Court: Court of Appeals of Arkansas; March 4, 1987; Arkansas; State Appellate Court
Beth Gladden Coulson, Judge, presided over an appeal regarding a deficiency judgment of $9,006.67, plus costs, awarded to Associates Commercial Corporation against Garrell L. White. The appellant raised four points for reversal; however, only one was found to have merit, leading to a modification of the judgment. White had entered into a conditional sales contract for a 1980 Kenworth tractor, agreeing to pay a total of $49,126.68 in installments. Following his default after eight payments, Associates initiated a replevin action for the tractor and requested a deficiency judgment if the sale did not cover the debt. The court ordered the tractor's seizure and later awarded possession to Associates.
Subsequent negotiations between White and Associates to redeem the tractor failed, leading to a public sale that fetched $28,000. Following the sale, Associates sought a deficiency judgment, while White counterclaimed for damages due to alleged refusal of redemption. The trial court concluded that Associates sold the tractor in a commercially reasonable manner and that White did not demonstrate any refusal to redeem. Consequently, a deficiency judgment of $9,006.67 was entered, including $1,700 in attorney’s fees for Associates.
On appeal, White contested the commercial reasonableness of the sale, claimed entitlement to damages, argued against the admission of a proof of publication form into evidence, and disputed the court’s finding that he had not tendered the necessary redemption amount. The appellate court determined that the recovery of attorney’s fees was inappropriate under the circumstances, prompting a reduction in the judgment. The evidence regarding publication was admitted by the trial court, which asserted that justice required it despite White's objection about late disclosure. The court noted that the admissibility of evidence is at the discretion of the trial judge, and White failed to demonstrate how he was prejudiced by the admission of the proof of publication, which merely corroborated other testimony.
In Smith v. State, 256 Ark. 321, 507 S.W.2d 110 (1974), the Arkansas Supreme Court addressed issues related to witness disclosure and the admissibility of evidence, concluding that the trial judge did not abuse discretion in admitting evidence despite a late disclosure of a witness. The prosecuting attorney informed the defense of the witness immediately upon discovery, and the testimony was deemed cumulative; thus, no prejudicial error was found.
Regarding the appellant's claim to redeem a tractor, the court affirmed that the trial court correctly found the appellant failed to tender the necessary amount for redemption as outlined in Ark. Stat. Ann. 85-9-506 (Supp. 1985). Although the appellee provided payoff figures and deadlines, the appellant's tender came after the second expiration date and was insufficient. The judge concluded that the appellee acted in a commercially reasonable manner per Ark. Stat. Ann. 85-9-504(3) (Supp. 1985), and the appellant's arguments lacked merit.
The court also addressed the appellant's challenge to the recovery of $1,700 in attorney’s fees. The conditional sales contract allowed for reasonable attorney’s fees, but the Arkansas Supreme Court has consistently ruled that recovery is only permissible if explicitly provided by statute. Citing Harper v. Wheatley Implement Co., 278 Ark. 27, 643 S.W.2d 537 (1982), the court determined the award of attorney’s fees was improper since it did not involve a promissory note, which is the condition for such recovery.
The appellee contends that Ark. Stat. Ann. 85-9-504 (Supp. 1985) allows for the recovery of attorney’s fees in this case. This statute permits a secured party to sell or dispose of collateral after default and allows for the application of proceeds to reasonable expenses, including attorney’s fees, as long as they are not prohibited by law. Prior to the Arkansas Supreme Court’s ruling in Harper, federal courts had suggested Arkansas might adopt the appellee's position. However, the Arkansas Supreme Court previously ruled in Bank of Holly Grove v. Sudbury that a similar provision in the Negotiable Instruments Act did not establish an authorization statute for attorney's fees. The Harper case clarified that the Uniform Commercial Code permits attorney's fees only where not prohibited by law, specifically citing Ark. Stat. Ann. 68-910, which requires a promissory note, a condition not met in this case. The appellee's argument for fee recovery related to attorney services for obtaining collateral possession is also dismissed, as previous cases like Svestka, which allowed such recovery, involved promissory notes. The current case is determined to be governed by Harper, leading to a decision that reduces the trial court's award by $1,700.00, while affirming the rest of the judgment. The decision is affirmed as modified, with judges Mayfield and Cooper concurring.
