Court Opinion

ID: 9640639
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:10:36.8302+00
Date Added: 2024-06-11T18:10:31.321870
License: Public Domain

Robert L. Brown, Justice, dissenting. The issue in this case is whether an unpaid contractor which constructed the improvements and is a judgment creditor has the right to garnish improvement district assessments collected and held by the county collector. Stated another way, who takes priority to such funds between this contractor with a garnishment lien and the bondholders who claim a prior lien? The opinion says the bondholders have a superior right to the funds but cites no authority to support its holding. I disagree, at least based on what has been presented to this court in this appeal. The opinion is correct that Article 9 of the Uniform Commercial Code does not control this matter. The question is what does. The Improvement District argues that the Central Business Improvement District Act (Ark. Code Ann. § 14-184-101, et.seq. (1987) decides the issue, and the majority apparently agrees. But the sections of the Improvement District Act, which are adduced in the opinion, do not decide the priority question. See Ark. Code Ann. §§ 14-184-120, 14-184-127 (1987). Both sections provide that assessments from the properties benefited by the improvements shall be security for the bondholders and that a lien is created. Neither statute, however, decides the conflicting claims question before the court today. The opinion also concludes that the bond documents restrict the assessed funds. Those documents, however, are not before the court because they were not abstracted by the Improvement District, and this court has made it clear that we will not scour the record for evidence to reverse the trial court. Montgomery v. Butler, 309 Ark. 491, 834 S.W.2d 148 (1992); Boren v. Qualls, 284 Ark. 65, 680 S.W.2d 82 (1984). Moreover, the opinion is merely conclusive in stating that the bond language is restric- ■ tive. No doubt the bond documents provide that special property assessments will be used to pay off the bonds. But it does not necessarily follow that the funds held by the county collector are impervious to a contractor’s lien. In short, the issue still remains of whether assessments held by the county collector can be garnished by the builder of the improvements that benefited the assessed properties. The circuit court, in its judgment, did not rely on Article 9 of the Uniform Commercial Code. Rather, it focused on the inherent injustice created by prohibiting the Improvement District contractor, which built the improvements, from collecting on its judgment. Again, the majority opinion in this case does not resolve the issue of the conflicting liens but only refers to the statutes which state that the bondholders have a lien. In addition, this court does not know precisely what the assessments collected by the county collector are for. The contractor contends that the assessments in the collector’s hands may be for administrative expenses of the Improvement District or operation and maintenance expenses. Hence, we do not know how those assessments are restricted, if at all, under the bond documents; when the assessments were paid; or when the pledge and mortgage lien attaches to the assessments. We are making this decision in the dark. No doubt the security of the bondholders must be protected. However, without a more cogent and persuasive legal or factual basis to reverse the circuit court, I would affirm its judgment.