1st Charter Lease Co. v. McAl, Inc., 81CA0785

• Decision Date: 12 February 1984
• Docket Number: No. 81CA0785,81CA0785
• Parties: 37 UCC Rep.Serv. 1820 1ST CHARTER LEASE COMPANY, a Colorado corporation, Plaintiff-Appellant, v. McAL, INC., a Colorado corporation, d/b/a Mc A.L., Inc., John E. McNabb, Audry Lee Autry, and Lon Dale Lowry, Defendants-Appellees. . I
• Court: Colorado Court of Appeals

Page 114

679 P.2d 114

37 UCC Rep.Serv. 1820

1ST CHARTER LEASE COMPANY, a Colorado corporation, Plaintiff-Appellant, v. McAL, INC., a Colorado corporation, d/b/a Mc A.L., Inc. John E. McNabb, Audry Lee Autry, and Lon Dale Lowry, Defendants-Appellees.

No. 81CA0785.

Colorado Court of Appeals Div. I.

Feb. 12, 1984.

David Barsotti, Denver, for plaintiff-appellant.

Ware, Marroney & Cole, P.C., David E. Ware, Pueblo, for defendants-appellees McAl, Inc., Audry Lee Autry, and Lon Dale Lowry.

No appearance for defendant-appellant John E. McNabb.

PIERCE, Judge.

In this action for a deficiency judgment, plaintiff, 1st Charter Lease Company (1st Charter) appeals the trial court's dismissal of claims on a motion for a directed verdict made by defendants, McAl, Inc., John E. McNabb, Audry Lee Autry, and Lon Dale Lowry (McAl). We reverse.

1st Charter is a general equipment leasing company. McAl leased computer hardware from 1st Charter for a term of 60 months with monthly payments of $560.25, for a total of $33,615. There is no dispute that the transaction involved a security interest governed by Article 9 of the Uniform Commercial Code, § 4-9-101, et seq., C.R.S. Lease Finance, Inc. v. Burger, 40 Colo.App. 107, 575 P.2d 857 (1977).

Approximately one year after the execution of the lease, McAl defaulted and 1st Charter made formal demand for payment and return of the equipment. After a preliminary attempt at sale by McAl, possession of the equipment was returned to 1st Charter. 1st Charter then sought to sell the equipment by advertising in a local trade journal, by word of mouth communications, and by written invitations to bid to various computer retailers. Subsequently, the equipment was sold at private auction for $6,974 with costs of $87.62. After applying this amount to McAl's outstanding balance of $23,207.68, 1st Charter initiated this action for a resulting deficiency of $16,233.68.

By its own admission, 1st Charter did not provide McAl with written notice of the date after which the equipment would be sold.

At the conclusion of 1st Charter's case, McAl moved for a directed verdict which was granted by the trial court. The trial court found that because 1st Charter had failed to give notice of the private sale, and because the sale had not been conducted in a commercially reasonable manner, 1st Charter could not claim a deficiency. A judgment of dismissal against 1st Charter then entered.

1st Charter argues on appeal that the trial court's ruling was incorrect as a matter of law. We agree.

Section 4-9-504(3), C.R.S., governs disposition of the collateral after McAl's default. In pertinent part, it provides:

"Sale or other disposition may be as a unit or in parcels and at any time and place and on any terms, but every aspect of the disposition including the method, manner, time, place, and terms must be commercially reasonable. Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made, shall be sent by the secured party to the debtor ...."

A "recognized market" has been described as one where sales involved many items so similar that individual differences are non-existent or immaterial, where haggling and competitive bidding are not primary factors in each sale, and where the prices paid in actual sales of comparable property are currently available by quotation. See Community Management Ass'n v....