Bilo v. Acme Outdoor Advertising Co.

Citations: 27 Ark. App. 19; 765 S.W.2d 12; 1989 Ark. App. LEXIS 93Docket: CA 88-80

Court: Court of Appeals of Arkansas; February 22, 1989; Arkansas; State Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Judith Rogers, Judge, presided over a case regarding the ownership of two outdoor advertising signs on property owned by appellant B. Gene Bilo, which were installed by appellee Acme Outdoor Advertising Company. The Union County Circuit Court ruled in favor of the appellee, determining that the signs were their personal property based on a lease agreement established in 1965 between the appellee and the property’s then-owner, James R. Mitchell. This ruling was upheld upon appeal.

The signs are situated at 714 North West Avenue, El Dorado, Arkansas. The lease allowed the appellee exclusive rights to erect and maintain the signs. The property changed hands multiple times before being sold to Dr. D.R. Vyas, who executed a real estate contract with the appellant in 1986. The dispute arose when the appellee sought to renew the lease, which the appellant refused, leading to claims of ownership from both parties.

During the trial, the appellant argued that the signs were fixtures attached to the property, thus ownership transferred to him upon purchasing the land. He claimed ignorance of the lease terms. However, evidence indicated the appellant had been informed by Dr. Vyas about the existing lease and its conditions, including an annual renewal and a 30-day notice requirement for removal.

The appellee maintained ownership of the signs as personal property under the 1965 lease, which stipulated that all signs placed on the premises remained the property of the appellee, allowing for their removal at any time with proper notice. The appellee also demonstrated ownership through payment of personal property taxes and obtaining an outdoor advertising permit. The trial court concluded that the appellant had notice of the lease, rendering him not an innocent purchaser, and affirmed that his lack of inquiry did not affect the appellee's ownership rights as outlined in the lease agreement.

Appellant argues that the evidence was insufficient to establish notice of the lease agreement regarding the signs and that the trial court misinterpreted handwritten portions of the real estate contract with Dr. Vyas. The trial court's findings are not to be reversed unless clearly against the preponderance of the evidence. The appellate issue centers on whether the appellant acquired the property subject to the lease terms. Legal precedents indicate that parties can designate fixtures as personal property, and subsequent purchasers with notice are bound by such agreements. The lease in question indicates an intent to treat the advertising signs as personal property, necessitating notice—either actual or implied—to bind subsequent purchasers.

The trial court found, and the appellate review agrees, that the appellant was aware of the lease agreement concerning the signs. Prior to the purchase, Dr. Vyas informed the appellant about the existing lease, including its annual renewal and 30-day notice provisions. The real estate contract specifically referenced the signs and obligated the buyer to honor existing leases. Additionally, the signs displayed the name “ACME,” further indicating the lease's existence. The appellant's claim of ignorance regarding the lease specifics is deemed unmeritorious, as he was aware of sufficient facts that warranted further inquiry. Notice of facts that would prompt ordinary prudence to investigate is equivalent to knowledge of the underlying facts.

The appellant also contends that the appellee failed to provide notice of ownership by not recording the lease. The trial court relied on expert testimony from Gibson Sims, who explained that in outdoor advertising, it is customary for advertisers to secure ground leases that reserve ownership of the signs and allow for their removal. Sims clarified that the industry standard does not involve recording yearly leases as it is unprofitable; instead, automatic renewal occurs through the payment and acceptance of rent.

The appellant argues that the trial court misinterpreted the handwritten elements of a real estate contract with Dr. Vyas by treating three separate handwritten additions as interconnected, rather than independent. The trial court noted that Dr. Vyas was aware of an existing lease, as indicated in the contract, and stated that no rent would be paid for advertising signs as of May 30, 1986, with the buyer responsible for managing the lease agreement. The appellant claims that the notation concerning the date and the buyer's responsibility were meant for different paragraphs and should not relate to the rent on the signs. However, the contract specifies that the buyer will "honor" existing leases, and the trial court's interpretation aligns with the contract's terms, which also reference the signs and their associated rent. Consequently, the trial court's conclusion that the appellant was not an innocent purchaser and should have been aware of the contract's terms is upheld. The decision that the advertising signs are the personal property of the appellee is affirmed.