Pine Meadow Autoflex, LLC v. Taylor, No. CA08-299.
Pine Meadow sold and financed a used vehicle to David Cates, who became delinquent on his payments and then filed for bankruptcy. While seeking bankruptcy, Cates applied for a duplicate title to the vehicle and supplied the State with a fraudulently executed release of lien by Pine Meadow. The State issued Cates another title to the vehicle, which he then sold to Walt Asher, who sold it to Recovery Files. Susan Taylor purchased the vehicle from Recovery Files. Approximately two months later, Pine Meadow repossessed the vehicle from Taylor. Taylor brought suit to recover the vehicle, arguing that she was a good-faith purchaser for value and, therefore, had good title to the vehicle. The trial court agreed.
On appeal, Pine Meadow argued that, because he fraudulently obtained clear title to the vehicle, Cates could pass only void title to the vehicle. The Arkansas Court of Appeals disagreed, noting that title was voidable instead of void. The court explained that the assurance of good title to good-faith purchasers of second-hand goods increases the value of the goods and the volume of such sales.
