439 1259 152 New Bremen v. Turner

• Decision Date: 16 March 1981
• Citation: 1 Ohio App.3d 152,439 N.E.2d 1259
• Parties: <!--439 N.E.2d 1259, 1 Ohio App.3d 152, First Nat. Bank NEW BREMEN, Appellee, v. TURNER, Appellant. Court of Appeals of Ohio, Third District, Auglaize County
• Court: Ohio Court of Appeals

Page 152

1 Ohio App.3d 152

439 N.E.2d 1259, 1 O.B.R. 463, 35 UCC Rep.Serv. 736

FIRST NATIONAL BANK [OF] NEW BREMEN, Appellee v TURNER, Appellant.

Court of Appeals of Ohio, Third District, Auglaize County.

March 16, 1981.

Syllabus by the Court

1. Where the secured party provides the debtor with money to pay off a prior lien holder and to pay a repair bill, the secured party is not a "retail seller," as defined by R.C. 1317.01(I), but a "lender," within the meaning of R.C. 1309.01(A)(13), and R.C. 1317.16 is not applicable to the disposition of the collateral after repossession of the collateral upon default; in such a situation, R.C. 1309.47 controls the disposition of the repossessed collateral.

2. Where the secured party sends a notice of sale of the repossessed collateral to the debtor by certified mail that is properly addressed to the debtor, and where three notices of the existence of the certified letter were left at the debtor's address, but the notice is returned by the postal authorities, marked "unclaimed," the notice requirements of R.C. 1309.47 have been complied with.

3. The burden of proof that a sale made pursuant to R.C. 1309.47 was "commercially reasonable" lies with the secured party.

4. The ultimate aim of R.C. 1309.47 is that the highest price be realized from the collateral sold for the benefit of all parties.

Garmhausen, Kerrigan, Elsass, Lewis & Co., L.P.A., and John M. Garmhausen, Sidney, for appellee.

Snyder & Alge and Daniel M. Snyder, Findlay, for appellant.

MILLER, Judge.

This is an appeal from a summary judgment entered by the Court of Common Pleas of Auglaize County granting plaintiff-appellee, First National Bank of New Bremen, a deficiency judgment against defendant-appellant, Clarence Turner.

On November 9, 1977, defendant executed a note to plaintiff in the amount of $14,001.12 payable in monthly installments of $583.38.

Upon default, plaintiff repossessed and sold at private sale a truck which secured the note, crediting the note with the sale price of the truck. Plaintiff then filed its complaint demanding judgment for $6,037.76, plus interest and costs. The note and a record of payments were attached to the complaint as exhibits.

Defendant filed a motion to dismiss which the trial court overruled.

Defendant then answered, first denying that he owed plaintiff the sum of $6,037.76, and then asserting, as an affirmative defense, that plaintiff had sold the truck without proper notice and was not entitled to a deficiency judgment.

The parties both moved for summary judgment and made written stipulations including a stipulation that all testimony and evidence adduced at the hearing on defendant's motion to dismiss be considered on the motions for summary judgment.

The trial court sustained plaintiff's motion, overruled defendant's motion and granted summary judgment in favor of plaintiff.

Defendant appeals setting forth five assignments of error.

Assignment of Error No. I:

"The Trial Court erred in finding that Section 1317.16 O.R.C. does not apply to disposition of collateral under 1309.47 O.R.C."

R.C. 1309.47 is entitled "Secured party's right to dispose of collateral after default; effect of disposition," and, as pertinent to this appeal, provides:

"(A) A secured party after default may sell, lease, or otherwise dispose of any or all of the collateral in its then condition or following any commercially reasonable preparation or processing. Any sale of goods is subject to sections 1302.01 to 1302.98 of the Revised Code. * * *

" * * *

"(C) Disposition of the collateral may be by public or private proceedings and may be made by way of one or more contracts. 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 if he has not signed after default a statement renouncing or modifying his right to notification of sale. * * *

" * * *

"(F) This section is subject to the limitations of section 1317.16 of the Revised Code."

R.C. 1317.16 is entitled "Disposition of Collateral" and provides:

"(A) A secured party whose security interest is taken pursuant to section 1317.071 of the Revised Code may, after default, dispose of any or all of the collateral only as authorized by this section.

"(B) Disposition of the collateral shall be by public sale only. Such sale may be as a unit or in parcels and the method, manner, time, place, and terms thereof shall be commercially reasonable. At least ten days prior to sale the secured party shall send notification of the time and place of such sale and of the minimum price for which such collateral will be sold, together with a statement that the debtor may be held liable for any deficiency resulting from such sale, by certified mail, return receipt requested, to the debtor at his last address known to the secured party, and to any persons known by the secured party to have an interest in the collateral. In addition, the secured party shall cause to be published, at least ten days prior to the sale, a notice of such sale listing the items to be sold, in a newspaper of general circulation in the county where the sale is to be held.

"(C) Except as modified by this section, section 1309.47 of the Revised Code governs disposition of collateral by the secured party."

R.C. 1317.071 states that "[n]o retail seller, in connection with a retail installment contract arising out of a consumer transaction, shall take any security interest other than as authorized by this section."

"Retail seller" means a seller who is a party to a retail installment sale. R.C. 1317.01(1).

"Retail installment sale" includes every retail installment contract to sell specific goods, every consumer transaction in which the cash price may be paid in installments over a period of time, and every retail sale of specific goods to any person in which the cash price may be paid in installments over a period of time. R.C. 1317.01(A).

A "secured party" means a lender, seller, or other person in whose favor there is a security interest, including a person to whom accounts or chattel paper have been sold. R.C. 1309.01(A)(13).

It is obvious that R.C. 1309.47 controls disposition of goods after default, except by a retail seller in connection with a retail installment contract arising out of a consumer transaction.

Here, the bank was a "lender," having provided defendant with money to pay off International Harvester Credit Union, a prior lien holder and to pay a repair bill in Pennsylvania and was in no manner a retail seller. The provisions of R.C. 1317.16 are not applicable to this situation and the first assignment of error is not well taken.

Assignment of Error No. II:

"The Trial court erred in finding that Plaintiff-Appellee reasonably complied with the notice requirements of Section 1309.47 R.C."

Assignment of Error No. III:

"The Trial Court erred in finding that the unclaimed notice complied with the requirements of 1309.47 O.R.C."

R.C. 1309.47 requires reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale is to be made to be sent by the secured party to the debtor if he has not signed a statement renouncing his right to such notification. There was...