Mack Financial Corp. v. Chrestman

605 S.W.2d 749, 270 Ark. 396, 1980 Ark. App. LEXIS 1452
CourtCourt of Appeals of Arkansas
DecidedSeptember 24, 1980
DocketCA 80-157
StatusPublished

This text of 605 S.W.2d 749 (Mack Financial Corp. v. Chrestman) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mack Financial Corp. v. Chrestman, 605 S.W.2d 749, 270 Ark. 396, 1980 Ark. App. LEXIS 1452 (Ark. Ct. App. 1980).

Opinions

Marian F. Penix, Judge.

This is an appeal from a directed verdict in favor of appellees on the ground the Circuit Court action was a collateral attack on the St. Francis Chancery Court order of April 12, 1979. The court denied the appellant’s motion for summary judgment and its motion for directed verdict. From these denials the appellant appeals.

In July 1977 one Fuentes purchased a 1973 International Harvester tractor model truck from Mack Trucks Inc. in Delran, New Jersey., Under terms of a security agreement Fuentes agreed to pay $19,012.32 in 36 monthly installments of $528.12 beginning August 8, 1977. The security agreement was assigned to MFC, appellant. The lien was noted on the New Jersey certificate of title. In August 1978 George Largo, son-in-law of Fuentes, the owner, left the truck with appellee Chrestman in Wheatley, Arkansas to be repaired. Fuentes has failed to make the monthly payments due on December 8, 1978 and every month thereafter. On December 12, 1978 Chrestman sent a certified letter to Largo notifying him that an action for the repair bill would be filed. This letter was returned. On February 22, 1979, a complaint to establish a lien and foreclose same was filed in St. Francis Chancery Court by Chrestman. A warning order was published February 27, 1979, March 6, 1979, March 13, 1979 and March 29, 1979. MFC alleges that on or before April 7, 1979 agents of MFC notified the repairman Chrestman of its interest in the truck. Robert Thornton was retained by the appellant to investigate the truck at Chrestman’s shop at Wheatley, Arkansas. Thornton testified he asked Chrestman for a copy of his repair bill on the truck on April 7, 1979. Chrestman refused. On March 29, 1979 Chrestman received a judgment in St. Francis Chancery Court, and on April 12, 199, the court ordered the sale of the truck to Goodman, appellee, who was issued an Arkansas Certificate of Title. The MFC lien was not noted on the Arkansas title. This was five days after Thornton made a request on Chrestman for a repair bill and informed Chrestman of appellant’s vendor’s lien. Chrestman denied being contacted about the vendor’s lien until after the order of sale. The appellant made a written demand on Chrestman for possession of the truck on April 19, 1979.

On August 1, 1979 MFC sued to replevy. MFC moved for a summary judgment for possession of the truck on the grounds (1) it was holder of a vendor’s lien which was entitled to priority over the lien of a repairman and (2) that its priority extended to purchaser Goodman under Ark. Stat. Ann. Sec. 75-l60(c). On December 10, 1979 the court ordered MFC was entitled' to a default judgment against Fuentes. The court denied MFC’s motion for a summary judgment. After MFC rested its case the trial court directed a verdict in favor of Chrestman and Goodman. This verdict was on the ground the circuit court action was collateral attack on the St. Francis Chancery Court Order of Sale. MFC appeals.

Ark. Stat. Ann. Sec. 51-412:

The [repairman’s] lien herein provided for shall take precedence over and be superior to any' mortgage or other obligation attaching against said property in all cases where the holder of such mortgage or other obligation shall permit such property to remain in the possession and be used by persons owing and bound for the amount thereof; provided, that the lien herein provided for shall be subject to the lien of a vendor of automobiles, trucks, tractors, and all other motor propelling conveyances retaining title therein, for any claim for balance of purchase money due thereon; . . .

This is the statute under which Chrestman claimed his interest in the truck and under which he foreclosed. MFC argues, they have priority due to the exception for a vendor’s lien.

Ark. Stat. Ann. Sec. 75-160 provides for MFC’s lien priority over the present possessor, Goodman.

(c) If a vehicle is subject to a security interest when brought into this State, the validity of the security interest is determined by the law of the jurisdiction where the vehicle was when the security interest attached, subject to the following:
... 2. If the security interest was perfected under the law of the jurisdiction where the vehicle was when the security interest attached, the following rules apply: (a) If the name of the lien holder is shown on an existing certificate of title issued by the jurisdiction, his security interest continues perfected in this State.

The truck was purchased by Fuentes in the State of New Jersey. A security .agreement was executed, value was given, and the debtor took possession of the collateral, the truck. The creation and attachment of the security interest is governed by New Jersey law. N- J- Stat. Ann. § 12A:9-204 states:

(1) A security interest cannot attach until there is agreement . . . that it attach and value is given and the debtor has rights in the collateral. It attaches as soon as all of the events in the preceding sentence have taken place unless explicit agreement postpones the time of attaching.

A security agreement was entered into evidence. The debtor, Fuentes, signed the agreement, value was given, and the debt- or had rights in the collateral. The attachment took place in New Jersey. Perfection is also governed by New Jersey law. Ark. Stat. Ann. § 85-9-103 states:

(4) Notwithstanding subsections (2) and (3), if personal property is covered by a certificate of title issued under a statute of this state or any other jurisdiction which requires indication on a certificate of title of any security interest in the property as a condition of perfection, then the perfection is governed by the law of the jurisdiction which issued the certificate.

In order to perfect this security agreement, New Jersey requires:

(3) The filing provisions of this Chapter do not apply to a security interest in property subject to a statute . . . (b) of this state which provides for a central filing of, or which requires indication on a certificate of title of, such security interests in such property. N.J. Stat. Ann. § 12A:9-302.

New Jersey law requires the notation of a security interest on the certificate of title.

If . . . in connection with such sale [of a used motor vehicle], a security interest is taken or retained by the seller to secure all or a part of the purchase price of the motor vehicle, or is taken by a person who by making an advance or incurring an obligation gives value to enable the purchaser to acquire rights in the motor vehicle, the name and the business or residents address of the secured party or his assignee shall be noted on the certificate of ownership. N.J. Stat. Ann. § 39:10-9

Therefore, under New jersey law, the security interest of MFC was perfected by the notation on the certificate of ownership. Pursuant to Ark. Stat. Ann. § 85-9-103, this perfection continues in Arkansas.

The next issue we must deal with is whether MFCs perfected security interest has priority over the statutory repairmen’s liens. Ark. Stat. Ann. § 85-9-310 provides:

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160 S.E.2d 836 (Court of Appeals of Georgia, 1968)
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161 S.E.2d 372 (Court of Appeals of Georgia, 1968)
Quattlebaum v. Gray
480 S.W.2d 339 (Supreme Court of Arkansas, 1972)
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Cite This Page — Counsel Stack

Bluebook (online)
605 S.W.2d 749, 270 Ark. 396, 1980 Ark. App. LEXIS 1452, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mack-financial-corp-v-chrestman-arkctapp-1980.