Boatmen's Bank of Nevada v. Dahmer

• Decision Date: 16 September 1986
• Docket Number: No. WD,WD
• Parties: 2 UCC Rep.Serv.2d 754 BOATMEN'S BANK OF NEVADA (formerly Charter Bank of Nevada) a banking corporation, Respondent, v. Greggory D. DAHMER, Appellant. 37859.
• Court: Missouri Court of Appeals

Page 876

716 S.W.2d 876

2 UCC Rep.Serv.2d 754

BOATMEN'S BANK OF NEVADA (formerly Charter Bank of Nevada) a banking corporation, Respondent, v. Greggory D. DAHMER, Appellant.

No. WD 37859.

Missouri Court of Appeals,

Western District.

Sept. 16, 1986.

Thomas L. Williams, Joplin, for appellant.

James R. Bickel, Nevada, for respondent.

Before CLARK, C.J., and NUGENT and GAITAN, JJ.

CLARK, Chief Judge.

Boatmen's Bank sued to recover a deficiency on a note given by appellant, Greggory Dahmer, and was awarded a judgment in the amount of $94,182.48 plus interest. On this appeal, Dahmer contends the judgment should be reversed because the bank by its conduct in the repossession and sale of collateral waived its right to pursue an action for the deficiency. Reversed.

The promissory note in question was executed by Dahmer on June 26, 1984 and given to the bank as consideration for a loan. Repayment of the note was secured by the pledge of 347 head of cattle ostensibly owned at the time by Dahmer and listed in a security agreement. The bank later called for payment of the note, apparently because only a few of the cattle could be found at the location specified in the security agreement and those which were located were not in prime condition. The note was declared in default when Dahmer did not respond.

The record is not fully explanatory of subsequent events, but it does appear that Dahmer acquiesced in surrendering possession to the bank of some 77 head of cattle which were sent to a sale barn. The proceeds from the sale were applied to the costs of transportation and sale and attorney fees and the balance was credited against the note. There is no dispute as to the amount realized from the sale or the application of credits.

Dahmer contends on this appeal that the bank waived its right to sue for a deficiency balance when it failed to comply with § 400.9-504(3), RSMo.1978 in that it gave him no written notice of the time and place where the collateral was to be sold after repossession. In an associated point, he says reasonable notice could not have been given in any event because the two days which elapsed between the repossession and the sale did not amount to a commercially reasonable interval. The bank counters by saying that Dahmer consented to an immediate sale of the cattle and thereby waived his right to notice and is equitably estopped from raising the issue of notice.

For the purpose of ruling the points, we assume the facts to be, as contended by the bank, that Dahmer was present when the bank took possession of the cattle, that Dahmer was orally informed the cattle would be sold two days later by the Fort Scott Sale Company and that the bank had previously been in contact with Dahmer's attorney who had consented on behalf of Dahmer to repossession of the cattle and an immediate sale.

The applicable provision of the Uniform Commercial Code cited above reads as follows:

"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, and except in the case of consumer goods to any other person who has a security interest in the collateral and who has duly filed a financing statement indexed in the name of the debtor in this state or who is known by the secured party to have a security interest in the collateral." Section 400.9-504(3), RSMo.1978.

If a creditor fails to give notice to the debtor of the time and place of sale of repossessed collateral, the creditor waives his entitlement to pursue a deficiency judgment. Gateway Aviation, Inc. v. Cessna Aircraft, 577 S.W.2d 860, 863 (Mo.App.1978). A creditor is held to the requirement of strict compliance with the notice provision of § 400.9-504(3), RSMo.1978, and any doubt as to whether there has been compliance is to be resolved in favor of the debtor. Modern Auto Co. v. Bell, 678 S.W.2d 443, 444 (Mo.App.1984). The burden of proof is on the creditor to show compliance with the statute both as to notice and as to the commercial reasonableness of the sale. First Missouri Bank & Trust Co. v. Newman, 680 S.W.2d 767, 770 (Mo.App.1984).

The evidence in the present case, consisting only of testimony by a single witness offered by the bank, establishes at most that Dahmer received verbal notice from the bank officer at the time the cattle were repossessed that they would be sold two days later at a Fort Scott auction barn. The hour of the day when the sale would be conducted was not stated and there is no contention that any written notice at all was supplied. The first issue to be considered is, therefore, whether such verbal notice amounted to strict compliance with the notification mandated by the statute as a precondition to a suit for deficiency.

The question of whether the notification requirement of § 400.9-504(3) contemplates in all instances a writing has not previously been expressly addressed...