In Ford Motor Credit Company v. First National Bank of Crossett, 2016 WL 4916829, at *5–8 (Ark.App., 2016), the Arkansas Court of Appeal held that a RISC assignee’s security interest was superior to that of a floorplan finance company’s.

FNBC acknowledges that a buyer in the ordinary course of business takes free of any underlying security interest created by the seller, even if the security interest is perfected and the buyer knows of its existence. . . FNBC further agrees that FMCC stands in Murphy’s shoes, so that if Murphy was a buyer in the ordinary course of business, then FMCC also takes free of FNBC’s security interest. . . . FNBC argued in its summary-judgment motion that Murphy was not a buyer in the ordinary course of business because he was the principal owner of Crossett Ford, he was personally obligated on the floor-plan loans, he left both vehicles on the lot after he had financed them with FMCC, and he could not title the vehicles in his name because he did not have possession of the COO or the certificate of title. FNBC thus alleged that Murphy did not buy the vehicles in good faith and without knowledge that the purchase was in violation of its security interest. . . Here, while Murphy was obviously aware of FNBC’s inventory lien due to his position with Crossett Ford, there is no evidence that the price he paid for either the F-150 or the Expedition was out of the ordinary or that he intended to defeat FNBC’s security interest by his purchases. Murphy stated in his affidavit that his purchases from the dealership were the same as any other retail customer. He explained that he purchased the F-150 as a “shop truck” and that he purchased the Expedition for his wife. Although Murphy did not have possession of the COO or the certificate of title for the vehicles and did not title them in his name, we have held that such documents are merely evidence of title, not title itself; thus, the failure to obtain a new certificate of title does not affect a transfer between parties. Commercial Credit Corp. v. Assocs. Discount Corp., 246 Ark. 118, 436 S.W.2d 809 (1969). See also Midway Auto Sales, Inc., supra (holding that the failure of a buyer to obtain a certificate of title from the seller or to register the vehicle does not necessarily prevent the buyer from obtaining bona-fide purchaser status). . . Relying on Ark. Code Ann. § 4-9-315, which codifies former Uniform Commercial Code (“UCC”) section 9-306, FMCC first argues that its lien on both vehicles takes priority over FNBC’s inventory lien because the floor-plan agreements between Crossett Ford and FNBC authorized the sale of the vehicles free and clear of FNBC’s security interest.. . . As FMCC contends, where the secured party has authorized the disposition free of its security interest, section 4-9-315 does not require that the buyer be a “buyer in the ordinary course” in order to come within its protection. Gen. Motors Acceptance Corp. v. Frank Meador Leasing, Inc., 6 B.R. 910, 913 (W.D. Va. 1980) (quoting 4 Anderson 311 § 9-306:18 (2d ed. 1971)). “A sale under this section destroys the interest of the secured party not because of the meritorious character of the buyer but because the secured party has agreed that a buyer may acquire rights by resale.” Id. Thus, it must be determined whether the terms of the floor-plan agreements between FNBC and Crossett Ford authorized the dealer to sell the vehicles covered under those agreements free and clear of FNBC’s security interest.  The agreements at issue here provided that as collateral for the line-of-credit loans, Crossett Ford agreed to grant FNBC “a first security interest in all new, program, and used motor vehicles in its inventory, all proceeds therefrom, all replacements, increases, additions, and substitutions to such inventory and on all tools and equipment located at the Dealer’s place of business, 301 E. 1st. Ave., Crossett, Arkansas[.]” The agreements stated that the exclusive purpose of the loans was “to enable the Dealer to purchase new, program, and used vehicles or to finance used trade-in vehicles” and that “[e]ach time the Dealer requests an advancement, the Dealer shall be required to execute a separate promissory note in favor of the Bank and deliver to the Bank the manufacturer’s certificate of origin for all new, and program vehicles, and certificates of title for all used vehicles.” The agreements further provided that “[e]ach time the Dealer sells a motor vehicle from inventory, the Dealer shall pay to the Bank the full amount due on the promissory note which was advanced by the Bank at the time the Dealer purchased that vehicle, at which time the Bank will release the certificate of origin or title to the Dealer.”  Murphy further stated in his affidavit that the floor-plan agreements and his course of dealing with FNBC authorized him to sell vehicles free and clear of FNBC’s security agreement in the regular course of his business. He indicated that he was never required to obtain prior approval before selling any vehicle.  Based on this evidence, FMCC contends that Crossett Ford was both implicitly and explicitly authorized by FNBC to sell the F-150 and the Expedition and that FMCC was therefore entitled to summary judgment pursuant to Ark. Code Ann. § 4-9-315. FNBC responds by first arguing that section 4-9-315 does not apply to the facts of this case because it does not involve the “entrustment doctrine” and cites to Commercial Credit Corp., supra, in support of its argument. However, that case discussed the applicability of Ark. Code Ann. § 4-2-403, which is often referred to as the “entrustment doctrine”; it did not involve the statute at issue here, section 4-9-315. FNBC also argues that, even if section 4-9-315 does apply to this case, its introductory sentence qualifies it by reference to section 4-2-403(2), which requires that the buyer purchase the goods in the ordinary course of business. There is no merit to this argument because the comments to section 4-9-315 make it clear that the reference to 4-2-403(2) is intended to add another exception to the general rule set forth in section 4-9-315 that a security interest survives disposition of the goods. As discussed above, there is no buyer-in-the-ordinary-course requirement under section 4-9-315 if the security agreement authorizes the disposition free and clear of the security interest.  FNBC does not necessarily refute that Crossett Ford had general authorization to sell vehicles out of its inventory but instead argues that the sale of the specific vehicles in question was not authorized because Crossett Ford did not pay off the loans on the vehicles as the floor-plan agreements required. FNBC also asserts that the agreements specifically prohibited Crossett Ford from having any motor vehicles on the premises except those financed by FNBC.  Contrary to FMCC’s argument that it is entitled to judgment as a matter of law pursuant to section 4-9-315, we conclude that material questions of fact also remain on the issue of whether Crossett Ford was authorized to sell the vehicles at issue in this case. The floor-plan agreements did not contain a general provision authorizing Crossett Ford to sell vehicles from its inventory free of FNBC’s security interest; instead, the agreements specifically stated that each time the dealer sold a vehicle from inventory, it was required to pay FNBC the full amount that had been advanced for the vehicle, at which time FNBC would release the certificate of origin or title. In addition, although Murphy stated that he never had to seek approval from FNBC prior to selling a vehicle, he also stated in his affidavit that he was authorized to sell vehicles free and clear of FNBC’s security interest “in the regular course of his business,” an issue as to which we have already determined that there remain material issues of fact. Given the unique circumstances of the sale of the vehicles in this case, further factual development is needed as to whether the exception in section 4-9-315 applies here, and FMCC was not entitled to summary judgment on this basis.  FMCC also argues with respect to the F-150 that its security interest takes priority over FNBC’s floor-plan lien because the vehicle was no longer “inventory” when FMCC filed and perfected its direct lien on August 20, 2012. “Inventory” is defined as “goods, other than farm products, which … are held by a person for sale or lease or to be furnished under a contract of service.” Ark. Code Ann. § 4-9-102(48)(B) (Repl. 2001). FMCC cites to Ark. Code Ann. § 4-9-324(a) (Repl 2001), which states that a perfected security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, if the purchase-money security interest is perfected at the time the debtor receives possession of the collateral or within twenty days thereafter.  FNBC argues, however, that the F-150 was not removed from its inventory because it was never paid by Crossett Ford for the vehicle, because it retained the COO for the vehicle, and because the vehicle remained on the premises of Crossett Ford in violation of the floor-plan agreements. Based on the unresolved questions discussed above, there are also questions remaining as to whether section 4-9-324(a) would apply to the facts in this case, and FMCC was not entitled to summary judgment as to the F-150 on this ground.  Finally, FMCC contends, as an alternative to its other arguments, that it was entitled to judgment as a matter of law on the basis that Murphy was a buyer in the ordinary course of business. While FMCC argues that its proof on this issue was unrebutted, we have previously concluded that material issues of fact remain regarding this issue. Thus, the circuit court did not err by denying FMCC summary judgment on this basis. Accordingly, we reverse and remand the circuit court’s order granting summary judgment to FNBC, and we affirm the denial of FMCC’s countermotion for summary judgment.

Affirmed in part; reversed and remanded in part.