*1 13, 1985, Argued and submitted December resubmitted Banc June affirmed September petition reconsideration denied November for review allowed 23,1986 (302 460) December CORP., AND FINANCIAL BANCORP LEASING Respondent, al, CONSTRUCTION, INC. et PUMP & STADELI Defendants, STADELI, Appellant. A34773) (144,821; CA 724 P2d 948 Larry argued appellant. Pound, Salem, Jon the cause for Eichelberger, him on the With briefs was Pound & Salem. argued Comstock, Salem, Mark B. the cause for respondent. Seideman, Garrett, himWith on the brief was Hemann, DeMuniz, P.C., Robertson & Salem. *2 Tempore

GILLETTE, J., Pro Young, dissenting. J., participating. Deits, JJ.,

Newman and Tempore GILLETTE, J., Pro court, In action tried to the defendant this conversion “Otto”) (hereafter appeals judgment Otto Stadeli1 from plaintiff. plaintiff acquired favor of The issue is whether accession a in a diesel did, judgment defendant. If it the trial court’s is correct. We affirm. money

In to Sta- plaintiffs predecessor loaned loan, Construction, Inc., and, Pump deli & to secure the alia, perfected in, dump inter truck owned by the time the corporation. The truck was 1981, however, the truck’s perfected. interest was up,” “blew and it was removed. The truck sat idle without an engine early purchased until when Otto sons, another Larry, loaned it to his Marvin and principals who were Later in corporation. the sons removed the engine corporation and returned it to Otto. The December, 1983, defaulted on loan. In took possession engineless truck, eventually which was sold $8,500. brought this action to recover the dif- Plaintiff ference between the sale and the price truck’s value with

The trial engine court held that the was an accession and, thus, to the security truck became subject interest when it was installed in the truck.2 The court ruled 1 sought remaining Plaintiff also to recover from the defendants various other Construction, equipment, Pump & well as the balance due on loans made to Stadeli Construction, Inc., Judgment against Pump Inc. & default was entered Stadeli and Gravel, Larry bankruptcy; & Windsor Island Sand Inc. and Marvin Stadeli filed judgment against prejudice. dismissed the claims them without ORCP 54.

2The court found: Oregon corporation good standing;

“1. Plaintiff is an in Construction, Pump & “2. Defendant Stadeli Inc. and Windsor Island Sand Gravel, Inc., answer; & are in want default for of Larry R. have each filed “3. Defendants Stadeli and Marvin Stadeli 701, Bankruptcy seq, 11 et an Order of Petitions under U.S.C. section them; Discharge has been entered for each of Construction, Pump promissory “4. Defendant Stadeli & Inc. executed a collateral, including agreement describing certain one 1978 note and Truck, 928V-564726, T385966, Dump equipped with 8V92 GMC VIN License transmission, rearend, box, axle, 10-speed yard engine, 10-12 3 16.5 diesel SQHD 374 a conversion and

that return of the to Otto constituted judgment plaintiff. appeal, argues entered On Otto findings support court’s of fact do not its conclusion that accession had occurred. Fox, 612, 615, P2d Oregon Bank v. 699 (1985), we stated: right possession the collat- creditor with the “A secured of

eral maintain an action for conversion after default against acts of dominion one who has exercised unauthorized rights.” property the creditor’s over the to the exclusion of omitted.) supplied; (Emphasis citations right has the to take party otherwise a secured agreed, Unless on default. ORS 79.5030. “Collat possession of the collateral interest. ORS subject eral” is 79.1050(1)(c). had a parties agree 'that tires; front tires and 10 22 rear 22.5 duly perfected in certain collateral of “5. Plaintiff its interest Construction, Inc., Pump among & which was the above-described Stadeli Truck, Secretary Oregon Dump by filing Financing with the GMC Statement 22, 1978, September filing Statement on State on October a Continuation by being of Title as the interest holder on the Certificate noted secured Department Dump Oregon of Motor Vehicles. Truck with the to the GMC perfection Subsequent Plaintiffs “6. to the Truck, Dump replaced original with a Defendants GMC Defendant, Stadeli; diesel Otto Defendant, Stadeli, any Financing filed no Statement of “7. Truck; Dump replacement engine installed the 1978 GMC Construction, 29, 1983, Defendant, Pump July & Stadeli “8. On or about Promissory Agree- Inc., payments Revision under the Note and defaulted on its possession all the collateral of Stadeli entitled to ments and Plaintiff became Construction, Inc., Dump including Pump Truck with all of the the 1978 GMC & equipment; described Defendant, Stadeli, 18, 1983, caused the On about November “9. Truck; Dump replacement engine 1978 GMC to be removed from the Defendant, remaining owing Stadeli due and to Plaintiff from Promissory “10. The sums Construction, Inc., pursuant Pump dated October Note & (12%) $65,697.71, percent per plus twelve annum interest at the rate of 1978 is * * 29,1983 July *.” from *4 financing confusing “file a Finding to Otto’s failure to number seven makes a reference interest, security perfecting Filing financing means of statement is a statement.” case, 79.3040, any 79.3020; bearing as far as we issue which has no on see ORS perfect interest defendant had to The have believed that can tell. court however, 79.3140, infra; advantage n see engine of ORS in order to take 79.2030, interest, perfection, the critical event is ORS of the attachment under ORS 79.3140.. to the truck had acceded only if it engine of law.3 operation not define does Code Commercial

The Uniform law. See ORS 71.1030. common accession; look to the we * * * generally is “a term of legal classification Accession personal property an owner right employed signify into incorporated is of another which personal to the 2d, “Accession 1 Am Jur property.” united with his “may be defeated accession of title Confusion,” 1. A claim § can be identified if materials another] [added [the] 2d, 1 Am Jur property.” original to the injury without severed however, some is, Confusion,” 2. There “Accession and as severable regarded additions disagreement as to what becoming integral part as regarded additions are and what of the whole. if the approach: functional have taken a

Some courts part, removal of the destroyed vehicle’s “usefulness” See, e.g., Lincoln on its installation. accedes to the vehicle part Netter, Allied 1952); v. (Ky Bank & Trust Co 253 SW2d (1956). In Shaneyfelt, 840, 74 NW2d 723 Inv. Co. 161 Neb case, stated: the latter the court that a motor an auto- logically argued

“It cannot severed or removed therefrom mobile can be identified and is in injury the automobile. motor without material vital, very integral part, life and substance of an fact a body without a motor An automobile chassis and automobile. * * * transpor- An automobile is used for is not an automobile. purpose.” tation, no useful a motor it can serve and without 161 Neb at 847-48. the truck the fact that that this view overlooks argues

Otto However, Otto engine. installation of the was useless before security interest plaintiffs the fact that himself overlooks of Otto’s installation truck and that it was was in an it had to the condition it back changed in the truck that security agreement. of the time of the creation enjoyed Otto, superior rights because argues to those of it had Plaintiff See ORS “security interest” before installation failed attach his priority However, correctly states a rule of that ORS 79.3140 *5 Other part courts have held that an added does not accede to a vehicle when part the can be removed See, e.g., Bank America v. without to “damage” the vehicle. of J. & S. Auto Repairs, Atlas (1985); Ariz 694 P2d 246 Gibbs, Assurance Co. v. (1936); Conn 183 A 690 Standard, Nissen, Omaha Inc. v. (Iowa 1971); 187 NW2d 721 Lundy, Havas Used Cars v. (1954). 70 Nev 276 P2d 727 See Property also Personal Brown, (1936). In choosing in Bank America approach, Supreme the Arizona Court of Repairs, v. J&S Auto supra, reasoned: “We believe that the cases such Atlas Co. v. as [Assurance

Gibbs, Cars, supra,] Lundy, supra], and Havas Inc v. [Used holding parts that detachable are not accessions are better provide equitable result than Lincoln reasoned and a more Bank and Allied Investment preventing complete wind- fall to the chattel owner. The doctrine of accession stems from equitable the notion that an owner of a is entitled chattel to in improved his chattel the same or condition after it has been tampered trespasser. principle with an innocent was designed give not or intended to the owner of the chattel more with, than he had to start but it was intended to assure he would not obtain his chattel a condition of less value or Thus, changed by party. usefulness than before it was a third improved if improve- the chattel was or enhanced and the injury ments could not be severed from chattel without it, improvements passed owner. automobiles, however, production

“Mass has resulted equipment, allowing standardization for additional and ready many parts damage removal of without to the auto- repair parts leaving mobile. After can the vehicle one remove Thus, repairs. in the same where a condition as before parts garageman motor and can be and the removed offers to parts, parts, he remove should be entitled to either performed expense, removal at his or the value of the parts. they damaging if We hold that can be removed without vehicle, parts detachable added to a motor vehicle parts accessions. Whether certain can be removed without damage injury to a vehicle is a factual that must be (Emphasis Ariz determined each case.” 143 at 422-23. original.) First, it approach. have two difficulties with this

We rendering to a truck than imagine greater “damage” is hard to totally necessary consequence taking out inoperable —the Second, treating this issue as one of fact creates its depending possibility not, accedes or that an ludicrous on how many find the We and hoses must attached. bolts Shaneyfelt, supra, expressed Co.v. in AlliedInvestment view adopt that an reasoned, and we it. We hold be better accedes to the motor vehicle is added to a motor vehicle matter law. Affirmed. dissenting.

YOUNG, J., disputed. facts are not Plain- I dissent. The essential a failed. in the truck. The tiff has years, roughly idle two After the truck sat engine *6 replacement engine was the installed. corpora- principals sons, he it to in the debtor loaned his the debtor tion, who installed it in the truck. After the defaulted replacement plaintiff, the was on its loan from The from truck returned to Otto. removed the replacement engine did, the truck. If it whether the plaintiff acquired acceded to engine, the and its interest in or in a conversion. Because the “usefulness” removal constituted majority approach adopted the results “functional” paying price for to maintain the Otto’s the the debtor’s failure adopt agreement, required I collateral as the would Repairs, approach J.&S. the taken in Bank America v. Auto (1985). 246 143 Ariz 694 P2d correctly argues approach the that “usefulness” the that was before installa- overlooks fact the truck useless majority attempts replacement engine. The of the tion argument: counter that

“However, plain- that the Otto himself overlooks the fact it was interest was in an truck and that tiffs changed engine in the truck that it back installation of Otto’s enjoyed the time of the creation of it had at condition App agreement.” Or at 375. third mean whether a I statement to that understand that party property loses title to to the debtor who loans depends debtor has failed to maintain on whether the time creation it was the collateral in the condition Although to as the debtor’s failure interest. good condition relevant maintain collateral between the debtor and the party, secured it has no relevance in applying the doctrine of accession against party. third

Accession is a acquiring 2d, “mode of title.” 1 Am Jur Accession and Confusion, 1. The general rule is that § “[w]hen goods of two different owners are incorporated together, title to the resulting product goes principal owner of the Personal Property, goods.” Brown, (1936). A material consideration which general modifies the rule is whether article attached can be removed without damage to the See cases cited principal property. majority, at 376. The Supreme Arizona concisely Court stated the purpose behind the doctrine of equitable accession and the considerations that important applying the doctrine:

“The doctrine of equitable accession stems from the notion that an owner of a chattel is entitled to his chattel in. improved the same or tampered condition after it has been trespasser. principle an innocent was not designed give or intended to the owner of the chattel more with, than he had to start but it was intended to assure he would not obtain his chattel condition less value or Bank changed by party.” usefulness than before it was a third Repairs, supra, America v. J&S Auto Ariz at 422. case, In the present say is safe to the truck was essentially useless when it was without an engine and that security interest was diminished accordingly. No one claims that replacement title to the engine passed to the debtor when Otto loaned the The evidence is that engine is identifiable and severable from the truck. The overriding last and factor is whether the engine *7 could be removed without to the truck.1 If that damage of Bank America v. done, can be I would follow the approach J&S Auto Repairs, supra, did and hold that Burch, accede to the truck. See Zandbergen v. 33 Or (1978).2 rev den 283 Or 99 576 P2d This strikes me as a 1Although deep applying there is a division cases the doctrine of accession, thing one seems clear: it is a of fact whether or not article of personal property becomes so affixed to other as to become an accession. 323, 325 (Tenn Equipment, App 1985); Mack’s Used Cars v. Tenn. Truck & 694 SW2d Annot., 43 ALR2nd 813. Burch, Zandbergen supra, substantially 2I understand define accession Zandbergen’s held, holding. same as I would. The confusion stems from The court arguably mistakenly, that conversion will lie when the has a colorable claim to accession, regardless the chattel virtue of the of whether there was an doctrine actual accession. result, fashioned rule, inequitable avoids better majority, penalizing the lender of the truck. failure of the debtor to maintain findings of fact the trial did not make Because court I damage, would removable without as whether findings further remand the case to the trial court make judgment accordingly. and enter conclusions Hoomissen, Judges, join and Van Warren dissent. notes 79.3140. apply and does not in the same collateral interests between two creditors Here, priority has no claiming interest in the collateral. creditor where the depends acceded on whether existence of truck.