Bill Fitts Auto Sales, Inc. v. Daniels

BILL FITTS AUTO SALES, INC. v.  Carrie A.
DANIELS

95-1100                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered June 10, 1996


1.   Statutes -- interpretation of -- construction of legislative
     intent. -- The first rule in considering the meaning of a
     statute is to construe it just as it reads, giving the words
     their ordinary and usually accepted meaning in common
     language; the basic rule of statutory construction to which
     all other interpretive guides defer is to give effect to the
     intent of the legislature; in interpreting a statute and
     attempting to construe legislative intent, the appellate court
     looks to the language of the statute, the subject matter, the
     object to be accomplished, the purpose to be served, the
     remedy provided, legislative history, and other appropriate
     means that throw light on the subject.

2.   Debtors & creditors -- debtor entitled to surplus from sale of
     collateral -- trial court correctly determined that
     requirement to account for any surplus included payment of
     surplus to appellee. -- The provision in Ark. Code Ann.  4-9-
     504(2) that a debtor is not entitled to any surplus from the
     sale of accounts or chattel paper unless the security
     agreement so provides clearly indicates that a debtor is
     entitled to the surplus from the sale of other collateral; 
     moreover, the proper procedure for post-sale accounting
     pursuant to U.C.C.  9-504 (2) includes payment of remaining
     surplus; once the creditor has obtained satisfaction of his or
     her debt by the disposition of the collateral, the creditor
     cannot recover more than the deficiency from the debtor; the
     trial court correctly determined that the requirement to
     account for any surplus included the payment of the surplus to
     appellee.

3.   Debtor & creditor -- meaning of "disposition" in U.C.C.  9-
     504. -- Not every transfer of collateral by a secured party is
     a disposition for the purposes of Ark. Code Ann.  4-9-504(3);
     however, after a creditor has repossessed the collateral, a
     delivery of it to a third person "with the expectation that
     such person will ultimately pay the balance due" is a
     "disposition" within U.C.C.  9-504 of which notice of sale
     must be given, even though no title is transferred to the
     third person at the time of delivery. 

4.   Debtor & creditor -- appellant's construction of statute
     faulty -- provision for disposition of collateral by way of
     one or more contracts pertains to collateral having more than
     one unit. -- The provision for disposition of the collateral
     by way of one or more contracts clearly pertained to
     collateral involving more than one unit; appellant's argument
     that "disposition" should be construed as a final parting with
     the collateral by the secured creditor, no matter how many
     other purchasers have come between, would result in a
     defaulting debtor being liable for any subsequent buyer's
     default until that buyer's contract was fully paid; clearly,
     the car was delivered by appellant to the second purchaser
     with the expectation that she would ultimately pay the balance
     due; the collateral was thus disposed of pursuant to  4-9-
     504.

5.   Debtor & creditor -- debtor's right to a surplus from
     disposition of collateral cannot be waived -- appellant's
     argument without merit. -- Appellant's contention that the
     trial court erred when it did not find that appellee waived
     the right to any surplus when she signed the contract for the
     purchase of the vehicle was meritless; the debtor's rights to
     a surplus from the disposition of the collateral cannot be
     waived even by an express agreement; appellant's contract with
     appellee was silent regarding the possibility of a surplus;
     however, appellee's right to a surplus granted by Ark. Code
     Ann.  4-9-504(2), cannot be waived even by an express
     agreement to do so.

6.   Motions -- motion to dismiss denied -- appellant waived his
     claim of error. -- Appellant waived his claim of error
     because, after appellee had rested her case and appellant's
     motion to dismiss was denied, he went forward with his proof;
     if, after the denial of a request for a directed verdict or a
     dismissal, a defendant introduces evidence that, together with
     that introduced by the plaintiff, is legally sufficient to
     sustain a verdict, he waives his claim of error by the court
     in refusing to direct a verdict, or dismiss, at the close of
     the plaintiff's case.

7.   Motions -- motion to dismiss properly denied -- sufficient
     evidence existed upon which trial court could base its
     judgment. -- Where testimony by appellant's wife provided the
     amount of payoff for appellee's loan and the costs incurred in
     repossessing the car, and appellee's testimony, as well as the
     contract itself, provided evidence concerning appellee's
     downpayment, there was clearly sufficient evidence upon which
     the trial court could base its judgment without having to
     resort to conjecture or speculation. 


     Appeal from Pulaski Circuit Court; John Ward, Judge; affirmed.
     Diana M. Maulding, for appellant.
     Central Arkansas Legal Services, by:  Kenneth E. Baker and
Griffin J. Stockley, for appellee.

     Andree Layton Roaf, Justice.JUNE 10, 1996.   *ADVREP*SC5*








BILL FITTS AUTO SALES, INC.,
                    APPELLANT,

V.

CARRIE A. DANIELS,
                    APPELLEE,






95-1100


APPEAL FROM THE PULASKI COUNTY
CIRCUIT COURT,
NO. 95-2758,
HON. JOHN WARD JUDGE, 


AFFIRMED.



                  Andree Layton Roaf, Justice.


     Appellant, Bill Fitts Auto Sales, Inc. ("Fitts"), appeals from
a judgment awarding appellee Carrie Daniels a surplus resulting
from the repossession and resale of a car which she had purchased
from Fitts under a security agreement.  Fitts contends that the
trial court erred in (1) interpreting Ark. Code Ann.  4-9-504 to
require payment of a surplus to Daniels; (2) not allowing credit
for expenses incurred by Fitts in a subsequent repossession of the
car from the person to whom it had been resold; (3) not finding
that Daniels had waived any right to surplus in the contract she
signed for purchase of the car; and (4) denying Fitts's motion to
dismiss for lack of sufficient evidence to award judgment.  We find
no error, and affirm.  
     Fitts sold a 1992 Mitsubishi Galant to Daniels for $10,500, on
February 22, 1993.  Daniels made a down payment of $6,500 and
financed the remainder at 24 payments of $180.95 each.  After
Daniels missed a few payments, Fitts repossessed the car on
December 1, 1993.  Fitts paid off the recourse debt of $2941.81 and
incurred the following expenses in connection with the
repossession: $300 repossession fee, $300 discount fee, $251.11
commission, $327.45 get ready fee, $100 detail fee and a $100 lot
fee.
     Fitts then resold the automobile to Joyce Harris on January 3,
1994, for $8950.  Harris paid a $1500 down payment but never made
any further payments, and the car was again repossessed within a
month.  Fitts incurred costs attributable to Harris's repossession
and paid off Harris's recourse debt of $6997.34.
     Daniels filed suit seeking the surplus from the resale of the
car to Harris.  Daniels sought the difference between the $8950
resale price to Harris, and the $2941.81 Daniels owed when the car
was repossessed from her, pursuant to Ark. Code Ann.  4-9-504(2)
(Repl. 1991).
     After a non-jury trial, the trial court entered judgment
against Fitts.  The trial court determined the difference between
the resale to Harris and the debt Daniels owed on the car to be
$6008.19 ($8950 minus $2941.81) and allowed Fitts only the expenses
of $1378.56 incurred in the repossession from Daniels, in awarding
judgment in favor of Daniels for $4629.63.  From that determination
comes this appeal.  
     Fitts first argues that the trial court erred in interpreting
the following provision contained in Ark. Code Ann.  4-9-
504(2)(Repl. 1991):
            (2) If the security interest secures an
          indebtedness, the secured party must account
          to the debtor for any surplus, and, unless
          otherwise agreed, the debtor is liable for any
          deficiency.  But if the underlying transaction
          was a sale of accounts or chattel paper, the
          debtor is entitled to any surplus or is liable
          for any deficiency only if the security
          agreement so provides. [emphasis added].

Fitts contends that the word "account" does not mean "pay" and
requires only that a post-disposition statement of charges and
credits be submitted to the debtor and that this was done. 
     Arkansas Code Annotated  4-9-504 deals with a secured party's
right to dispose of collateral after default.  Section 4-9-504(1)
provides that a secured party after default may sell the
collateral, and that the proceeds of the disposition shall be
applied, first, to the reasonable expenses of retaking, holding,
and preparing the collateral for sale, next to the satisfaction of
the indebtedness under which the disposition is made, and third to
the satisfaction of indebtedness secured by any subordinate
security interest in the collateral.  We must thus determine what
is required of a secured party, such as Fitts, if there are funds
remaining from the proceeds of disposition of the collateral after
payment of the credits allowed in  4-9-504(1).
     The first rule in considering the meaning of a statute is to
construe it just as it reads, giving the words their ordinary and
usually accepted meaning in common language. Henson v. Fleet
Mortgage Co., 319 Ark. 491, 892 S.W.2d 250 (1995).  However, we are
not limited to the dictionary definition of a term, as Fitts would
suggest.  The basic rule of statutory construction to which all
other interpretive guides defer is to give effect to the intent of
the legislature. McCoy v. Walker, 317 Ark. 86, 876 S.W.2d 252
(1994).  In interpreting a statute and attempting to construe
legislative intent, the appellate court looks to the language of
the statute, the subject matter, the object to be accomplished, the
purpose to be served, the remedy provided, legislative history, and
other appropriate means that throw light on the subject. Id.
     We first note that section 4-9-504(2) further provides that a
debtor is not entitled to any surplus from the sale of accounts or
chattel paper unless the security agreement so provides.  This is
surely strong, if not conclusive, indication that a debtor is
entitled to the surplus from the sale of other collateral. 
Moreover, the proper procedure for post-sale accounting pursuant to
U.C.C.  9-504 (2) has been described as follows:  
     When a duty to account exists, the proceeds of the
     foreclosure sale of the collateral are to be applied to:
     (a) liquidation expenses, (b) payment of debt, (c)
     subordinate security interests, (d) payment of remaining
     surplus.

9A Ronald A. Anderson, Anderson on the Uniform Commercial Code, 

 9-504. (3d ed. 1994) (emphasis added).  Anderson further provides
that once the creditor has obtained satisfaction of his or her debt
by the disposition of the collateral, the creditor cannot recover
more than the deficiency from the debtor.  The trial court thus
correctly determined that the requirement to account for any
surplus included the payment of the surplus to Daniels.
     Fitts next contends that the trial court erred in not
considering and crediting Fitts with the expenses of the Harris
repossession.
     Arkansas Code Annotated  4-9-504(1)(a) provides that
reasonable expenses of retaking, holding, preparing for sale or
lease, selling, leasing, and the like shall be deducted from the
proceeds of the disposition of the collateral.  Section 4-9-504(3)
further provides that:
            (3) Disposition of the collateral may be by
          public or private proceedings and may be made
          by way of one or more contracts.  Sale or
          other disposition may be as a unit or in
          parcels and at any time and place and on any
          terms, but every aspect of the disposition
          including the method, manner, time, place, and
          terms must be commercially reasonable.

Ark. Code Ann.  4-9-504(3) (Repl. 1991) (emphasis added).  Fitts
argues that the expenses incurred after the sale to Joyce Harris
should be deducted from the proceeds of the sale to her because
collateral may be disposed of by way of "one or more contracts,"
and it took more than one contract to effectively dispose of the
collateral.
     According to Fitts, the Harris repossession costs include a
$500 "quick note" that was not collected, $300 repossession fee,
$1,254.87 commission, $521.25 dealer discount, and a $367.45 get
ready fee along with a payoff of Harris's debt of $6997.34.  Fitts
argues that the transaction with Harris was but another expense on
the continuum that started when the car was repossessed from
Daniels and the Harris expenses should be counted as reasonable
expenses under Ark. Code Ann.  4-9-504(1)(a).  Fitts asserts that
"disposition" should be construed as a final parting with the
collateral by the secured creditor.  This argument is also without
merit.
     According to Anderson, supra, not every transfer of collateral
by a secured party is a disposition for the purposes of the section
in question.  However, after a creditor has repossessed the
collateral, a delivery of it to a third person "with the
expectation that such person will ultimately pay the balance due"
is a "disposition" within U.C.C.  9-504 of which notice of sale
must be given, even though no title is transferred to such third
person at the time of delivery. 9A Ronald A. Anderson, Anderson on
the Uniform Commercial Code  9-504 (3d ed. 1994); First City Bank-
Farmers Branch, Tex. v. Guex, 677 S.W.2d 25 (Tex. 1984).
     The provision for disposition of the collateral by way of one
or more contracts clearly pertains to collateral involving more
than one unit.  To accept Fitts's construction of the statute would
result in a defaulting debtor being liable for any subsequent
buyer's default until that buyer's contract was fully paid. 
Clearly, the car was delivered by Fitts to Harris with the
expectation that she would ultimately pay the balance due; the
collateral was thus disposed of pursuant to  4-9-504.
     Fitts contends that the trial court erred when it did not find
that Daniels waived the right to any surplus when she signed the
contract for the purchase of the vehicle.  The contract between
Daniels and Fitts contained the following clause:
          REPOSSESSION
          
          You can repossess the property if I default. 
          I'll turn it over to you upon request.  You
          may enter my property to get the property so
          long as you do it peacefully.  You have the
          right to sell the property to cover my
          obligations and I'll also pay for your costs
          of retaking it, holding it, preparing it for
          sale [sic] and the like.  If the sale doesn't
          cover all that I owe, I'll still be
          responsible for the difference.  But I can
          still recover the property before you sell it
          by paying any amount due and any charges you
          are entitled to.

Fitts argues that Daniels is bound by the contract and that the
contract does not provide that she get any surplus.  This argument
is also without merit.
     Arkansas Code Annotated  4-9-501 provides:
          (3) To the extent that they give rights to the
          debtor and impose duties on the secured party,
          the rules stated in the subsections referred
          to below may not be waived or varied except as
          provided with respect to compulsory
          disposition of collateral (4-9-504, and
          4-9-505), and with respect to redemption of
          collateral (4-9-506), but the parties may by
          agreement determine the standards by which the
          fulfillment of these rights and duties is to
          be measured if such standards are not
          manifestly unreasonable:

           (a) Section 4-9-502(2) and 4-9-504(2) insofar
          as they require accounting for surplus
          proceeds of collateral[.]

(Emphasis added.)  The debtor's rights to a surplus from the
disposition of the collateral cannot be waived even by an express
agreement. 68A Am. Jur. 2d Secured Transactions  693 (1993).
     Fitts's contract with Daniels was silent regarding the
possibility of a surplus.  However, Daniels's right to a surplus
granted by Ark. Code Ann.  4-9-504(2), cannot be waived even by an
express agreement to do so.
     Fitts finally contends that there was insufficient evidence
for the court to grant judgment to Daniels.  He argues that Daniels
failed to prove her case and, therefore, it was error not to grant
Fitts's motion to dismiss.  
     Fitts argues, in essence, that the trial court erred when it
denied the motion to dismiss because there was no sufficient
evidence in the record, placed there by Daniels, because Daniels
could not testify to the precise amount of the debt owed by her or
the expenses incurred by Fitts with the repossession and resale,
even though she had obtained this information in discovery. 
Daniels's testimony, as well as the contract itself, provided
evidence that Daniels paid $6,500 down on a $10,500 automobile. 
Yvonne Fitts, wife of Bill Fitts, was called as a witness by
Daniels and confirmed without objection, that there was $2,941
owing on the automobile.  She also testified on direct examination,
again without objection, to the costs incurred in the repossession
from Daniels.
     Furthermore, Fitts waived his claim of error because, after
Daniels rested her case and Fitts's motion to dismiss was denied,
he went forward with his proof.  Both Fitts and his wife testified
again, providing the amount of the payoff for Daniels's loan and
the costs incurred in repossessing the car from Daniels during
their testimony.  If, after the denial of a request for a directed
verdict or a dismissal, a defendant introduces evidence which,
together with that introduced by the plaintiff, is legally
sufficient to sustain a verdict, he waives his claim of error by
the court in refusing to direct a verdict, or dismiss, at the close
of the plaintiff's case.  Shamlin v. Shuffield & Garot, 302 Ark.
164, 787 S.W.2d 687 (1990); Higgins v. Hines, 289 Ark. 281, 711 S.W.2d 783 (1986); Kansas City Southern Ind., Inc. v. Stewman, 266
Ark. 544, 587 S.W.2d 12 (1979).
     There was clearly sufficient evidence upon which the trial
court could base its judgment, without having to resort to
conjecture or speculation.  See Aronson v. Harriman, 321 Ark. 359,
901 S.W.2d 832 (1995).
     Affirmed.
     Glaze, J., concurs; Dudley, J., not participating.