Federal Deposit Ins. Corp. v. Farrar, 2--56919
| Decision Date | 31 July 1975 |
| Docket Number | No. 2--56919,2--56919 |
| Citation | 231 N.W.2d 602 |
| Parties | 17 UCC Rep.Serv. 622 FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver of State Bank of Prairie City, Prairie City, Iowa, Appellee, v. Foster Wayne FARRAR, Appellant. |
| Court | Iowa Supreme Court |
Robert W. Pratt and Dennis J. Kirkwood, Des Moines, for appellant.
R. Eugene Knopf, Newton, for appellee.
Heard by MOORE, C.J., and RAWLINGS, LeGRAND, UHLENHOPP and REYNOLDSON, JJ.
Defendant Foster Wayne Farrar (Farrar) appeals from deficiency judgment entered on promissory notes executed by him and held by plaintiff Federal Deposit Insurance Corporation (FDIC), as Receiver of State Bank of Prairie City (State Bank).
In Division I of its petition FDIC sought a deficiency judgment of $1694.42, plus interest, on the note secured by Farrar's mobile home and in Division II a deficiency judgment of $445, plus interest, on the note secured by Farrar's automobile. FDIC further prayed for statutory attorney fees and costs.
Farrar's answer alleged, inter alia, plaintiff had taken possession of his 1964 mobile home and 1964 Chevrolet automobile which were worth more than the balance owing on his notes and sold them with no notice to him of the time and place of any public or private sale thereof. Farrar sought the surplus and denied plaintiff's claim to a deficiency judgment.
Plaintiff's reply admitted sale of the collateral but denied it was required to give notice of any public or private sale. It asserted the collateral was of a type customarily sold on a recognized market.
The issues were submitted to the trial court on a written stipulation of facts. A summary of the stipulated facts is as follows:
November 5, 1968 defendant Farrar executed to State Bank a promissory note in the amount of $3522.72. Farrar purchased a 1964 Hillcrest mobile home with the $2700 he received under the note. The mobile home secured the note.
December 30, 1969 Farrar executed another promissory note to State Bank. The total payments under the note amounted to $507. Farrar used the $470 he received under the note to purchase a 1964 Chevrolet sedan, which was listed in the same instrument as security for the note.
On or about April 12, 1971 Farrar was in default on payments under both notes. By virtue of acceleration clauses in the instruments Farrar was then obligated to pay plaintiff $2271.92 and $470, the remaining principal balances then due under the respective notes.
On or about April 12, 1971 Farrar signed and delivered to FDIC the following statement which had been prepared by FDIC:
"Federal Deposit Insurance Corporation April 12, 1971
Receiver of State Bank of Prairie City
Prairie City, Iowa
Gentlemen:
This is your authority to repossess my 1964 Hillcrest Mobile Home, Serial Number 5010 2197, which is pledged as security to my indebtedness at the State Bank of Prairie City, Prairie City, Iowa described as follows: (Note dated November 5, 1968 in the original amount of $3522.72, payable in monthly installments of $73.40, beginning December 30, 1968). This note has been reduced to a present unpaid balance of $2271.92. It is fully understood you will have this mobile home appraised and sell at the appraisal value or best offer, and apply the proceeds to costs and to my unpaid balance. Also, it is understood that I will be responsible for any deficiency balance after sale has been applied.
____________________ ____________________
Witness Signature
____________________ ____________________
Witness Signature"
On or about April 12, 1971 a similar statement was signed by Farrar and sent to FDIC authorizing repossession of the 1964 Chevrolet automobile.
Plaintiff thereafter took possession of the mobile home and automobile and had them appraised. May 6, 1971 the estimated fair market value of the 1964 Chevrolet was $130 'in its current condition.' A May 10, 1971 appraisal of the 1964 Hillcrest mobile home indicated it was worth $790 after payment of $349.50 in taxes due.
On or before June 8, 1971 FDIC sold the 1964 Hillcrest mobile home for $990. On or before August 6, 1971 FDIC sold the 1964 Chevrolet automobile for $25. FDIC gave Farrar no prior notice of the time and place of either sale.
Application of the mobile home sale proceeds to the unpaid balance of the first note left a deficiency balance of $1694.42 plus interest as provided in the note.
After the proceeds from the sale of the automobile were applied to the unpaid balance of the second note there remained a deficiency balance of $445, plus interest, as provided in the note.
The trial court found plaintiff did not act in bad faith in repossessing and selling the collateral and that because defendant agreed to be responsible for any deficiency balance the question whether defendant waived his right to notice of sale was of no legal consequence. No November 14, 1973 deficiency judgment was entered against defendant for the amount prayed for plus interest and attorney fees. Defendant has appealed.
As stated by the trial court: 'The sole issue in this case is whether the plaintiff was obligated by law to give defendant notice of the date, time and place of such public or private sale pursuant to section 554.9504(3) of the Code of Iowa, and whether plaintiff is entitled to a deficiency judgment against defendant as prayed in plaintiff's petition.'
I. We, like the trial court, refer to section 554.9504(3), Code 1973. The identical applicable provisions are in the 1966 and 1971 Codes. We are not concerned with statutory changes made after the trial of this case.
Section 554.9504(3) of Iowa's Uniform Commercial Code, as pertinent here, provides:
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