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Under Ark. Code Ann. § 4-9-103(2), where goods are covered by certificate of title issued under statute of another jurisdiction--under law of which security interest must be indicated on certificate as condition of perfection--perfection of security interest is governed by law of jurisdiction issuing certificate of title; law continues to govern until goods are registered in another jurisdiction.
Billy Stinnett (Debtor) purchased a Freightliner truck (on credit) from Texarkana Truck Center, Inc. (TTC), in Texas. The parties' security agreement indicated that Debtor's home address was in Arkansas. TTC immediately assigned the contract and its interest in the truck to Mercedes-Benz Credit Corporation (MBCC). On Debtor's behalf, Trux, Inc. registered and titled the truck in Oklahoma, using a business address it acquired for him. Oklahoma subsequently issued a title reflecting a lien in favor of MBCC. Upon purchasing the truck, Debtor immediately drove it to his Arkansas residence, and thereafter operated the truck from his residence, hauling loads primarily to Texas, Colorado, Oklahoma, and Kansas. Debtor never owned a business in Oklahoma. The bankruptcy court concluded that under Ark. Code Ann. § 409-103(2)(b), Oklahoma law controlled the perfection of MBCC's security interest; and because Oklahoma law required indication of a security interest on the certificate of title for perfection, MBCC's interest was perfected for purposes of Arkansas law. The court thus entered judgment for MBCC. William S. Meeks (Trustee) appealed to the district court. Noting that neither party questioned any findings of fact, and reviewing de novo the bankruptcy court's conclusions, the district court affirmed the decision of the bankruptcy court. This appeal followed.
Did the bankruptcy court err in concluding that under Ark. Code Ann. § 409-103(2)(b), Oklahoma law controlled the perfection of MBCC's security interest?
The court concluded that the bankruptcy court correctly determined MBCC's interest was perfected for purposes of Arkansas law. Meeks argued that Arkansas's statutes concerning motor vehicle registration applied to determine the validity of MBCC's security interest, and that under these provisions, the security interest was not perfected because the truck was never registered in Arkansas. The court stated that the issue involved in the appeal was the perfection of MBCC's security interest, not compliance with Arkansas's vehicle registration laws, which served a different purpose.