Global Business Solutions v. Crossett School District, City First Financial, and Summit Bank

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MARCH 24, 2004










Olly Neal, Judge

Appellant Global Business Solutions, Inc., (Global) appeals from an order of the Ashley County Circuit Court denying its petition for a delivery order. On appeal, Global argues that the trial court erred when it denied Global's request for replevin. We disagree with Global's argument and affirm.

Global is a vendor of "document imaging machines" and their accompanying software. Appellee City First Financial Company (City First) was the alter ego of Rodney K. Miller, deceased. City First would provide financing for the buyers of Global equipment and software. In exchange for financing, the buyer would enter into a lease/purchase agreement with City First. Global would deliver the equipment to the buyer and then submit an invoice to City First. Within ten days of receipt of the invoice, City First would remit payment to Global.

On November 1, 2002, Global entered into an agreement to sell equipment to appellee Crossett School District (the school district). Global arranged for City First to finance the school district's purchase. On November 7, 2002, City First and the school district entered into a lease/purchase agreement. The agreement listed City First as the lessor and the school district as the lessee. The agreement provides in part:

8. TITLE. Upon acceptance of the Equipment by Lessee hereunder, title to the Equipment will vest in Lessee; however, (i) in the event of termination of this Lease by Lessee pursuant to Section 4 hereof; (ii) upon the occurrence of an Event of Default hereunder an as long as such Event of Default is continuing; or (iii) in the event that the Purchase Option has not been exercised prior to the Expiration Date, title will immediately vest in Lessor or its assignee.

9. SECURITY INTEREST. In order to secure all of its obligations hereunder, Lessee hereby: (i) grants to Lessor a first and prior security interest in any and all right, title, and interest of (ii) agrees that this Lease may be filed as a financial statement evidencing such security interest; and (iii) agrees to execute and deliver all financing statements, certificates of title and other instruments necessary or appropriate to evidence such security interest.

On November 12, 2002, the school district registered the agreement with the treasurer of the school district and the State Department of Education. On or about November 13, 2002, City First assigned its interest to appellee Summit Bank (Summit) in exchange for $508,325.38. Rodney Miller died sometime in early December 2002. On December 12, 2002, and January 7, 2003, Global delivered and installed the school district's equipment. After delivery, City First failed to pay Global. Sometime in January 2003, Global learned of the assignment to Summit. Upon Global's failure to receive payment from either City First or Summit, Global filed a petition for delivery order against the school district, City First, and Summit, seeking the return of the equipment. Summit and the school district contested the petition. Summit also filed a petition for declaratory judgment asking the court to declare that Global did not have an interest in the equipment.

A hearing on Global's petition was held March 10, 2003. At the hearing, Larry Clark, Global's CEO, testified that, on December 8, 2002, Rodney Miller's assistant, Carolyn Burnham, called asking what the delivery date was for the school district's equipment. Clark said that he told Ms. Burnham December 12, 2002, and that Ms. Burnham assured him that even though Mr. Miller had died, City First would remit payment for the equipment. Clark stated that City First had neither any input in the lease/purchase agreement nor was City First a party to the agreement.

Chris Wewer, Summit's CFO, said that in Summit's past dealings with City First, it never paid the vendor. He also said that City First represented in the assignment that there were no claims against the equipment and that a UCC search revealed that Summit had the only lien against the equipment. Wewer said that Summit's UCC filing was notice to Global of the assignment.

On March 18, 2003, the trial court entered an order denying Global's petition for an order of delivery. From that order comes this appeal.

This court reviews equity actions de novo. Del Mack Constr., Inc. v. Owens, 82 Ark. App. 415, 118 S.W.3d 581 (2003). However, we will not reverse a finding of fact of the trial court unless the trial court was clearly erroneous. Riley v. Hoisington, 80 Ark. App. 346, 96 S.W.3d 743 (2003). A finding is clearly erroneous when, even though there is evidence to support it, the appellate court is left with the definite and firm conviction that a mistake has been made. Id.

Although Summit raises this in a footnote, we must first address Summit's contention that the case should be dismissed for lack of a final order. In its order, the trial court acknowledges that Summit filed a petition for declaratory judgment; however, in denying Global's petition for delivery, the trial court failed to address Summit's petition for declaratory judgment.

Whether a judgment, decree, or order is final is a jurisdictional issue that this court has a duty to raise, even if the parties do not, in order to avoid piecemeal litigation. FordMotor Co. v. Harper, 353 Ark. 328, 107 S.W.3d 168 (2003). Where no final or otherwise appealable order is entered, this court lacks jurisdiction to hear the appeal. Id. An order is not final when it adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties. Lee v. Konkel-Swaim, 73 Ark. App. 429, 43 S.W.3d 767 (2001). In order for a judgment to be final and appealable, it must dismiss parties from court, discharge them from the action or conclude their rights to the subject matter in controversy. Ford Motor Co. v. Harper, supra. This court has held that the test of finality and appealability of an order is whether the order puts the court's directive into execution, ending the litigation or a separable branch of it. Farm Bureau Mutual Ins. Co. of Arkansas, Inc. v. Running M. Farms, Inc., 348 Ark. 313, 72 S.W.3d 502 (2002).

By denying Global's petition for delivery, the trial court essentially gave Summit its requested relief. The denial of the petition for delivery concluded Global's rights to the subject matter in controversy; therefore, the trial court's order was final and appealable.

On appeal, Global argues that the trial court erred when it denied its request for replevin. Replevin has been recognized as a remedy stemming from common law. Drug Task Force v. Hoffman, 353 Ark. 182, 114 S.W.3d 213 (2003). Replevin is a possessory action. Akins v. Pierce, 263 Ark. 15, 563 S.W.2d 406 (1978). A replevin action can be maintained only by one who has a general or special property interest in a thing taken or detained at the commencement of the action. Bonnell v. Smith, 322 Ark. 141, 908 S.W.2d 74 (1995). The right of possession or ownership must be by a title recognized by law. Id. In a suit in replevin, the plaintiff must show both title to the property and the right to possess the property. Singer Sewing Mach. Co. v. Cole, 187 Ark. 1017, 63 S.W.2d 977 (1933).

Unless there is an agreement to the contrary, title passes to the buyer upon delivery of the goods. See Ark. Code Ann. ยง 4-2-401(2) (Repl. 2001). Global argues that title had not passed under section 4-2-401 because there was an explicit agreement that title would remain in Global until payment occurred. However, Global fails to present any proof that there was such an agreement. Furthermore, Global is unable to establish that it retained a security interest in the property. Without proof that it retained title to the equipment and had a right to possess the equipment, Global is unable to maintain a replevin action. We are unable to say that the findings of the trial court were clearly erroneous and, therefore, affirm the findings of the trial court.


Vaught and Roaf, JJ., agree.