No conditional sale contract, conditional lease, chattel mortgage, or other lien or encumbrance or title retention instrument upon a vehicle, of a type subject to registration under the laws of this state other than a lien dependent upon possession, is valid as against the creditors of an owner acquiring a lien by levy or attachment or subsequent purchasers or encumbrances, with or without notice, until the requirements of this subchapter have been complied with.
History. Acts 1949, No. 142, § 60; 1951, No. 208, § 1; 1959, No. 307, § 9; 1973, No. 596, § 3; A.S.A. 1947, § 75-160.
Publisher's Notes. Acts 1973, No. 596, § 4, provided that the purpose of the act was to subject mobile homes to the provisions of Acts 1949, No. 142, as amended, in order to remove doubt and uncertainty as to the application of the act to that class of vehicle.
Cross References. Penalty for violation of 1959 amendatory act, § 27-50-305.
Case Notes
Purpose.
Applicability.
Bill of Sale.
Construction with Other Laws.
Foreign Registrations.
Judgment Creditors.
Liens Dependent upon Possession.
Priority of Rights.
Failure to comply with this section does not affect the validity of a lien as between the parties to the transaction; rather, the legislative purpose of the statute is for the benefit of bona fide purchasers. Anderson v. First Jacksonville Bank, 243 Ark. 977, 423 S.W.2d 273 (1968).
This section does not apply to vehicles which are neither registered nor required to be registered. United States v. Westmoreland Manganese Corp., 134 F. Supp. 898 (E.D. Ark. 1955), aff'd, 246 F.2d 351 (8th Cir. Ark. 1957), rev'd, 246 F.2d 357 (8th Cir. 1957).
Arkansas statutes relating to perfection of a security interest in vehicles did not require a creditor to have maintained a copy of the title, nor did statutes provide that the security interest became unperfected if the title could not be located; accordingly, the fact that the creditor could not locate the certificates of title did not affect its security interests. In re Hill, 313 B.R. 290 (Bankr. E.D. Ark. 2004).
Bill of sale by truck owner in payment of attorney's fees was an absolute conveyance of his interest, and not a conditional sale or mortgage. House v. Hodges, 227 Ark. 458, 299 S.W.2d 201 (1957).
Although several provisions of Arkansas law may appear to conflict, a harmonious reading of the provisions of the Arkansas vehicle titling statutes and the Uniform Commercial Code clearly demonstrates that it is the intention of the statutes to allow the security interest in a vehicle perfected in a state other than Arkansas, by required notation on a certificate of title issued by that state, to remain perfected in Arkansas for a period of four (4) months, and so long thereafter as no certificate of title is issued by Arkansas. Meeks v. Mercedes-Benz Credit Corp. (In re Stinnett), 241 B.R. 599 (Bankr. W.D. Ark. 1999).
The fact that the debtor may have avoided higher fees or taxes imposed by the State of Arkansas by registering and titling his vehicles in Oklahoma was of no consequence to the perfection question. Any outcome that would punish the creditor or provide a windfall to the general unsecured creditors or others who have proper notice of the security interest would be inappropriate. Meeks v. Mercedes-Benz Credit Corp. (In re Stinnett), 241 B.R. 599 (Bankr. W.D. Ark. 1999).
As this section does not apply to vehicles which are merely subject to registration but only to vehicles which are actually registered under this subchapter, in order for a judgment creditor to obtain the benefit thereof, as against a mortgagee, it must appear that the vehicle in question was in fact registered at the time the judgment creditor obtained a levy of execution thereon. United States v. Westmoreland Manganese Corp., 134 F. Supp. 898 (E.D. Ark. 1955), aff'd, 246 F.2d 351 (8th Cir. Ark. 1957), rev'd, 246 F.2d 357 (8th Cir. 1957).
Liens Dependent upon Possession.
The possession intended by this section regarding a lien dependent upon possession is such open, notorious possession as will give notice to all the world of the claim. In re Ford, 186 F. Supp. 252 (E.D. Ark. 1960).
Where bank, which had loaned money to bankrupt, failed to record chattel mortgage on truck given as security, but held certificate of title on truck, its lien of encumbrance was of no effect against subsequent creditors, since mere possession of certificate of title cannot be said to be a lien dependent on possession within the meaning of this section. In re Ford, 186 F. Supp. 252 (E.D. Ark. 1960).
The lien rights of a holder of retained title for sale of an automobile are superior to mechanic's lien on the vehicle notwithstanding the vendee who ordered the work may have obtained possession of the car from the mechanic without his knowledge or consent. Goff-McNair Motor Co. v. Phillips Motor Co., 226 Ark. 751, 294 S.W.2d 342 (1956).
Cited: Commercial Credit Corp. v. Associates Disct. Corp., 246 Ark. 118, 436 S.W.2d 809 (1969); Henson v. Government Employees Fin. & Indus. Loan Corp., 257 Ark. 273, 516 S.W.2d 1 (1974); Rex Fin. Corp. v. Marshall, 406 F. Supp. 567 (W.D. Ark. 1976); Hill v. Bank of N.E. Ark., 264 Ark. 412, 572 S.W.2d 150 (1978); In re Frontier Mobile Home Sales, Inc., 635 F.2d 726 (8th Cir. 1980); Brown v. Arkoma Coal Corp., 276 Ark. 322, 634 S.W.2d 390 (1982).