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A vehicle used to unlawfully transport any narcotic shall be forfeited to the State. Cal. Health & Safety Code § 11610. Cal. Health & Safety Code § 11620 provides that the claimant may prove his mortgage to be bona fide and that his 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. Cal. Health & Safety Code § 11622 provides that, in the event of such proof, the court shall order the vehicle released to the innocent mortgagee, it being the intention to forfeit only the interest of the purchaser. The statute makes it clear that it does not contemplate the forfeiture of the interest of an innocent mortgagee.
On June 10, 1953, Willie Smith purchased the automobile from a dealer in Bexar County, Texas. Smith executed a note for the unpaid balance of the purchase price and gave the dealer a chattel mortgage on the automobile to secure payment. On the same day, the dealer assigned the note and mortgage to respondent, a Texas corporation engaged in the business of financing the sales of automobiles. The mortgage prohibited the mortgagor from removing the automobile from Bexar County without the written consent of the mortgagee. In violation of this prohibition and without the knowledge of respondent, Smith brought the automobile to California. On September 23, 1954, Smith used the automobile in California to transport marihuana, and the automobile was seized. On March 1, 1955, the attorney general filed a notice of seizure and intended forfeiture. Respondent answered, asserting its mortgage. The hearing disclosed that Texas has no law providing for the forfeiture of automobiles used in the unlawful transportation of narcotics; that at the time respondent accepted the assignment of the note and mortgage it had no information that would place it on notice that the vehicle was to be used unlawfully; and that respondent made no investigation of Smith's moral responsibility, character, and reputation. The trial court concluded that the validity and effect of the lien of respondent is governed by the laws of the State of Texas, which do not require an investigation of the moral responsibility, character and reputation of the purchaser, and entered judgment providing that the automobile be forfeited to the state of California subject to respondent's lien for the unpaid balance of the purchase price, $ 722.84. The People appealed from the part of the judgment recognizing respondent's lien and contended that the creditor's interest should be forfeited because it failed to investigate the debtor's moral responsibility, character, and reputation.
Did the "reasonable investigation" required of a California mortgagee to avoid forfeiture of his interest apply to the creditor?
The court found that, in the absence of a plain legislative direction to the contrary, the statute could not reasonably be interpreted as requiring such investigation when the sales were financed in other states and the vehicles were taken to California, not only without the knowledge of those financing the sales, but in violation of express contractual prohibitions.