Bokker v. Hill

David BOKKER d/b/a Bokker's Used Cars v.
Odell HILL and Roy Peterson d/b/a Peterson
Glass Company

96-481                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                Opinion delivered March 24, 1997


1.   Liens -- automobile repairmen given absolute lien subject to automobile
     vendor retaining title. -- Under Ark. Code Ann.  18-45-201
     (1987), automobile repairmen are given an "absolute lien" on
     a vehicle for repairs and storage for which payment was not
     made; under Ark. Code Ann.  18-45-202 (1987), a mechanic's
     lien is subject to the lien of an automobile vendor retaining
     title.

2.   Liens -- Act 737 of 1991 directly at odds with statute providing for
     priority of vendor's liens. -- Act 737 of 1991, Ark. Code Ann. 
     27-14-903 (Repl. 1994), which made the use of a title-
     retention note to secure an interest in a vehicle a Class C
     misdemeanor, was directly at odds with Ark. Code Ann.  18-45-
     202(b), which granted priority to a vendor only if the vendor
     kept possession of the title.

3.   Liens -- Ark. Code Ann.  18-45-202(b) nullified as statutory basis for
     establishing superiority of vendor's lien. -- Where Ark. Code Ann. 
     18-45-202(b) plainly required an automobile vendor to keep the
     certificate of title in his possession in order to preserve
     priority over a mechanic's lien in violation of Act 737 of
     1991, Ark. Code Ann.  18-45-202(b) was essentially nullified
     as a statutory basis for establishing the superiority of a
     vendor's lien.

4.   Courts -- supreme court is loath to engage in judicial legislation. --
     Noting that for it to hold that a vendor had priority over a
     mechanic without clear statutory authority establishing the
     benchmark for that priority would amount to judicial
     legislation, the supreme court declared that it has been loath
     to engage in judicial legislation in the past and declined to
     do so in the instant case.

5.   Liens -- no statutory authority giving vendor's lien priority over
     mechanic's lien -- case affirmed. -- Because there was no statutory
     authority giving appellant's vendor's lien priority status
     over appellee's mechanic's lien, the supreme court affirmed
     the case.

6.   Appeal & error -- issue not preserved for review. -- Where the record
     revealed no reference to the issue of joint and several
     liability being raised to the trial judge, the issue was not
     preserved for review.

     Appeal from Cross Circuit Court; Olly Neal, Judge; affirmed.
     John Bridgforth, P.A., for appellant.
     Richard L. Proctor, for appellee.

     Robert L. Brown, Justice.
     Appellant David Bokker d/b/a Bokker's Used Cars appeals a
judgment in favor of appellee Roy Peterson d/b/a Peterson Glass
Company relating to the priority between his vendor's lien on a
motor vehicle and Peterson's mechanic's lien on the same vehicle. 
The issue concerns statutory interpretation and, specifically, the
effect of Act 737 of 1991, now codified at Ark. Code Ann.  27-14-
903(c)(1) (Repl. 1994), on lien priorities.  We agree with the
trial judge that Bokker failed to satisfy the requirements of the
applicable lien-priority statute (Ark. Code Ann.  18-45-202(b)
(1987)), and we affirm.
     The facts in this case are really not in dispute.  On May 18,
1994, Bokker entered into a retail installment contract in Wynne
with Odell Hill for the sale of a 1986 Toyota Celica.  Bokker
agreed to finance the purchase price of the car.  The agreed
purchase price was $4,995, with $1,700 down and the balance ($3,295
plus other costs) payable in 18 monthly installments of $204.92
each.  The certificate of title for the car, which was issued in
Hill's name, showed Bokker as the first lienholder.  On December
19, 1994, Peterson did repair work to the broken rear window of the
Toyota Celica at a cost of $590.17.  Because there was no payment
for the work done, Peterson stored the car on his business premises
at a rate of $10 per day.  On January 20, 1995, Hill made his last
payment to Bokker on the car and later defaulted.  The car remained
on Peterson's business premises.  Bokker demanded return of the
car, but Peterson refused.
     Bokker then filed suit against Hill and Peterson.  He claimed
damages against Hill for breach of contract in the amount of
$2,258.29 and for possession of the car so that it could be sold
and the proceeds applied to his lien.  He also sought $1,000
against Peterson for wrongful detention of the car.  Peterson
answered and asserted that Bokker's lien was inferior to his own
mechanic's lien.  He further asserted that the car should be sold
with the proceeds going first to satisfy his mechanic's lien in the
amount of $590.17 plus storage fees and next to satisfy Bokker's
lien.  In addition, Peterson filed a counterclaim against Bokker on
the basis that he (Peterson) had a priority lien.  Bokker answered
the counterclaim and stated that his vendor's lien was superior. 
An agreed order was entered by the trial judge for the sale of the
Toyota Celica with the proceeds to be paid into the registry of the
court for distribution after the trial judge decided the priority
of the two liens.  However, the parties did not comply with this
order.
     A bench trial followed on the priority question.  Bokker
testified that he did not retain the certificate of title, because
that would have been illegal under Arkansas law, but that he did
show himself as first lienholder on the certificate and, thus,
perfected his lien.  He argued that this was sufficient to give him
priority.  Peterson testified that he had done the repair work on
the car and stored it and that his mechanic's lien was superior. 
The trial judge ruled from the bench in favor of Peterson, and
judgment was entered accordingly.  The judge found that Peterson
had a first lien of the car in the amount of $915 ($590.70 for
window repair and $325 for storage) and that Bokker's vendor's lien
in the amount of $2,962.01 was a subordinate and inferior lien. 
The basis for the judgment was that Bokker had not retained title
to the vehicle, as required by Ark. Code Ann.  18-45-202(b)
(1987).
     Bokker first contends on appeal that the trial judge erred
when he construed the pertinent statutes to favor Peterson.  We
refer first to the statutes relating to mechanic's liens. 
Automobile repairmen are given an "absolute lien" on a vehicle for
repairs and storage for which payment was not made.  Ark. Code Ann.
 18-45-201 (1987).  The next statute in the Code, codified at Ark.
Code Ann.  18-45-202 (1987), sets out the priority of mechanic's
liens vis- -vis vendor liens:
          (b) The lien provided for in this subchapter shall
     be subject to the lien of a vendor of automobiles,
     trucks, tractors, and all other motor propelled
     conveyances retaining title therein, for any claim for
     balance of purchase money due thereon.  (Emphasis ours.)
In 1991, Act 737 was enacted into law, which made retention-of-
title notes to secure an interest in a vehicle a Class C
misdemeanor.  Ark. Code Ann.  27-14-903 (Repl. 1994).  Act 737
defined a title-retention note as:
     [A]ny instrument that grants the purchaser the right to
     possession and use of the vehicle, but withholds
     assignment of ownership on the existing certificate of
     title and its delivery to the purchaser, until full
     payment has been made by the purchaser, thereby thwarting
     the purchaser's ability to comply with subsection (b) of
     this section.
Ark. Code Ann.  27-14-903(c)(1)(B) (Repl. 1994).  By making
retention of title a Class C misdemeanor, Act 737 was directly at
odds with  18-45-202(b), quoted above, which grants priority to a
vendor only if the vendor keeps possession of the title.
     Bokker does not make the argument that Act 737 impliedly
revoked the title-retention requirement of  18-45-202.  Rather, he
argues that he perfected his vendor's lien by placing it on the
certificate of title, which was delivered to Hill, and that, in
essence, he did all that he could do under the law.  We are
confronted, nonetheless, with a priority-of-lien statute --  18-
45-202(b) --  which plainly requires a vendor to keep the
certificate of title in his possession in order to preserve
priority over a mechanic's lien.  Admittedly, were Bokker to have
done that, he would have been in violation of Act 737.  Thus,  18-
45-202(b) has essentially been nullified as a statutory basis for
establishing the superiority of a vendor's lien.
     Nevertheless, Bokker urges us to give his vendor's lien
priority.  But for us to hold that a vendor had priority over a
mechanic without clear statutory authority establishing the
benchmark for that priority would amount to judicial legislation. 
We have been loath to engage in judicial legislation in the past
and decline to do so in the instant case.  See, e.g., Sebastian
County Chapter of the Am. Red Cross v. Weatherford, 311 Ark. 656,
846 S.W.2d 641 (1993); Trout Brothers, Inc. v. Emison, 311 Ark. 27,
841 S.W.2d 604 (1992); Pickens-Bond Construction Co. v. Case, 266
Ark. 323, 584 S.W.2d 21 (1979); Vault v. Adkisson, 254 Ark. 75, 491 S.W.2d 609 (1973).
     We are mindful of the fact that Act 737, in rendering title-
retention notes illegal, also provides that it is not intended to
limit the rights of a lienholder to perfect or record his security
interest.  Ark. Code Ann.  27-14-903(d) (Repl. 1994).  Perfection
of a security interest, however, does not automatically equate to
priority status over competing lienholders.  The Uniform Commercial
Code, for example, gives a mechanic's lien priority over a
perfected security interest in goods unless a "statute expressly
provides otherwise."  Ark. Code Ann.  4-9-310 (Repl. 1991).  Here,
the existing statute on point --  18-45-202(b) -- would give a
vendor's lien priority only if the vendor retained title.  But,
again, we will not attempt to resolve this statutory quandary, and
we conclude that this is a matter for the General Assembly to
address and clarify.  Hence, because there is no statutory
authority giving Bokker's vendor's lien priority status over
Peterson's mechanic's lien, we must affirm.
     For his second point, Bokker claims that his judgment of $400
in attorney's fees and $190.85 in costs should be awarded jointly
and severally against Hill and Peterson, rather than solely against
Hill.  We disagree.  In reviewing the record of this matter, we
find no reference to the issue of joint and several liability being
raised to the trial judge.  Accordingly, the issue is not preserved
for our review.  Douthitt v. Douthitt, 326 Ark. 372, 930 S.W.2d 371
(1996); Betts v. Betts, 326 Ark. 544, 932 S.W.2d 336 (1996).
     Affirmed.
     Glaze, J., dissents.

                  Tom Glaze, Justice, dissents.

     Section 18-45-202(b) (1987) provides that the lien of a
dealer/vendor, retaining title for an automobile, is superior to a
repairmen's lien.  Act 737 of 1991 was later enacted prohibiting a
vendor or dealer selling cars from using title-retention notes. 
The question arises in this case whether, by its passage of Act
737, the General Assembly intended to affect a dealer's or vendor's
lien rights established in  18-45-202.  The answer is no.
     In paragraph (d) of Act 737, the General Assembly provided the
following:
          This section [Act] is not intended to limit the
     rights of a lienholder to perfect or record his security
     interest in a motor vehicle pursuant to the provisions of
     Ark. Code Ann.   27-14-802 and -803.  (Emphasis added.)
     Section 27-14-801 provides that no conditional sale contract
or lien is valid against an owner's (purchaser's) creditors
acquiring a lien until other subchapter requirements are met. 
Subchapter  27-14-802(a), in pertinent part, provides that a
dealer/vendor must deposit with the State Motor Vehicle Office a
copy of the instrument creating and evidencing a lien with the last
certificate of title issued for the vehicle.  The Office then
endorses the date and hour when the instruments are filed and
issues a new certificate of title with the name of the new owner
and statement of all liens.  Section 27-14-806 then provides a
vendor lienholder two options in recording his lien -- the lien may
be recorded on the manufacturer's statement of origin or on an
existing certificate of title.
     Here, Bokker Used Cars complied fully with the foregoing
provisions when perfecting its lien.  On May 18, 1994, Odell Hill
purchased a Toyota by signing a retail installment contract giving
a security interest to Bokker Used Cars.  Upon Bokker filing the
necessary documents with the State, Hill received his new
certificate of title dated July 5, 1994, showing him as owner and
Bokker's Used Cars as first lienholder.  See attached certificate
of title designated as "Plaintiff [Bokker's] Exhibit No. 2."
     In conclusion, I am concerned that today's decision may have
unintended adverse effects on existing liens perfected by Arkansas
dealers and other persons selling cars.  Obviously, the General
Assembly, in passing Act 737, never intended that dealers or
vendors selling cars must still comply with the title-retention
language in  18-45-202(b) before they can perfect their lien. 
Such an interpretation of these provisions would be absurd and
would require such vendors to violate the 1991 law against using
title-retention instruments.  
     The General Assembly made it perfectly clear in Act 737 that
all it intended was to prohibit dealers from retaining title to a
sold vehicle until the purchaser paid the note or contract in full. 
In doing so, it specifically stated it did not intend to limit a
dealer's/lienholder's rights to perfect its security interest.
     In Act 737, the General Assembly provided that all laws and
parts of laws in conflict with the Act are repealed.  That is
precisely what occurred here -- the "retaining title" phrase in 
18-45-202(b) is in conflict with Act 737 and in particular with
paragraph (d) of that Act.  In short, Bokker's Used Cars complied
with Arkansas's existing vendor-lien laws, and Bokker's lien rights
should be enforced.  The majority court's interpretation of those
provisions to the contrary is seriously flawed, and most likely
will prove to have a ripple effect on other vendor's who have
appropriately followed the same lien procedures Bokker's Used Cars
did in this cause.