Exch. Bank of Mo. v. Gerlt, No. WD 74206.

• Court: Court of Appeal of Missouri (US)
• Writing for the Court: MARK D. PFEIFFER
• Citation: 367 S.W.3d 132,77 UCC Rep.Serv.2d 638
• Docket Number: No. WD 74206.
• Decision Date: 22 May 2012
• Parties: EXCHANGE BANK OF MISSOURI, Appellant, v. Gordon Lee GERLT and Willa Gerlt, Respondents.

367 S.W.3d 132
77 UCC Rep.Serv.2d 638

EXCHANGE BANK OF MISSOURI, Appellant,
v.
Gordon Lee GERLT and Willa Gerlt, Respondents.

No. WD 74206.

Missouri Court of Appeals,
Western District.

May 22, 2012.

Ron Sweet, Columbia, MO, for Appellant.

William J. Daily, Glasgow, MO, for Respondents.

Before Division II: VICTOR C. HOWARD, Presiding Judge, and MARK D. PFEIFFER and KAREN KING MITCHELL, Judges.

MARK D. PFEIFFER, Judge.

Exchange Bank of Missouri (“the Bank”) appeals the judgment of the Circuit Court of Howard County, Missouri (“trial court”), in favor of Gordon and Willa Gerlt (“the Gerlts”) on the Bank's claim for an alleged deficiency balance related to a promissory note in default. We affirm.

Factual and Procedural Background¹

The Gerlts executed a $46,500 promissory note with the Bank in January 2005.

[367 S.W.3d 133]

The promissory note was secured with the following collateral: a 1996 Dodge Dakota pickup truck; a 1967 Ford pickup truck; a 1999 Kawasaki ATV; and a 1978 logging truck. In October 2005, though the Gerlts were then already in default under the terms of the promissory note, the Bank released all of the collateral securing the promissory note with the exception of the 1978 logging truck (“the logging truck”). In November 2005, due to the Gerlts? continuing default status, the Bank repossessed the logging truck and, without providing notice to the Gerlts as required by section 400.9–611,² sold the logging truck for $5,000 to Kenneth Ray (“Ray”), another customer of the Bank.

Subsequently, the Bank filed suit against the Gerlts to recover the difference between the amount paid by Ray for the collateral and the remaining amount owed under the promissory note—$55,033.32 at the time of the bench trial in 2010.

At trial, the Bank offered Ray's testimony as to his experience in the logging industry and the events surrounding his purchase of the logging truck. Ray testified that he was neither an automotive dealer nor an automobile appraiser, but he had purchased logging vehicles over his eighteen-year career in the logging industry and had spoken to other loggers to find out what they typically would pay for logging trucks. Given his experience in the industry, Ray offered the Bank $5,000 for the logging truck, and without any further negotiations, the Bank accepted Ray's offer. Though the Bank offered Ray as an expert witness on the topic of the logging truck's value, Ray never testified as to “the value” of the logging truck at the time of his purchase—only that he was willing to offer $5,000 for the logging truck and that the Bank accepted his first and only offer. Likewise, Ray never testified as to his opinion of what the logging truck would have sold for had the sale of the collateral by the Bank been in compliance with Article 9 of the Mo. UCC. Though the Gerlts objected to much of Ray's testimony at trial, the trial court permitted all of Ray's testimony to come into evidence.

Mr. Gerlt, too, testified. He explained that the large logging truck tires—fourteen in total—had been replaced not long before the November 2005 sale by the Bank and that the cost of the tires alone was in excess of $5,000. Mr. Gerlt also testified that one month before the Bank repossessed the logging truck and sold it without notice to him, he had convinced the Bank's president of the significant value of the logging truck, causing the Bank to release the two pickup trucks and ATV as additional collateral for the $46,500 promissory note.

Noting that the Bank's evidence on the value of the logging truck at the time of its sale was speculative, at best, the trial court concluded that the Bank failed to rebut the presumption under section 400.9–626 that the proceeds from the sale of the logging truck were deemed to be the equivalent of the secured obligation under the promissory note, thereby entering judgment for the Gerlts on the Bank's deficiency claim. The Bank appeals.

[367 S.W.3d 134]

Standard of Review

We review a bench-tried case under the standard outlined in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We will affirm unless there is no substantial evidence to support the verdict, it is against the weight of the evidence, or the court erroneously declares or applies the law. Id. We view the facts, and all reasonable inferences thereto, in the light most favorable to the trial court's judgment. Courtney v. Roggy, 302 S.W.3d 141, 145 (Mo.App. W.D.2009).

Analysis

In its sole point on appeal, the Bank argues the trial court erred in concluding that the Bank's evidence was speculative, because the Bank argues that the trial court failed to give Ray's expert opinion on the value of the logging truck the evidentiary value deserving of expert testimony.

Whether the Bank proved the amount the truck would have sold for if the Bank had complied with Article 9 of the Mo. UCC is crucial to this case.

Under section 400.9–626(a)(3), if a secured party, such as the Bank, fails to comply with Article 9 of the Mo. UCC in the repossession and sale of collateral serving as security for the debt owed the secured party,³ the liability of the debtor

is limited to an amount by which the sum of the secured obligation, expenses, and attorney's fees exceeds the greater of: (A) The proceeds of the collection, enforcement, disposition, or acceptance; or (B) The amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this part relating to collection, enforcement, disposition, or acceptance.

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