August 15, 1985

Ms. Mary G. Keller 
Beadle County State's Attorney 
145 3rd Street, S.W. 
Huron, South Dakota 57350

OFFICIAL OPINION NO. 85-33

Status of poor relief lien on later acquired motor vehicle

Dear Ms. Keller:

You have requested an official opinion based on the following set of facts:

FACTS: 

An individual has received poor relief payments from the county, and has not reimbursed the county for the amount thereof.  The county auditor has made the record of payment and has filed such record with the Register of Deeds, all as required by SDCL 28-14-7. The individual contemplates purchase of a motor vehicle, such purchase to be financed by a lending institution.  The county of residence of the individual is not in question.

Based on that set of facts you have asked the following questions:

QUESTIONS: 

1.  Does the county have a lien on the motor vehicle superior to that of the lending institution? 

2.  If the county has a first priority lien on the vehicle, can the individual receive a title to the same without satisfying the lien? 

3.  If the county does not have a first priority lien, how should the county protect its lien against a subsequent purchaser for value?

SDCL 28-14-3 is as follows: 

For the purpose of § §  28-14-5 to 28-14-18, inclusive, a poor person shall mean any person who receives support, care, and maintenance as a poor person, or any person who is a patient of the South Dakota human services center and  any and all other cases wherein any county within this state shall become obligated to, and does pay for any care, support, and maintenance.  It shall also include all moneys expended by any county for burial expenses.

SDCL 28-14-5 is as follows: 

Whenever any county within this state shall become obligated to, and does pay for the care, support, and maintenance, and burial expenses of any poor person as defined in § 28-14-3, the county in such cases shall have a lien upon all the property, both real and personal, including joint tenancy and homestead interests belonging to the poor person, or to be thereafter acquired by the poor person, or in which the poor person has any interest, for all sums of money expended therefore by any county, such lien to become effective as between the county and the poor person and other persons having actual knowledge of such payments to the poor person, immediately upon the payment made by any county, to or for the benefit of such poor person, and each additional payment made for such poor person shall be added to the amount of the lien.

SDCL 28-14-7 is as follows: 

It shall be the duty of the county auditor, immediately after issuing of county warrants or payment of cash, as the case may be, for the benefit of any poor person, to record the name of such poor person for whose benefit such warrants or cash were issued, the amount thereof, the purpose for which  such warrants or cash were issued, together with the name of the fund from which such warrants of cash were drawn, all properly indexed, and to subsequently record in a like manner each additional payment made by the county for such poor person.  Such record shall be filed in the office of the register of deeds of the county in which such poor person resides, and in the county of his legal residence or last residence, if he is an inmate of any state institution or deceased.

SDCL 28-14-9 is as follows: 

Such record shall be actual notice to all persons of a lien upon all property, real and personal, including joint tenancy and homestead interests belonging to such poor person, or to be thereafter acquired by the poor person or to the husband or wife of such poor person as the case may be, to the extent and amount obligated and paid by any county for the benefit of such poor person.

SDCL 28-14-11 is as follows: 

Any lien established by virtue of these statutes may be foreclosed by action in the name of the county to satisfy the amount of the lien, together with interest, cost, and expenses of foreclosure.  Such foreclosure shall not be commenced until one year after the last payment to or for the benefit of the poor person during the lifetime of the poor person or until after the death of the poor person. 

Such lien shall not be enforced against the homestead of the poor person during his or her lifetime or while occupied as a homestead by the surviving spouse or minor children, except upon alienation.

South Dakota adopted the Uniform Commercial Code in 1966, and the same, with subsequent amendments, now appears in Title 57A of South Dakota Codified Laws.  SDCL 57A-9-301(2) is as follows: 

If the secured party files with respect to a purchase money security interest before or within ten days after the collateral comes into possession of the debtor, he takes priority over the rights of a transferee in bulk or of a lien creditor which arise between the time the security interest attaches and the time of filing.

SDCL 57A-9-107 provides as follows: 

A security interest is a 'purchase money security interest' to the extent that it is 

(a)  Taken or retained by the seller of the collateral to secure all or part of its price; or 

(b)  Taken by a person who by making advances or incurring an obligation gives value to enable the debtor to acquire rights in or the use of collateral if such value is in fact so used.

SDCL 57A-9-302(3) provides as follows: 

(3)  The filing provisions of this chapter do not apply to a security  interest in property subject to a statute 

(a)  Of the United States which provides for a national registration or filing of all security interests in such property; or 

(b)  Of this state which provides for central filing of, or which requires indication on a certificate of title of, such security interests in such property.

Subparagraph 4 of that statute is as follows: 

(4)  A security interest in property covered by a statute described in subsection (3) can be perfected only by registration or filing under that statute or by indication of the security interest on a certificate of title or a duplicate thereof by a public official.

SDCL 57A-9-312(4) is as follows: 

(4)  A purchase money security interest in collateral other than inventory has priority over a conflicting security interest in the same collateral if the purchase money security interest is perfected at the time the debtor receives possession of the collateral or within ten days thereafter.

In South Dakota a motor vehicle is property subject to a statute which  'requires indication on a certificate of title of, such security interests in such property.'

SDCL 32-3-10 is as follows: 

No person, except as provided in this chapter obtaining or getting  possession of a motor vehicle, trailer or semitrailer shall acquire any right, title, claim, or interest in or to such motor vehicle, trailer or semitrailer, until he shall have had issued to him a certificate of title to such motor vehicle, trailer or semitrailer or delivered to him a manufacturer's or importer's certificate for the same; nor shall any waiver or estoppel operate in favor of such person against a person having possession of such certificate of title or manufacturer's or importer's certificate for such motor vehicle, trailer or semitrailer, for a valuable consideration.

SDCL 32-3-11 provides in part as follows: 

All contracts, liens, mortgages and encumbrances, noted on a certificate of title, shall take priority according to the order of time in which the same are noted thereon.

SDCL 32-3-38 provides for having a notation of a lien made on the face of a certificate of title by the register of deeds.

SDCL 23-3-41 provides, in part, as follows: 

    . . . if a notation of same has been made by the secretary of commerce and regulation or county register of deeds on the face thereof, shall be valid as against the creditors of the mortgagor, whether armed with process or not, and subsequent purchasers, mortgagees and other lien holders or claimants, but otherwise shall not be valid against them.

SDCL 32-3-43 provides a method of having a junior lien endorsed on the  certificate of title by the register of deeds demanding surrender of such title by the first lien holder for the purpose of making such notation and SDCL 32-3-44 provides a requirement that the cancellation of a lien must be endorsed on the certificate of title.

My opinion is that the poor relief lien of the county cannot attach to particular collateral, in this case the motor vehicle, until the debtor receives a property interest therein.  SDCL 57A-9-314(4) gives priority to a 'purchase money security interest' if the same is perfected at the time the debtor receives possession or within 10 days thereafter.  The security interest is perfected when the same is endorsed on the title.  The debtor has no interest in the property until the certificate of title is issued to him (SDCL 32-3-10), and he first receives the certificate with the purchase money security interest endorsed thereon.

It is my opinion that your questions are to be answered as follows: 

As to Question No. 1, the answer is 'no.'  This answer is based on the assumption that the lending institution has caused a notation of its 'purchase money security interest' to be endorsed on the certificate of title at the time of or within ten days after delivery of the vehicle to the individual.

As to Question No. 2, the same is not applicable in view of the answer to Question No. 1.

As to Question No. 3 the county could protect its lien on the particular vehicle by causing a notation thereof by the register of deeds under the procedure provided for by SDCL 32-3-43.

Respectfully submitted,

Mark V. Meierhenry
Attorney General