Universal C.I.T. Credit Corp. v. Congressional Motors, Inc.

Congressional Motors, Inc. (Congressional) (plaintiff) leased premises in Maryland to automobile dealer Peter Palmer, Ltd. (Palmer). In December 1965, after Palmer failed to pay rent, Congressional obtained a warrant of distraint (i.e., a warrant allowing the seizure and sale of property to satisfy an unpaid amount) and directed the sheriff to levy upon seven cars that were owned by Palmer and located on the leased premises. However, the sheriff learned that Universal C.I.T. Credit Corporation (Universal) (defendant) was claiming a lien on the cars based on an advance that Universal had made for Palmer’s purchase of the cars. Universal asserted that its lien was superior to Congressional’s lien. Based on Universal’s assertion, the sheriff refused to sell the cars as directed by Congressional. Congressional sought a writ of mandamus to compel the sheriff to sell the cars. Universal intervened in the action and asserted its lien, which Universal claimed was a security interest with priority under the Uniform Commercial Code (UCC). The trial court held that Congressional’s lien had priority and ordered the sale. Universal appealed. On appeal, the court noted that if the levy had been made on or after January 1, 1966, Universal’s lien would have had priority under certain changes to the law of distress that had become effective on that date. However, because the levy had been made in 1965, the court considered the priority of Congressional’s and Universal’s respective liens under the pre-1966 law of distress and the UCC.