Since your in Alabama I just pulled down the Alabama Dismantler and Scrap Dealer laws I have for the location were opening there. In a case like this if the scrap dealer was a licensed automotive dismantler and parts recycler you might want to try Alabama Revenue Services since they license all auto salvage yards in the state and hold there dealer bonds but if there only licensed by county then the county probate courthouse were there located might be able to help you.
Now for how the title cancellation works for Alabama heres a rough idea. All titles are cancelled online in Alabama so its different then it is in most states where we mail or deliver the certificate of titles to the state or county depending on location. I just looked there system dosent let you cancel a title cancellation once its put in the system, once its put in and paid and the dealer confirms the information its marked as Junked and the transaction is final, and the title may never be issued again.
But under law we usually have to verify the VIN matches the VIN on the title before accepting the vehicle, and if they dont match then seller is usually turned away into the proper title is brought in with it. Your best bet would be to try those two sources first and go from there. This why most states have us get a bond incase were sued, or a case like this comes up were we can be held accountable for the actions. Explain the situation to Revenue or the County Court and see if they can do anything.
I also have to admit im also confused in this case since its not the first time Ive heard something like this but never in Alabama. Usually we have a holding period for cases like this. Even here in Maine were we don't have to hold vehicles I put a three day hold just in case when they come in. I can say if the title was brought in to the other vehicle the scrap yard should have never reported the other title was they noticed it didnt match the VIN and should have been returned that title once you brought the correct one in instead.
Alabama Revenue would most likely know more on the subject.
I hope this can help you some.
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