{ "id": 1633388, "name": "COMMERCIAL CREDIT CORP. v. NATIONAL CREDIT CORP.", "name_abbreviation": "Commercial Credit Corp. v. National Credit Corp.", "decision_date": "1971-12-20", "docket_number": "5-5662", "first_page": "702", "last_page": "709", "citations": [ { "type": "official", "cite": "251 Ark. 702" }, { "type": "parallel", "cite": "473 S.W.2d 881" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "220 A. 2d 621", "category": "reporters:state_regional", "reporter": "A.2d", "year": 1966, "opinion_index": 0 }, { "cite": "437 S. W. 2d 876", "category": "reporters:state_regional", "reporter": "S.W.2d", "year": 1971, "opinion_index": 0 }, { "cite": "221 Ark. 33", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1656615 ], "weight": 3, "year": 1952, "opinion_index": 0, "case_paths": [ "/ark/221/0033-01" ] } ], "analysis": { "cardinality": 567, "char_count": 12588, "ocr_confidence": 0.877, "pagerank": { "raw": 1.2589735982788528e-07, "percentile": 0.6119447504468407 }, "sha256": "b18f3476c319b7bdef87db8cea01ad154d16560235b09d7673b79872435dda68", "simhash": "1:e9c1471276626340", "word_count": 1997 }, "last_updated": "2023-07-14T18:18:57.175988+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Harris, C.J., not participating." ], "parties": [ "COMMERCIAL CREDIT CORP. v. NATIONAL CREDIT CORP." ], "opinions": [ { "text": "Frank Holt, Justice.\nThe appellant and appellee are two competing creditors. They each claim superior liens on two automobiles, hereinafter referred to as the \u201cWilliams\u201d and \u201cMorgan\u201d vehicles. The appellant was in possession of the vehicles and the appellee had possession of the certificates of title. Appellant demanded delivery of the titles and, upon refusal, it brought suit seeking a mandatory injunction requiring appellee to deliver the titles. Appellee filed a counterclaim seeking possession of the two vehicles. As to the Williams automobile, the chancellor found that appellant\u2019s possession and subsequent bailment or storage of this vehicle with Mathews Motor Company did not constitute the actual or open possession required to perfect appellant\u2019s security interest under Ark. Stat. Ann. \u00a7 75-160 (Repl. 1957) and provisions of the Uniform Commercial Code; therefore, appellee National\u2019s security interest has priority and it is entitled to the proceeds of the mutually agreed sale of the Williams vehicle.\nCommercial\u2019s records show that on February 24, 1969, it purchased a security agreement, dated four days previously, from Howard Mathews Motor Company, the dealer, showing the sale of a 1966 Buick Electra, 4-door Hardtop, Motor No. 484376X138256, to Kenneth Williams. Williams made five payments on the vehicle before default. On October 29, 1969 Commercial repossessed a 1966 Buick LeSabre, 2-door hardtop sedan, Motor No. 452376X138256, by Williams\u2019 wife bringing it to appellant. The latter vehicle was stored by appellant under a storage agreement, accurately describing the car, with Mathews Motor Company from October 29, 1969, to February 12, 1970, when Commercial again took physical possession of the vehicle. Commercial admittedly never had possession of the title to the automobile nor was its lien recorded pursuant to \u00a7 75-160.\nNational\u2019s records and dealings with the 1966 Buick show that on December 8, 1969, for an advance of $3,-950, Mathews Motor Company executed a 90-day promissory note and a trust receipt to National for (among other vehicles) a 1966 Buick LeSabre, 2-door Hardtop, Motor No. 452376X138256, together with a bill of sale of the automobile. At that time the title certificate, signed in blank by Kenneth Williams, was delivered to National. On February 10, 1970, National contacted Commercial and advised that a number of National\u2019s trust receipt units were missing. On February 22, 1970, National filled out the title certificate showing itself as owner and forwarded the certificate to the Motor Vehicle Division of the Arkansas Department of Revenues. The title certificate was issued in National\u2019s name as owner on February 26, 1970. National\u2019s floor plan financing arrangement with Mathews had extended over a number of years. Its financing statement under the Uniform Commercial Code in connection therewith was last filed on January 15, 1962.\nBy virtue of the five-year limitation period set out in Ark. Stat. Ann. \u00a7 85-9-403(2) (Supp. 1969), National does not have a perfected security interest under the Uniform Commercial Code in either the automobile or the chattel paper. Furthermore, having failed to comply with Ark. Stat. Ann. \u00a7 75-160 and \u00a7 75-161, National was not a lien encumbrancer insofar as third parties are concerned under the Motor Vehicle Registration requirements on February 12, 1970, the date that Commercial took possession of the Williams Buick. See West, Sheriff v. General Contract Purchase Corp., 221 Ark. 33, 252 S. W. 2d 405 (1952). In the absence of a lien either on the vehicle or the chattel paper, we must turn to the Uniform Commercial Code to determine the priority between the parties.\nUnder Ark. Stat. Ann. \u00a7 85-9-203(a) (Add. 1961) the security agreement need not be in writing where the collateral is in the possession of the secured party (see Comment 3).\nFurthermore, \u00a7 85-9-305 provides:\n\u201cA security interest in letters of credit and advices of credit (subsection (2) (a) of Section 5-116 [\u00a7 85-5-116]), goods, instruments, negotiable documents or chattel paper may be perfected by the secured party\u2019s taking possession of the collateral. If such collateral other than goods covered by a negotiable document is held by a bailee, the secured party is deemed to have possession from the time the bailee receives notification of the secured party\u2019s interest. A security interest is perfected by possession from the time possession is taken without relation back and continues only so long as possession is retained, unless otherwise specified in this Article [chapter]. The security interest may be otherwise perfected as provided in this Article [chapter] before or after the period of possession by t\u00edre secured party. [Acts 1961, No. 185, \u00a7 9-305.1\u201d\nTo avoid the effect of the foregoing provisions of the Uniform Commercial Code, National makes two arguments. The first is that there is no evidence that either Kenneth Williams, Howard Mathews Motor Company or anyone else consented or agreed that Commercial would have a lien on the 1966 Buick LeSabre 2-door Hardtop as distinguished from the 1966 Buick Electra 4-door Hardtop described in Commercial\u2019s security agreement. This argument not only overlooks the provisions of \u00a7 85-9-203(a), supra, but also the evidence. While the testimony of Commercial\u2019s managers may not be considered as undisputed, their testimony to the effect that the 1966 Buick LeSabre is the vehicle surrendered to them by Kenneth Williams\u2019 wife after default in his car payments on the security agreement describing a 1966 Buick Electra and stored by Commercial with Mathews Motor Company is not controverted and there is nothing to indicate any lack of credibility. Furthermore, the parties stipulated at the beginning of the trial that the Buick LeSabre was in the possession of Commercial.\nNational\u2019s second argument is that since Commercial\u2019s lien was not perfected on December 8, 1969, when National acquired its security interest in the automobile, National takes priority under \u00a7 85-9-301 (l)(b) which provides:\n\u201cExcept as otherwise provided in subsection (2), an unperfected security interest is subordinate to the rights of ### a person who becomes a lien creditor without knowledge of the security interest and before it is perfected; ***.\u201d\nNational does not here stand in the position of a \u201clien creditor\u201d as that term is defined in subsection (3) of \u00a7 85-9-301 which provides:\n\u201cA \u2018lien creditor\u2019 means a creditor who has acquired a lien on the property involved by attachment, levy or the like and includes an assignee for the benefit of creditors from the time of assignment and a trustee in bankruptcy from the date of the filing of the petition or a receiver in equity from the time of appointment.\u201d\nUnder the record before us and the foregoing provisions of the Uniform Commercial Code, we conclude that Commercial, when it took possession of the Williams Buick from Mathews Motor Company, thereafter, at least, stood in the position of a secured party in possession pursuant to the provisions of \u00a7 85-9-203(a) and \u00a7 85-9-312(5)(b). Since National was neither a lien encumbrancer, insofar as third parties are concerned, under the Motor Vehicle Registration Act [\u00a7 73-160 and \u00a7 73-161] nor the holder of a perfected security interest, a \u201clien creditor\u201d or a buyer in the ordinary course of business under the Uniform Commercial Code, it follows that the trial court erred in holding that National\u2019s security interest had priority over the security interest that Commercial perfected by possession.\nThe Morgan vehicle: In this second transaction, the Mathews Motor Company, on September 23, 1969, floor planned a 1969 Chevrolet Impala (and other vehicles) with National by executing a bill of sale, a 90-day promissory note for $10,500 and trust receipt, along with an unendorsed title which was in the name of another car dealer. This car was purchased from Mathews Motor Company on October 2, 1969, by Sharon Morgan who executed a security agreement. On October 6, Commercial discounted and purchased the Morgan security agreement from the dealer. After two payments, the purchaser defaulted and on March 18, 1970, appellant repossessed the automobile and stored it on its lot behind its office. On January 9, 1970, Mathews Motor renewed the original 90-day floor plan arrangement by giving National a new note, bill of sale, and trust receipt. It appears that National did not check at this time to ascertain whether the Impala was still in possession of Mathews Motor, and, in fact, did not discover that it was missing until February 11, 1970. Neither Commercial nor National filed with respect to the Morgan Impala, although National secured an endorsement after February 11 to the title it held and then acquired a new title on February 27, 1970, from the Motor Vehicle Division of the Arkansas Revenue Department, naming itself as owner and not as a lienor.\nUpon National\u2019s refusal to deliver the Morgan title, Commercial brought suit seeking delivery of the title as in the Williams\u2019 transaction, supra. Appellee National countersued for possession of the 1969 Impala. The court found that Commercial had not perfected its lien by filing or possession on January 9, 1970, the date on which appellee re-executed its \u201cfloor-plan\u201d transaction with Mathews Motor Company, and, therefore, National was entitled to the proceeds of the mutually agreed sale.\nIt appears undisputed that National did not comply with the requirement of \u00a7 75-160 since it did not deposit or record with the motor vehicle registration department a copy of the promissory note, bill of sale, and trust agreement upon which the asserted prior lien is based. See, also, West, Sheriff v. General Contract Purchase Corp., supra.\nFurthermore, we consider our recent opinion in the companion case of Commercial Credit Corp. v. National Credit Corp., 251 Ark. 702, 437 S. W. 2d 876 (1971) controlling in this Morgan transaction. There, as here, National took a bill of sale, a trust receipt, and a certificate of title to a vehicle from the Mathews Motor Company, the retail dealer, to secure a floor-plan loan. Thereafter, the dealer sold the encumbered vehicle to a customer who signed a security agreement which was discounted and purchased by Commercial. Subsequently, upon learning of Commercial\u2019s security interest, National registered the vehicle in its name as the owner and indicated no liens. There, as here, National contended its security interest was paramount to Commercial\u2019s security interest. In disagreeing with this contention we said:\n\u201c*** Priorities between National and Commercial as to security interests in the automobile are not important to our decision in this case because National lost whatever security interest it may have had in the automobile when it permitted Matthews to sell the automobile in the regular course of Mathews\u2019 business, which was the business of selling automobiles at retail.\n* # #\nMathews sold Edgerson\u2019s (Morgan\u2019s) contract to Commercial within three days after he obtained it from Edgerson, and after Mathews sold Edgerson\u2019s contract to Commercial, National\u2019s security interest would not have followed the chattel paper into the hands of Commercial, but would have continued in the proceeds Mathews received from Commercial in the sale of the chattel paper (contract).\u201d\nCiting \u00a7\u00a7 85-9-306, -308; Spivach, Secured Transactions Under the Uniform Commercial Code. See, also, Associates Discount Corp. v. Old Freeport Bank, 220 A. 2d 621 (Penn. 1966).\nNeither does National have a perfected security interest under the Uniform Commercial Code in either the automobile or the chattel paper since National did not, as in Williams, supra, have a currently effective financial statement on file. Section 85-9-403(2).\nWe agree with the chancellor, there is no merit in National\u2019s contention that the car was merely a \u201cloan\u201d to Miss Morgan by a friend who was Mathews\u2019 salesman. Furthermore, Morgan\u2019s ownership would not be affected, with or without notice, by National\u2019s unfiled security agreement. Section 75-160; Williams, supra.\nThe decree is reversed and the cause remanded with directions to render a decree that Commercial was entitled to the certificates of title to the Williams and the Morgan vehicles and, consequently, to the proceeds from the mutually agreed sales.\nReversed and remanded.\nHarris, C.J., not participating.", "type": "majority", "author": "Frank Holt, Justice." } ], "attorneys": [ "Dickey, Dickey & Drake, for appellant.", "Coleman, Gantt, Ramsey ir Cox, for appellee." ], "corrections": "", "head_matter": "COMMERCIAL CREDIT CORP. v. NATIONAL CREDIT CORP.\n5-5662\n473 S.W. 2d 881\nOpinion delivered December 20, 1971\nDickey, Dickey & Drake, for appellant.\nColeman, Gantt, Ramsey ir Cox, for appellee." }, "file_name": "0702-01", "first_page_order": 728, "last_page_order": 735 }