Opinion ID: 1759569
Heading Depth: 1
Heading Rank: 3

Heading: Attachment of equitable lien

Text: As its second point on appeal, C.A.R. Transportation argues that the trial court correctly determined that it was entitled to an equitable lien on excess proceeds from the foreclosure sale that was held in trust by the Seays' counsel, but erred in finding that the lien attached as of the date of the commencement of the trial in this matter. According to C.A.R. Transportation, the lien, which was inchoate as of the date that notice of it was filed, became choate upon entry of the judgment; thus, the lien relates back to the date of the second amended counterclaim of January 27, 2004, and should attach from that date. The Seays counter that the trial court erred in granting an equitable lien, as it was nothing more than an attempt by C.A.R. Transportation to obtain a prejudgment hold and attachment on property that belonged to them. The Seays point out that at the time C.A.R. Transportation filed its counterclaim seeking the equitable lien, it held no judgment against the Seays on its conversion claim, nor did it seek any judgment on the lien prior to trial. Alternatively, the Seays argue that if this court determines that the trial court properly granted the equitable lien, the date of attachment should be the date of the judgment entered in C.A.R. Transportation's favor. While we do not agree with the Seays' claim that the trial court erred in granting an equitable lien, we do agree that the date of attachment for that lien should coincide with the trial court's judgment entered on February 15, 2005. An equitable lien is a right to have a demand satisfied from a particular fund or specific property. First Nat'l Bank of DeWitt v. Cruthis, 360 Ark. 528, 203 S.W.3d 88 (2005). There, we further elaborated that an equitable lien has been defined as a remedy that awards a nonpossessory interest in property to a party who has been prevented by fraud, accident, or mistake from securing that to which he was equitably entitled. See id. The court of appeals thoroughly addressed the concept of an equitable lien and explained that: [A]n equitable lien can arise absent an express or implied agreement. An equitable lien may arise independently of any express agreement; it may arise by implication from the conduct and dealings of the parties. As the rule is frequently stated, in the absence of an express contract, an equitable lien, based on those maxims which lie at the foundation of equity jurisprudence, may arise by implication out of general considerations of right and justice, where, as applied to the relations of the parties and the circumstances of their dealings, there is some obligation or duty to be enforced. However, the tendency is to limit rather than extend the doctrine of constructive liens, and, in order that such a lien may be claimed, either the aid of a court of equity must be requisite to the owner so that he can be compelled to do equity or there must be some element of fraud in the matter as a ground of equitable relief. Such a lien will not be implied and enforced where the facts and circumstances present no grounds for equitable relief, and there is an adequate remedy at law. Mitchell v. Mitchell, 28 Ark.App. 295, 302-03, 773 S.W.2d 853, 857 (1989) (quoting 53 C.J.S. Liens § 8, at 467-468 (1987) (footnotes omitted)). Here, C.A.R. Transportation made its claim for an equitable lien on the Seays' foreclosure sale proceeds in its counterclaim filed January 27, 2004. The claim was made, however, in conjunction with its counterclaim for conversion. As noted above, an equitable lien is the right to have a demand satisfied from a particular fund. C.A.R. had no right to any judgment against the Seays until the circuit court found that Michael was liable for conversion. For that reason, the circuit court erred in imposing the equitable lien as of the date of trial, rather than as of the date of the judgment. Before leaving this point, we note that the cases relied on by C.A.R. Transportation to support its argument that the lien became choate upon entry of judgment, but should relate back to the date of filing of the amended counterclaim, are inapposite. At issue in Thorn v. Ingram, 25 Ark. 52 (1867), was the applicability of an equitable lien in a land transaction. In both Gray v. Bank of Hartford, 137 Ark. 232, 208 S.W. 302 (1918) and Harrison v. Trader, 29 Ark. 85 (1874), clerks issued writs that were served by sheriffs. In contrast, C.A.R. Transportation sought an equitable lien in personal property not related to the conversion claim, and it never sought a pretrial order or a writ of service prior to the date of the attachment of the lien. Thus, because any interest that C.A.R. Transportation had in the lien attached once a judgment was entered in its favor against Michael Seay, the attachment begins upon entry of that judgment. Accordingly, we affirm the entry of the equitable lien but modify its date of attachment to February 15, 2005.