’
NO. 95-503
IN THE SUPREME COURT OF THE STATE OF MONTANA
.+ 1996
PACCAR FINANCIAL CORP.,
a Washington corporation,
Plaintiff and Appellant,
v.
LES SCHWAB TIRE CENTERS OF
MONTANA, INC., a Montana
corporation, and INSURANCE
COMPANY OF NORTH AMERICA,
Defendants and Respondents.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorablk Ed McLean, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Patrick G. Frank, Worden, Thane & Haines, Missoula,
Montana
For Respondent:
John R. Velk, Blakley & Velk, Missoula, Montana
Submitted on Briefs: February 15, 1996
Decided: July 23, 1996
Filed:
Clerk
Justice James C. Nelson delivered the Opinion of the Court.
Paccar Financial Corporation (Paccar) brought this action
against Les Schwab Tire Centers of Montana (Les Schwab) and
Insurance Company of North America (ICNA) to recover damages for
the repossession of tires affixed to semi-trucks and trailers owned
by Paccar and leased to MPT Corporation and/or Arthur and Dena
Pamin (MPT). The District Court for the Fourth Judicial District,
Missoula County, granted Les Schwab's and ICNA's Motion for Summary
Judgment as well as their Motion for Rule 54(b) Certification to
this Court. We affirm.
The following issues are presented for review:
1. Whether the District Court erred in determining that
Paccar had no interest in the tires purchased by MPT from Les
Schwab.
2. Whether the District Court erred in granting summary
judgment to ICNA because Padcar was not a named party to the surety
bond and did not have an insurable interest in the tires.
3. Whether the District Court erred in determining that there
were no genuine issues of material fact.
Factual and Procedural Background
From late 1987 through early 1989, Paccar entered into several
agreements with MPT over the lease of eighteen semi-trucks. To
protect its interest in the leased trucks, Paccar filed a financing
statement with the Secretary of State on May 17, 1989.
From December 11, 1990, through October 5, 1991, MPT purchased
123 tires and related equipment from Les Schwab for mounting onto
2
the eighteen trucks leased through Paccar as well as several trucks
owned by MPT. On July 23, 1991, MPT executed a continuing security
agreement with Les Schwab setting forth the commercial and credit
terms under which MPT could have an on-going business relationship
with Les Schwab for the purpose of purchasing, on credit, goods and
services for use in its trucking business. Les Schwab did not
perfect its lien on the tires until August 5, 1991.
When MPT failed to pay for the tires, Les Schwab brought an
action in the District Court to repossess them. The court found
that Les Schwab had made a prima facie showing of its right to
possession and ordered the sheriff to seize the tires. Les Schwab
asked ICNA to issue a bond wherein ICNA agreed to indemnify and pay
all costs to the Defendants "in the event that the attachment or
taking of property of Defendant(s) is found to be wrongful."
Paccar filed a motion to intervene in the case on August 8,
1992, but before the court could rule on the motion, Les Schwab and
MPT entered into a settlement agreement and the case was dismissed.
Paccar instituted the present action on November 17, 1992, alleging
a claim of conversion against Les Schwab for the repossession of
the tires and naming ICNA as a party because of the bond.
On September 9, 1994, Les Schwab and ICNA filed a Motion for
Summary Judgment in this action. The District Court granted the
motion on March 14, 1995. Upon motion by Les Schwab and ICNA and
without objection by Paccar, the District Court certified, pursuant
to Rule 54(b), M.R.Civ.P., that its order granting summary judgment
is a final order and judgment.
3
Standard of Review
Our standard of review in appeals from summary judgment
rulings is de nmm. Mead v. M.S.B., Inc. (1994), 264 Mont. 465,
470, 872 P.2d 782, 785. When we review a district court's grant of
summary judgment, we apply the same evaluation as the district
court based on Rule 56, M.R.Civ.P. Bruner v. Yellowstone County
(1995), 272 Mont. 261, 264, 900 P.2d 901, 903. In Bruner, we set
forth our inquiry as follows:
The movant must demonstrate that no genuine issues of
material fact exist. Once this has been accomplished,
the burden then shifts to the non-moving party to prove,
by more than mere denial and speculation, that a genuine
issue does exist. Having determined that genuine issues
of fact do not exist, the court must then determine
whether the moving party is entitled to judgment as a
matter of law. We review the legal determinations made
by a district court as to whether the court erred.
Bruner, 900 P.2d at 903 (citations omitted).
Issue 1.
Whether the District Court erred in determining that Paccar
had no interest in the tires purchased by MPT from Les Schwab.
Paccar contends that under its lease agreement with MPT, the
tires became the property of Paccar when they were installed on the
trucks leased by MPT. Paccar's lease agreements with MPT provide
in part:
[MPT] shall furnish, at its own expense, all necessary
fuel, lubricants, grease, antifreeze, tires, tubes and
all other replacement parts and supplies necessary for
maintenance and lawful operation of the Equipment. . . .
All parts installed and any modifications and alterations
made in the course of the ordinary maintenance and repair
of the Equipment shall become the property of [Paccarl
and shall remain the property of [Paccarl upon
termination of this Agreement unless otherwise provided
herein.
4
The threshold issue then is whether the tires became so
affixed to the trucks leased by MPT that they became "accessions."
The District Court found that the tires were not accessions under
the common law because they did not become an integral part of the
trucks and remained independently identifiable and capable of being
removed without harm or damage to the trucks.
The doctrine of accession stems from the equitable
notion that an owner of a chattel is entitled to his
chattel in the same or improved condition after it has
been tampered with by an innocent trespasser. The
principle was not designed or intended to give the owner
of the chattel more than he had to start with, but it was
intended to assure he would not obtain his chattel in a
condition of less value or usefulness than before it was
changed by a third party. Thus, if the chattel was
improved or enhanced and the improvements could not be
severed from the chattel without injury to it, the
improvements passed to the owner.
Bank of America v. J. & S. Auto Repairs (Ariz. 1985), 694 P.Zd 246,
252
In Bank of America, the bank brought a replevin action to
recover a van upon which the bank held a purchase money lien. The
automobile repair shop which had repaired the van after its
apparent abandonment by the mortgagor, filed a counterclaim. The
Supreme Court of Arizona held that if detachable parts, such as the
engine, transmission and tires, can be removed without damaging the
vehicle, they are not accessions. Bank of America, 694 P.2d at
253. The Arizona court also determined that while a buyer and
seller of a vehicle can make an agreement between themselves, they
cannot bind third persons not parties to the agreement. Bank of
America, 694 P.2d at 250.
Two years later, the Supreme Court of Oregon held in Bancorp
5
Leasing v. Stadeli Pump (Or. 1987), 739 P.2d 548, that because a
truck el