The creditor entered obtained a secured promissory note from the debtors. The security agreement established that the promissory note was secured by the debtor’s current motor vehicles and any after-acquired motor vehicles. The debtors, which were four related parties, failed to pay the creditor a total of $180,000. The court ruled that the creditor was entitled to all the collateral, including the vehicle. Subsequently, the creditor moved for an order directing the county clerk of courts to issue a motor vehicle title identifying the creditor as the legal owner. The motion also included an affidavit that stated the creditor had repossessed the vehicle and a Virginia certificate of the title that seemed to show that the vehicle was titled to one of the debtors. The trial court denied the motion, stating that the collateral agreement was invalid because the debtors did not have legal ownership of the vehicle at the time of the agreement.
In Kasha Foods, LLC v. Diamantopoulos, No. 13-24-04, 2024 WL 3651679, 2024 Ohio App. LEXIS 2791 (Ohio Ct. App. Aug. 5, 2019) (opinion not yet released for publication), the appellate court affirmed the trial court’s denial of the creditor’s motion to order the issuance of a certificate of title in the truck but disagreed with its reasoning. The court noted that under Ohio law, it was permissible for a collateral agreement to include property not yet owned by the creditor. Thus, the trial court’s holding that the collateral provision was unenforceable was erroneous. However, the court found that the creditor had not shown entitlement to relief. The court stated that R.C. 4505.10 provided the appropriate means for obtaining a certificate of title. First, the creditor could surrender the previous certificate of title to the court or provide “satisfactory proof to the clerk of ownership and rights of possession to the motor vehicle.” Id. Alternatively, if the clerk finds the information insufficient, the creditor could have submitted its evidence to the registrar of motor vehicles for approval. Id. Then, if a certificate has still not been issued, the creditor has the right to petition the court directly. Id. Here, the creditor failed to comply with R.C. 4505.10(A). There was no evidence that the creditor had been declined a certificate by the clerk or the registrar of motor vehicles, which is a prerequisite to petitioning the court. Therefore, the trial court did not err in denying the motion, and the court affirmed the judgment.
By Libby Gear [email protected]
Edited By Maycee Redfearn: [email protected]
Edited By Ashley Boyce: [email protected]
Edited By Hayden Mariott: [email protected]
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