Charles Lakin, who did business as Sun Country Citrus, owned a citrus-packing plant in Yuma, Arizona. In 1985, the packing plant was leased to Sunco Partners. Under the terms of the lease, Sunco had the right to replace existing packing, sizing, and grading equipment with “state-of-the art” equipment. In 1986, PKD, Inc. purchased Sunco. Sunco signed a bill of sale for all of its “personal property, including, but not limited to, packing equipment, boilers, compressors, and packinghouse-related supplies.” The bill of sale was secured by an Article 9 security interest executed by PKD as the debtor and Lakin/ Sunco as the creditors.
In February 1987, PKD changed its name to Amcico and negotiated for the purchase and lease of citrus-sorting equipment from Pennwalt Corp., now Elf Atochem. The documents for the transaction specifically provided that title to the equipment would remain with Elf Atochem until all payments were made under the terms of the sale and lease agreement.
In December 1987, Amcico defaulted on its payments to Lakin and Sunco. Lakin and Sunco took possession of all of the equipment in the Yuma plant. Elf Atochem objected, claiming its title to the citrus-sorting equipment. Lakin and Sunco produced the security agreement giving them such equipment as collateral. Elf Atochem claimed that because it retained title in the citrus-sorting equipment, there was no interest in it on the part of Amcico, and the security interest of Sunco and Lakin never attached. Was Elf Atochem correct? [Elf Atochem North America, Inc. v Celco, Inc., 927 P2d 355 (Ariz App)]