Midway Auto Sales, Inc. v. Clarkson ( 2000 )

Sam BIRD, Judge,

concurring. I agree with the majority’s decision, but only because it appears to be the result mandated by the existing Arkansas case law as set forth in Pingleton v. Shepherd, 219 Ark. 473, 242 S.W.2d 971 (1951), and similar cases that discuss the distinction between the status of the title to an automobile that has been acquired by fraud (in which case good title can be passed to subsequent purchasers until such time as the defrauded party successfully voids the transaction) and an automobile that is acquired by theft (in which case neither the thief nor a subsequent purchaser acquires any title to the automobile). Any person who acquires ownership of a motor vehicle in this state is required to register it within ten days¹ with the Department of Motor Vehicles and receive a certificate of title to it. Ark. Code Ann. § 27-14-903(a)(l) (Repl. 1994). Failure to do so is a Class C misdemeanor. Furthermore, the purchaser of a new or used motor vehicle for a consideration of $2,000 or more is required to pay a gross receipts tax on the vehicle at the time of registration. Ark. Code Ann. § 26-53-126 (Repl. 1997). The sale or purchase of a motor vehicle on a so-called open title (a title certificate in which the name of the present seller is not identified as the owner of the automobile) is prima facie evidence that these requirements have not been met.

Because of these registration and sales tax requirements, in my opinion the law of Arkansas, as it relates to the good-faith sale and purchase of motor vehicles, is outmoded, and it should be changed to provide that, except in the case of purchases of motor vehicles from authorized automobile dealers, any purchaser acquiring a motor vehicle on an open title is not a bona fide purchaser and can neither acquire nor transfer good title to it. The exception for purchasers from authorized motor vehicle dealers should apply only when such dealer acquired the motor vehicle directly from the person whose name is on the title. Otherwise, no transferee of a motor vehicle on an open title, whether acquired from one who got it by fraud or by theft, should qualify as a bona fide purchaser.

The supreme court has held that where a purchaser of personalty knows that the price is inadequate, he is on notice of the infirmity of his seller’s title and is, therefore, not a bona fide purchaser for value. Hollis v. Chamberlin, 243 Ark. 201, 419 S.W.2d 116 (1967). It seems to me that an even stronger reason exists to deny bona-fide-purchaser status to one who buys a motor vehicle with knowledge that there has been no compliance with either the registration or tax laws that are applicable to the transfers of motor vehicles in this state.

1 Effective January 1, 2000, the registration deadline was extended to thirty days. Ark. Code Ann. § 27-14-903(a)(l)(Supp. 1999).