.

This is an appeal by the People, in a proceeding for forfeiture of an automobile used in transportation of narcotics, from that portion of the judgment which recognizes the lien thereon of respondent, Dean and Company.

On June 10, 1953, in San Antonio, Texas, one Willie Smith bought the automobile in question from Sam Henry Motors, a car dealer, and executed a note and chattel mortgage on the automobile to said dealer to secure the balance of the purchase price. The note and mortgage were assigned on the same day to respondent.

Respondent is a Texas corporation engaged in automobile financing in the state of Texas and maintains its office in the city of San Antonio. Texas did not at the time in question have an automobile forfeiture law and neither the dealer nor the finance company made any character investigation of Smith.

The mortgage provided that the mortgagor would not remove the automobile from Bexar County, in which San Antonio is located, without the written consent of the mortgagee. Contrary to this provision, Smith removed the automobile to California without the knowledge or consent of respondent. On September 23, 1954, in Monterey County, California, the automobile was used to unlawfully transport marihuana, with knowledge of such use by Smith. It was seized on said date pursuant to section 11611 of the Health and Safety Code. Smith thereafter assigned his interest as the registered owner to his attorneys.

This action was commenced on March 1, 1955, under the provisions of sections 11612 et seq., of the Health and Safety Code. Smith did not appear after proper notice and his default was entered. The attorneys filed an answer in propria persona. Judgment went against them and they have not appealed. Respondent filed an answer, setting up its mortgage. The judgment provided that the automobile be forfeited to the State of California subject to a lien of $722.84 thereon in favor of respondent, payable in accordance with section 11625 of the Health and Safety Code. The sole point on this appeal is whether it was error to recognize such lien.

Section 11610 of the Health and Safety Code provides: ‘A vehicle used to unlawfully transport or facilitate the unlawful transportation of any narcotic, or in which any narcotic is unlawfully kept, deposited or concealed or in which any narcotic is unlawfully possessed by an occupant thereof, shall be forfeited. * * *’

An exception is made in favor of a lien claimant who complies with the provisions of section 11620 of the Health and Safety Code, which, at the time in question, provided as follows: ‘The claimant of any right, title or interest in the vehicle may prove his lien, mortgage, or conditional sales contract to be bona fide and that his right, title, or interest was created after a reasonable investigation of the moral responsibility, character, and reputation of the purchaser, and without any knowledge that the vehicle was being, or was to be, used for the purpose charged.’

It is admitted that no such investigation of Smith was made. Respondent's position is that the California forfeiture statute does not apply to or affect a lien created in a sister state which does not have any such forfeiture statute or require any investigation of the purchaser.

Respondent relies upon Mercantile Acceptance Co. v. Frank, 203 Cal. 483, 265 P. 190, 57 A.L.R. 696. In that case an automobile, subject to a valid Minnesota mortgage, was removed from that state to California, contrary to the terms of the mortgage. It was then sold in California to bona fide purchasers. The mortgagee sued in California to enforce the mortgage. The mortgage was not accompanied by the good faith affidavit then required by section 2957 of our Civil Code. Neither was it recorded in this state prior to the sale to the bona fide purchasers. Under the then California statutory law, the mortgage was void as against such purchasers. However, the Supreme Court held that, under the doctrine of comity, the validity and enforceability of the mortgage was governed by the law of Minnesota and upheld the mortgage as against the subsequent purchasers.

The Mercantile Acceptance case, supra, involved only the contract rights of private parties and the result reached did not contravene the public policy of this state. The significance of this is discussed at length by the Supreme Court in its decision, 203 Cal. at pages 488 to 491, 265 P. at pages 192 to 193, inclusive.

In the instant case, we are faced with the problem of whether, under the doctrine of comity, an exception should be made in the enforcement of a penal statute of this state. The narcotics problem in California has required the enactment of drastic legislation. The clear purpose of the forfeiture law is to keep automobiles out of the possession of those who might use them for the transportation of narcotics. It is one method devised to aid in the prevention of the nefarious narcotics traffic and to protect its citizens therefrom. In such a situation the rule to be followed is well stated in 15 C.J.S., Conflict of Laws, § 4, at page 856: ‘It is well settled as a general principle that no state will give effect to the laws of another on the principle of comity when the effect would be injurious to the state or its citizens, it belonging exclusively to each sovereignty to determine for itself whether it can enforce a foreign law without, at the same time, neglecting the duty that it owes to its own citizens or subjects.’

We conclude that the public policy of this state is to enforce the penal provisions of the narcotics law according to the statutes enacted by our legislature for that purpose and that such public policy is paramount to any principle of comity which would permit the civil law of Texas to have the extraterritorial effect of defeating this penal law of California.

Respondent also contends that when Smith removed the automobile from Texas, contrary to the provisions of the mortgage, he was guilty of larceny and that the decision in People v. One 1937 Plymouth 6, etc., 37 Cal.App.2d 65, 98 P.2d 750, applies and prevents a forfeiture. This is the so-called ‘stolen car’ rule. The cited case holds that an owner is protected against a narcotics forfeiture if the automobile is taken from him without his knowledge and consent. This is sound law, and is necessary to preserve the constitutionality of the forfeiture statute under due process. But the exception has never been extended beyond the initial taking from the owner. People v. One 1951 Ford Sedan, 122 Cal.App.2d 680, 265 P.2d 176; People v. One 1949 Cadillac, 126 Cal.App.2d 410, 272 P.2d 873; People v. One 1941 Ford 8 Stake Truck, 26 Cal.2d 503, 159 P.2d 641. The case last cited limits the ‘stolen car’ situation as follows, commencing 26 Cal.2d at page 506, 159 P.2d at page 642: ‘It is true that the Health and Safety Code does not expressly exempt from confiscation an automobile taken in the first instance without the owner's consent and used to transport narcotics but it has been construed as not authorizing forfeiture under such circumstances. The reasoning, leading to this conclusion is that a contrary determination would amount to an unconstitutional deprivation of property without due process of law (People v. One 1937 Plymouth 6, supra) [37 Cal.App.2d 65, 98 P.2d 750], and where a statute is susceptible of two interpretations, one of which would satisfy constitutional guarantees, if possible the courts will uphold the legislation. Bodinson Mfg. Co. v. California Emp. Comm., 17 Cal.2d 321, 326–337, 109 P.2d 935.

‘But there are no constitutional impediments to a forfeiture where the owner entrusts his vehicle to another who uses it illegally, even though the owner does not know of or acquiesce in such use. The distinction between such a situation and the plight of an automobile owner who failed to give possession of his car or consent to its operation is based upon the means by which the one fund transporting the contraband obtained the vehicle. An owner who entrusts the possession of his vehicle to another thereby accepts the risk that it will be used contrary to law, but, in the operation of an automobile without the owner's consent to do so in any manner or at all, there is no element of choice or volition and a complete lack of permission, express or implied, on the part of the owner.’ (Emphasis added.) In the case just quoted from, an employee drove his employer's truck far beyond the point where he was allowed to go. He obtained some narcotics and on his return was arrested and the truck seized. A judgment of forfeiture of the truck was affirmed. In the instant case, Smith likewise drove the automobile beyond the boundaries of Texas, in violation of the terms of the mortgage. The innocent lienholder in such a situation is in no better position than an innocent owner.

The lien should not have been recognized and the judgment is therefore reversed.

AGEE, Justice pro tem.

PETERS, P. J., and BRAY, J., concur.

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