Court Opinion

ID: 9563813
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:47:34.155652+00
Date Added: 2024-06-11T09:18:04.864325
License: Public Domain

YOUNG, J.,
dissenting.
I dissent. The essential facts are not disputed. Plaintiff has a security interest in the truck. The engine failed. After the truck sat idle for roughly two years, a replacement engine was installed. Otto owned the replacement engine and he loaned it to his sons, the principals in the debtor corporation, who installed it in the truck. After the debtor defaulted on its loan from plaintiff, the replacement engine was removed from the truck and returned to Otto. The question is whether the replacement engine acceded to the truck. If it did, plaintiff acquired a security interest in the engine, and its removal constituted a conversion. Because the “usefulness” or “functional” approach adopted by the majority results in Otto’s paying the price for the debtor’s failure to maintain the collateral as required by the security agreement, I would adopt the approach taken in Bank of America v. J.&S. Auto Repairs, 143 Ariz 416, 694 P2d 246 (1985).
Otto correctly argues that the “usefulness” approach overlooks the fact that the truck was useless before installation of the replacement engine. The majority attempts to counter that argument:
“However, Otto himself overlooks the fact that the plaintiffs security interest was in an operable truck and that it was installation of Otto’s engine in the truck that changed it back to the condition it had enjoyed at the time of the creation of the security agreement.” 81 Or App at 375.
I understand that statement to mean that whether a third party who loans property to the debtor loses title to the property depends on whether the debtor has failed to maintain the collateral in the condition it was in at the time of creation of the security interest. Although the debtor’s failure to maintain the collateral in good condition may be relevant as *378between the debtor and the secured party, it has no relevance in applying the doctrine of accession against a third party.
Accession is a “mode of acquiring title.” 1 Am Jur 2d, Accession and Confusion, § 1. The general rule is that “[w]hen goods of two different owners are incorporated together, the title to the resulting product goes to the owner of the principal goods.” Brown, Personal Property, § 25 (1936). A material consideration which modifies the general rule is whether the article attached can be readily removed without damage to the principal property. See cases cited by the majority, 81 Or App at 376. The Arizona Supreme Court concisely stated the purpose behind the doctrine of accession and the equitable considerations that are important in applying the doctrine:
“The doctrine of accession stems from the equitable notion that an owner of a chattel is entitled to his chattel in. the same or improved condition after it has been tampered with by an innocent trespasser. The principle was not designed or intended to give the owner of the chattel more than he had to start with, but it was intended to assure he would not obtain his chattel in a condition of less value or usefulness than before it was changed by a third party.” Bank of America v. J&S Auto Repairs, supra, 143 Ariz at 422.
In the present case, it is safe to say that the truck was essentially useless when it was without an engine and that plaintiffs security interest was diminished accordingly. No one claims that title to the replacement engine passed to the debtor when Otto loaned the engine. The evidence is that the replacement engine is identifiable and severable from the truck. The last and overriding factor is whether the engine could be readily removed without damage to the truck.1 If that can be done, I would follow the approach of Bank of America v. J&S Auto Repairs, supra, and hold that the engine did not accede to the truck. See Zandbergen v. Burch, 33 Or App 363, 576 P2d 812, rev den 283 Or 99 (1978).2 This strikes me as a *379better rule, and it avoids the inequitable result, fashioned by the majority, of penalizing the lender of the engine for the failure of the debtor to maintain the truck.
Because the trial court did not make findings of fact as to whether the engine is removable without damage, I would remand the case to the trial court to make further findings and conclusions and enter judgment accordingly.
Warren and Van Hoomissen, Judges, join in this dissent.

Although there is a deep division in the cases in applying the doctrine of accession, one thing seems clear: it is a question of fact whether or not an article of personal property becomes so affixed to other property as to become an accession. Mack’s Used Cars v. Tenn. Truck & Equipment, 694 SW2d 323, 325 (Tenn App 1985); Annot., 43 ALR2nd 813.

I understand Zandbergen v. Burch, supra, to define accession substantially the same as I would. The confusion stems from Zandbergen’s holding. The court held, arguably mistakenly, that conversion will lie when the plaintiff has a colorable claim to the chattel by virtue of the doctrine of accession, regardless of whether there was an actual accession.