Court Opinion

ID: 9759866
Source: CourtListenerOpinion
Date Created: 2023-08-29 00:31:12.075188+00
Date Added: 2024-06-11T07:29:05.633872
License: Public Domain

John I. Purtle, Justice, dissenting. I disagree with the majority because I think it has unduly complicated the procedure for repossession of chattels. Also it has added trouble, time and expense to the debtor’s already existing problems. Arkansas Stat. Ann. § 85-9-504 (1) (a) (Supp. 1988), a part of the Uniform Commercial Code which has been adopted in Arkansas, allows the expense of retaking, holding, preparing for sale and selling collateral to be deducted from the proceeds of the sale before crediting the balance to the debtor’s account. The debtor is then liable for any remaining deficiency. We have not considered the factual situation before us in any previous opinion. The question before us is whether the difference in the trade-in allowance and wholesale price received by the dealer is a commercially reasonable expense incurred in the repossession and disposition of the collateral. There is no dispute that appellant received the required notice of intended sale of his repossessed vehicle. Neither is there any dispute that he did not receive notice of the proposed sale of the trade-in unit. According to the provisions of Ark. Stat. Ann. § 85-9-504 (3) (Supp. 1983) the sale or disposition of the collateral may be as a unit or in parcels “but every aspect of the disposition including the method, manner, time, place, and terms must be commercially reasonable.” Brown v. Ford, 280 Ark. 261, 658 S.W.2d 355 (1983). It is common practice for automobile dealers to either discount the list price of a vehicle or make an over-allowance for the buyer’s trade-in vehicle. In the case before us the creditor listed the repossesed vehicle at a price higher than the remaining balance of the debtor and also made an over-allowance for a trade-in on the repossessed unit. If the dealer had allowed the new buyer $1,200 trade-in, which he now argues is the real value of the vehicle, the deficiency would have been obvious and a proper charge against the debtor. However, when the contract shows on its face that the repossessed collateral sold for a stated price I think the debtor is entitled to credit in that amount. If creditors were allowed to make just any allowances for trade-ins it could easily lead to abuse. A dealer or his agent could sell at any price to a relative or friend and the debtor would have to pay the difference. The debtor had the right to rely on the dealer to dispose of his repossessed vehicle in a commercially reasonable manner. An inflated trade-in is not a commercially reasonable sale especially when the debtor is the one who eventually pays the difference. In order to avoid what may seem to be a pitfall a creditor need only make the record speak the facts. This over-allowance is another incident of doing business and is not a part of the cost or expense of retaking and disposing of the collateral. A rule applied to all automobile sales and repossessions alike is not discriminatory. The argument that this rule would disrupt the repossession procedures and cost the debtor in the long run is not logical. I would require the sale transaction disposing of a repossessed item to speak the truth. The procedure mandated by the majority opinion will require a debtor who has already lost his property because he could not pay for it to go deeper into debt by hiring a lawyer or getting stuck for an over-allowance on a trade-in or both. Adkisson, C.J., joins in this dissent.