City Bank & Trust Co. v. VanAndel

• Decision Date: 07 June 1985
• Docket Number: No. 84-127,84-127
• Parties: , 41 UCC Rep.Serv. 282 CITY BANK & TRUST CO., Crete, Nebraska, a Nebraska corporation, Appellant, v. Helen L. Van ANDEL, Appellee.
• Court: Nebraska Supreme Court

Page 789

368 N.W.2d 789

220 Neb. 152, 41 UCC Rep.Serv. 282

CITY BANK & TRUST CO., Crete, Nebraska, a Nebraska corporation, Appellant, v. Helen L. Van ANDEL, Appellee.

No. 84-127.

Supreme Court of Nebraska.

June 7, 1985.

Syllabus by the Court

1. Summary Judgment. A motion for summary judgment shall be granted if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. If there is a genuine issue of fact, summary judgment may not be granted.

2. Summary Judgment: Appeal and Error. In reviewing a summary judgment this court must take the view of the evidence most favorable to the party against whom the motion is directed and give that party the benefit of all favorable inferences which may be drawn from the evidence.

3. Summary Judgment. The party moving for summary judgment has the burden of showing that no genuine issue as to any material fact exists; therefore, that party must produce enough evidence to demonstrate his entitlement to a judgment if the evidence remains uncontroverted, after which the burden of producing contrary evidence shifts to the party opposing the motion.

4. Summary Judgment. Summary judgment is an extreme remedy to be awarded only when the issue is clear beyond all doubt.

5. Uniform Commercial Code: Security Interests: Notice. Compliance with the requirements of the Uniform Commercial Code for notification as to the disposition of collateral, Neb.U.C.C. § 9-504(3) (Reissue 1980), is a condition precedent to a secured creditor's right to recover a deficiency.

6. Uniform Commercial Code: Security Interests: Notice: Waiver. A debtor's right to notice under Neb.U.C.C. § 9-504(3) (Reissue 1980) may be waived by conduct after default amounting to waiver or estoppel.

Adrian R. Fiala II, Lincoln, for appellant.

J. David Thurber of Doyle and Doyle, Lincoln, for appellee.

William B. Brandt and Robert J. Hallstrom of Brandt, Horan, Hallstrom & Sedlacek, Nebraska City, for amicus curiae Nebraska Bankers Ass'n.

KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ.

BOSLAUGH, Justice.

This is an action on a guaranty executed by the defendant, Helen L. Van Andel, on January 5, 1976, to secure indebtedness of her son, Ronald Van Andel, to the plaintiff, City Bank & Trust Co., Crete, Nebraska. The petition alleged that there was $94,819.82 due the bank on August 2, 1982, the date on which Ronald Van Andel and his wife, Pamela, filed a petition in bankruptcy. Through liquidation of collateral and payments by the debtor, the amount due the bank was reduced to $71,003.35, which amount the plaintiff sought to recover under the guaranty.

The defendant's answer alleged that the plaintiff had sold collateral without notice to the defendant as required by Neb.U.C.C. § 9-504(3) (Reissue 1980). The trial court sustained the defendant's motion for summary judgment on this ground and dismissed the petition. The plaintiff has appealed.

The motion was heard upon the pleadings, the depositions of the president of the plaintiff bank and the defendant, documentary evidence including an affidavit by plaintiff's counsel, and testimony by defendant's counsel. Although the affidavit and testimony of counsel were received without objection to counsels' further participation in the case, we call the attention of counsel to Canon 5, DR 5-102(A), of the Code of Professional Responsibility, which provides that a lawyer upon learning that he ought to be called as a witness as to a contested matter shall withdraw from the conduct of the trial, and his firm, if any, shall not continue representation in the trial.

The plaintiff contends: (1) The district court erred in granting summary judgment because there are genuine issues of material fact; (2) The district court erred in failing to find that the defendant had waived her right to notice of the sale of the collateral or was estopped to rely upon the lack of notice as specified in § 9-504(3); and (3) The district court erred in finding that a notice of sale was required even though the collateral was perishable or threatened to decline speedily in value.

The record shows that the indebtedness of Ronald Van Andel to the plaintiff was delinquent in March of 1982. The Van Andels and the defendant were notified in a letter from the plaintiff dated March 22, 1982, that the loan was delinquent. Thereafter, William Fulton, the president of City Bank, and Ronald Van Andel, together with the Van Andels' attorney, J. David Thurber, attempted to "work out" the problems associated with the loan.

On May 17, 1982, Thurber wrote Fulton regarding City Bank's most recent offer to "work out" the Van Andels' delinquent debt situation. The letter stated that "Ron and Pam will accept the transfer of the current indebtedness ... to a 10-year note with a 3-year balloon and a variable interest rate. Helen Van Andel also will agree to secure the new 10-year note with unencumbered real estate in Seward County, Nebraska." In exchange the letter requested that the defendant be released from her obligations under any previous guarantees. A carbon copy of this letter was sent to the defendant. Subsequently on June 29, 1982, City Bank sent copies of a promissory note, mortgage, financing statement/security agreement, and a letter outlining to Thurber, the Van Andels, and the defendant the agreed-upon transfer of indebtedness. By the terms of these documents, the Van Andels were to be extended credit in the amount of $80,000 with interest at the rate of 17 percent; the loan was to be secured by a mortgage on real estate owned by the defendant, and by equipment, livestock, and crops owned by the debtor.

On August 2, 1982, the Van Andels filed a voluntary petition in bankruptcy under 11 U.S.C. ch. 7 (1982). Thereafter, on August 17, 1982, Adrian Fiala, as attorney for City Bank, sent a letter to Thurber acknowledging receipt of the bankruptcy notice. The letter indicated that City Bank was "quite concerned" as to the status of its secured collateral and requested Thurber to notify the Van Andels that Fulton would be making a physical inventory of the collateral on August 19, 1982. The letter also inquired as to whether Thurber represented the defendant.

On August 17, 1982, Fiala sent a letter to the defendant demanding payment under the guaranty of the Van Andels' indebtedness. A copy of this letter was sent to Thurber. On August 20, 1982, Thurber sent a letter to Fiala stating that his office represented the defendant and that he may be contacted regarding the matter. From that point on the parties and the Van Andels, acting through their attorneys, undertook negotiations regarding the collateral.

On August 19, 1982, City Bank filed a request in the U.S. Bankruptcy Court for relief from the automatic stay, based on the alleged perishable condition of the livestock. The record contains a veterinarian's affidavit attesting to the sickly condition of the livestock concerned. Relief from the stay was granted on September 15, 1982. Prior to that, on September 2, 1982, the Van Andels, after orally notifying City Bank and receiving no objection, sold a number of hogs at the Beatrice Sales Pavilion. City Bank then physically repossessed the remainder of the livestock on September 27 and November 22, 1982. In the first repossession, 7 mixed feeder pigs were sold at the Crete Livestock Market; the second time, 14 cows and 18 calves were sold. Although no specific written notice was given to the defendant of these sales, the defendant did supervise the loading of the livestock repossessed by City Bank on September 27, 1982. Fulton testified by way of deposition that "we did everything possible to jointly coordinate all activities of disposition of the collateral with you [Thurber] with verbal communication with Helen, Ron and Pam, and acknowledged the seriousness of the situation."

Throughout this time, lengthy conversations had begun, and there was correspondence between the attorneys, Van Andels, and the defendant concerning the equipment that was collateral. On January 6, 1983, Fiala notified the debtors, through a letter to Thurber, of the impending sale of equipment. The equipment was sold at a public auction on January 16, 1983.

Neb.Rev.Stat. § 25-1332 (Reissue 1979) provides that a motion for summary judgment shall be granted "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." If there is a genuine issue of fact, summary judgment may not be granted. Moore v. American Charter Fed. Sav. & Loan Assn., 219 Neb. 793, 366 N.W.2d 436 (1985). In reviewing a summary judgment this court must take the view of the evidence most favorable to the party against whom the motion is directed and give that party the benefit of all favorable inferences which may be drawn from the evidence. Yankton Prod. Credit Assn. v. Larsen, 219 Neb. 610, 365 N.W.2d 430 (1985); Gall v. Great Western Sugar Co., 219 Neb. 354, 363 N.W.2d 373 (1985). The party moving for summary judgment has the burden of showing that no genuine issue as to any material fact exists; therefore, that party must produce enough evidence to demonstrate his entitlement to a judgment if the evidence remains uncontroverted, after which the burden of producing contrary evidence shifts to the party opposing the motion. Moore, supra; Gall, supra. Summary judgment is an extreme remedy to be awarded only when the issue is clear beyond all doubt. Yankton Prod. Credit Assn., supra.

The record discloses that there are a number of genuine issues of material fact and that it was error to sustain the defendant's motion for summary judgment.

Principally of concern herein is the application of...