Court Opinion

ID: 9640537
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:07:49.500937+00
Date Added: 2024-06-11T18:10:30.591896
License: Public Domain

John I. Purtle, Justice, dissenting. The instrument in question clearly reflects a sale and is therefore usurious. It looks like a sale; it sounds like a sale; it has all of the attributes of a sale. The appellee admitted that at the end of the lease period the property would belong to the lessee, provided she paid him $ 1.00. This amount was not mentioned anywhere in the contract. Obviously, neither party anticipated that these items were to be returned to the “seller” or “lessor” upon the termination of the contract. The instrument in question provided that if the appellant made the total payments on her refrigerator she would have paid about $930.00. She had paid roughly $700.00 at the time she stopped making payments. The cash price of the refrigerator was listed at $600.00. The cash price of the microwave was $250.00; she paid $ 190.00 on the agreed price of $400.00. The duration of the contract was for fifty-two weeks on the refrigerator and forty weeks on the microwave. This transaction clearly was a sale and was consequently usurious. The transfer instruments in this case provided that, at the end of the payment schedule, the title to the property would be transferred to the appellant. I believe that fact alone is sufficient to warrant a holding that this was a sale and not a lease. This factor appears to have been of particular significance in our decisions in Hill v. Bentco Leasing, Inc., 288 Ark. 623, 708 S.W.2d 608 (1986), and Bell v. Itek Leasing Corp., 262 Ark. 22, 555 S.W.2d 1 (1977). The instrument of agreement between the parties provided that the lessee was responsible for the loss, theft, or destruction of the property from any and all causes whatsoever. The purchaser was obligated to pay the full price, even if the property were destroyed by an act of God. Also, if the property were damaged to an extent less than its full value, the agreement provided that the renter agreed to pay the owner for partial damage or destruction to the property. The majority opinion employs the test of Professor Peter Coogan to determine whether this is a lease or sale. Professor Coogan states: Where the lessee has agreed to pay an amount substantially equal to the value of the goods of which he is to become the owner (or has the option to become the owner), the parties have entered into a conditional sale agreement. The transaction at issue in this appeal could not be more accurately described than by these words of Professor Coogan. The majority also apply the following three point test to determine whether a transaction is a sale: (1) There must be an agreement by the lessee to pay the lessor a set amount; (2) such amount must be equivalent to the value of the leased goods; and (3) the lessee must become the owner or have the option to become the owner of the leased goods. If any one of these elements is lacking, the lease is not a financing agreement but a true lease. None of these elements is lacking in the case before us. There was an agreement to pay a stated amount; that amount was equivalent to the value of the goods; the lessee was to become the owner at the end of the payment period. This instrument meets all three of the above requirements. In keeping with the rationale of Hill v. Bentco and Bell v. Itek, I see no reason why a sale should not be called a sale. I would reverse and remand.