Associates Commercial Corp. v. Francisco

• Decision Date: 09 December 1983
• Citation: 667 S.W.2d 481
• Parties: ASSOCIATES COMMERCIAL CORPORATION, Plaintiff-Appellant, v. William J. FRANCISCO and wife, Penny Francisco, and John Barb, Defendants-Appellees. 667 S.W.2d 481
• Court: Tennessee Court of Appeals

Page 481

667 S.W.2d 481

ASSOCIATES COMMERCIAL CORPORATION, Plaintiff-Appellant, v. William J. FRANCISCO and wife, Penny Francisco, and John

Barb, Defendants-Appellees.

667 S.W.2d 481

Court of Appeals of Tennessee,

Eastern Section.

Dec. 9, 1983.

Permission to Appeal Denied by

Supreme Court April 2, 1984.

James A. Matlock, Jr., and Gene A. Stanley, Jr., Knoxville, for plaintiff-appellant.

David S. Haynes, Bristol, for defendants-appellees.

OPINION

FRANKS, Judge.

Defendant, John L. Barb's artisan's lien was determined by the chancellor to be superior to plaintiff's security interest in a 1977 Peterbilt truck tractor, owned by W.J. Francisco. Plaintiff has appealed.

In June, 1981, plaintiff financed for Francisco the purchase of the tractor-trailer and perfected its security interest by a notation on the certificate of title. Subsequently, Francisco ordered repairs by defendant, Barb, who made certain repairs but subcontracted some repairs to other repairmen.

Barb retained possession of the tractor following the repairs and asserted a common law and statutory mechanic's lien. While the tractor was in Barb's possession he used it in his trucking business. The chancellor determined Barb had driven the tractor 35,000 miles while it was in his possession, and the issue as to the value of this usage was referred to the master, who determined the value to be $3,500.00. This amount was affirmed by the chancellor who reduced Barb's lien by this amount, ordered the tractor sold and Barb's lien first satisfied from the proceeds of sale.

In order to retain priority over a previously perfected security interest, the repairman must retain possession of the property. Forrest Cate Ford, Inc. v. Fryar, 62 Tenn.App. 572, 465 S.W.2d 882 (1970). In this regard, plaintiff insists that Barb relinquished possession within the meaning of the lien when he turned the tractor over to other mechanics for repairs. It is generally held that constructive possession preserves an artisan's lien, as where the vehicle is permitted to leave the repairman's actual possession under an agreement for its return. 61A C.J.S., Motor Vehicles, Sec. 747(1); Maccar Trucks v. Gorenstein, 248 N.Y.S. 231, 139 Misc. 681 (App.Div.1930). We hold that Barb maintained constructive possession of the tractor while permitting others to make repairs in furtherance of Barb's obligation.

Plaintiff also argues Barb's use of the tractor amounted to a conversion and that a lien may be waived by wrongful conversion of the property by the lienor, citing 53 C.J.S., Liens, Sec. 17(4). The statement in C.J.S. is based on an old California case, Williams v. Ashe, 111 Cal. 180, 43 P. 595 (1885). However, the modern California rule discussed in Gardena Valley Airport, Inc. v. All American Sports Enterprises, 230 Cal.App.2d 478, 41 Cal.Rptr. 93 (1964), is stated thusly: In order for a lien to be extinguished by wrongful conversion, the lienholder must commit some act inconsistent with the continuance of the lien equivalent to its denial or repudiation. The court further stated that an act done to preserve and protect the collateral, so that it will remain subject to the lien, is not a wrongful conversion. ¹

The evidence does not establish a waiver of the lien in the instant case and, unlike some jurisdictions, no provision is...