Commercial Credit Equipment Corp. v. Kelland

Decision Date07 December 1966
Docket NumberNo. 7869,7869
Citation421 P.2d 325,101 Ariz. 477
PartiesCOMMERCIAL CREDIT EQUIPMENT CORPORATION, a corporation, Appellant and Cross-Appellee, v. Roy KELLAND, Appellee and Cross-Appellee, and Beeler Equipment, Inc., a corporation, Appellant and Cross-Appellant.
CourtArizona Supreme Court

Byrne & Green, Yuma, for appellant and cross-appellee.

Brandt & Baker, Yuma, for appellee and cross-apppellee.

Westover, Copple, Keddie & Choules, Yuma, for appellant and cross-appellant.

UDALL, Justice.

Commercial Credit Equipment Corporation (hereinafter referred to as plaintiff) brought this action on its amended complaint against Walter L. Dice, Roy Kelland, and Beeler Equipment, Inc., (hereinafter referred to as Beeler) to recover the balance due on a conditional sales contract. Plaintiff alleged that Dice had purchased a combine harvester from Beeler executing a conditional sales agreement therefor, and that Kelland signed as a co-signer. Beeler had assigned the contract to plaintiff, but the payments thereon had not been made and plaintiff had sold the combine pursuant to statute and now desired a deficiency judgment.

Dice offered no defense on the merits, but answered alleging his discharge in bankruptcy. Beeler and Kelland answered alleging that plaintiff had repossessed the combine and retained it without reselling for such length of time as to release all parties liable under the contract and counterclaimed for attorney fees and punitive damages for having to defend the suit. Beeler also filed a cross claim against Kelland for judgment over for anything Beeler was obligated to pay plaintiff.

At the trial the issues were submitted on special interrogatories to a jury, which resolved them in favor of defendants Beeler and Kelland. The trial court entered judgment upon the special verdict in favor of Kelland for $1,750.00 as attorney fees and for $10,000.00 as exemplary or punitive damages and against plaintiff. However, upon plaintiff's motion for judgment notwithstanding the verdict judgment was entered in favor of plaintiff and against Beeler for the balance due on the conditional sales contract, which was $3,740.35, plus attorney fees of $875.00. Judgment was also ordered by the court in favor of Dice on all matters and in favor of Kelland and against Beeler on its cross claim. Plaintiff appeals from the denial of its motions for judgment notwithstanding the verdict against Kelland and for a new trial on Kelland's counterclaim. Also, Beeler cross-appeals from the judgment notwithstanding the verdict entered in favor of plaintiff and from the judgment dismissing Beeler's cross-complaint against Kelland.

The facts, briefly stated, were that Beeler, as a farm machinery dealer, sold a combine to Dice on July 30, 1959. The sale was consummated as a conditional sale, with the agreement signed by Beeler as seller, Dice as buyer and by Kelland as a co-signer. The contract, the terms of which called for the payment of three annual installments of $2,710.50 due on January 30th of 1960, 1961 and 1962, was assigned to plaintiff by Beeler. As a part of the assignment Beeler agreed that in the event of Dice's default, it would repurchase the interest of plaintiff in the combine and pay plaintiff the unpaid balance due on the contract, plus the expenses of repossession and collection, including attorney fees.

Beeler also agreed that plaintiff could release any rights against the buyer and grant any extension of time of payment without affecting the liability of Beeler to the plaintiff. By way of further security to plaintiff, Beeler executed and delivered a specific guaranty which contained, among other promises and agreements, the following:

'In the event of any breach of any of the terms and conditions of the Instrument, we will pay to CCEC, immediately upon demand, the unpaid balance owing thereon, without requiring any proceedings to be taken by CCEC against Buyer or the property covered thereby.'

Dice took possession of the combine in July, 1959 and used it, but when the first installment of $2,710.50 became due on January 30, 1960, Dice made only a partial payment of $750.00. Plaintiff notified Beeler by letter that if Dice was unable to pay the balance of the first installment Beeler would have to repurchase the interest of plaintiff by paying the balance due on the contract. Between January and September of 1960, plaintiff also corresponded with Dice concerning his delinquency, until finally by reason of Dice's continuing default, plaintiff repossessed the combine on September 20, 1960. On September 22nd, plaintiff notified Dice, Kelland and Beeler of such fact and made formal demand on all three defendants for the balance due on the contract.

The defendants failed to pay as demanded, but on November 17, 1960, 57 days after the repossession, possession of the combine was returned to Dice pursuant to a written agreement between Dice, Kelland and plaintiff, by which the time for payment of the 1960 installment was extended. However, Dice again failed to make the payments when due, whereupon this was filed February 1, 1961. The combine was repossessed by plaintiff on February 8, 1961, and after the proper notices and publication, was sold at public auction on March 7, 1961, to Roland Beeler for $3,800.00. The proceeds of the sale were applied to the balance due on the contract and there remained due the sum of $3,740.35.

Plaintiff's first assignment of error is that the verdict and judgment in favor of Kelland and against plaintiff on plaintiff's complaint is unsupported by the evidence and contrary to law for the reason that the holding of the combine for 57 days after repossession without proceeding with notice of public sale was not unreasonable under the circumstances.

A.R.S. § 44--320 does not require the resale of the goods if the conditional buyer has paid less than 50 per cent of the purchase price, unless the buyer demands it. Herein, Dice had not paid more than 50 per cent of the purchase price at the time plaintiff repossessed the combine and Dice did not demand a resale, so, any resale by plaintiff would have been voluntary. Such a voluntary sale is governed by the last sentence of § 44--320:

'The seller may voluntarily resell the goods for account of the buyer on compliance with the same requirements.'

Our § 44--320 is § 20 of the Uniform Conditional Sales Act. 2 Uniform Laws Annot., pp. 30--34 (1922). The courts in other jurisdictions that have enacted the Uniform Act agree that the proper interpretation of this section is that no specific time limit is set for a voluntary resale, the only requirement being that such a sale must be made within a reasonable time after the retaking. In re White Allom & Charles Roberson of London, Inc., 253 App.Div. 220, 1 N.Y.S.2d 715; Central Acceptance Corp. v. Massey, 107 W.Va. 503, 148 S.E. 864; Peterman v. Shore Motors, Inc., 54 Del. 229, 175 A.2d 739.

The question therefore presented is what is a 'reasonable time'. In Bergen Auto Co. v. Mattarochio, 58...

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