Fidelity Financial Services, Inc. v. Stewart, 91-CA-0217

• Decision Date: 26 February 1992
• Docket Number: No. 91-CA-0217,91-CA-0217
• Parties: 19 UCC Rep.Serv.2d 940 FIDELITY FINANCIAL SERVICES, INC. v. Scotty STEWART and Joann Stewart.
• Court: Mississippi Supreme Court

Page 1111

608 So.2d 1111

19 UCC Rep.Serv.2d 940

FIDELITY FINANCIAL SERVICES, INC. v. Scotty STEWART and Joann Stewart.

No. 91-CA-0217.

Supreme Court of Mississippi.

Feb. 26, 1992.

On Rehearing Nov. 19, 1992.

John E. Howell, Meridian, for appellant.

Dannye L. Hunter, Jackson, for appellees.

Before HAWKINS, P.J., and PRATHER and SULLIVAN, JJ.

HAWKINS, Presiding Justice, for the court:

From the dismissal of its complaint for a deficiency judgment, Fidelity appeals. The only issue is whether the circuit court erred in ruling Fidelity failed to give the Stewarts reasonable notice of the sale of their repossessed automobile.

Following default in payment of a promissory note, Fidelity repossessed and sold the Stewarts' car, then sued in the circuit court of Scott County for a deficiency judgment in the amount of the loan balance of $2,751.87, attorney fees of $917.29, and interest and costs. At a bench hearing, the circuit judge gave a directed verdict for the Stewarts, holding that notice of sale mailed to the Stewart's address, and signed for by a Stewart relative, was insufficient. This was error.

This case is controlled by McKee v. Mississippi Bank & Trust Co., 366 So.2d 234, 238 (Miss.1979), where we held:

If notice in writing is personally delivered to the debtor, or if it is sent by mail to the debtor's address (whether actually received by the debtor or not), such personal delivery or sending by mail will satisfy the requirement of notice....

REVERSED AND REMANDED.

ROY NOBLE LEE, C.J., DAN M. LEE, P.J., and PRATHER, ROBERTSON, SULLIVAN, PITTMAN, BANKS and McRAE, JJ., concur.

ON PETITION FOR REHEARING

I. INTRODUCTION

Fidelity Financial Services repossessed Scotty and Joann Stewart's vehicle after they had become delinquent in their monthly payments. Fidelity sold the vehicle and then sued the Stewarts in the Scott County Circuit Court seeking a deficiency judgment.

On motion for a directed verdict, the Stewarts claimed that they never received notice of the sale of their vehicle. According to the evidence adduced at trial, Fidelity provided notice of the sale of the vehicle by mailing a certified letter to the Stewarts' address. Unfortunately, the Stewarts' address is shared by three other families. That is, four families receive their mail through the same mailbox.

The return receipt of the certified notification letter indicated that the Stewarts did not sign for it; rather, their step-aunt, Bernice Morris, did. Morris testified that she did not give the letter to the Stewarts; she gave it to Madison McBride, who is Joann Stewart's father. McBride did not testify, so what he did with the letter is unknown. What is known is that the Stewarts claimed at trial that they never received the letter. Fidelity countered that, as a matter of law, it provided sufficient notice. For support, Fidelity cited this Court's opinion in McKee v. Mississippi Bank & Trust Co., 366 So.2d 234, 238 (Miss.1979):

If notice in writing is personally delivered to the debtor, or if it is sent by mail to the debtor's address (whether actually received by the debtor or not), such personal delivery or sending by mail will satisfy the requirement of notice.

The trial judge directed a verdict in favor of the Stewarts after reasoning:

[Fidelity] takes the position that, in this case here, that there was notice sent out [and] was received by a Mrs. Bernice Morris.... Fidelity was in good shape by mailing--complying with [relevant law], by mailing the notice to the known address, and I think that if [it] had just gone and mailed a letter to them, [it] would not have known that Bernice Morris received that notice, and [it] could have rested upon [law for support]. Now, what we have that's unusual in this case is that you have four different parties that are receiving their mail through the same mailbox. Therefore, it is my opinion that whenever they received notice back--[Fidelity] sent [its] letter by certified mail--[it] received notice that Bernice Morris had received the letter addressed to the defendants, that [it] then had the responsibility of taking further action to protect [itself], and did not do so.... [Fidelity] then, knew--[it was] assuming that since [it] mailed it to that address, that [it] would receive it, and I don't think the law would allow that assumption, and when [it] did receive notice back that Bernice Morris had received the letter that was addressed to the defendants, then the responsibility then was [Fidelity's] to take additional notice, or action. Therefore, the motion is sustained.

Record Vol. II, at 36-37.

On appeal, this Court reversed and remanded after concluding that the trial judge erred in "holding that notice of sale mailed to the Stewart's [sic] address, and signed for by a Stewart relative, was insufficient." See page 1111.

The Stewarts filed a petition for rehearing, which this Court has granted for the following reasoning.

II. ANALYSIS

Notice of liquidation of collateral by a secured creditor is governed by Sec. 9-504(3) of the Uniform Commercial Code as adopted by this State. See Miss.Code Ann. Sec. 75-9-504(3) (1972) ("[R]easonable notification of the time and place of any public sale ... shall be sent by the secured party to the debtor."); see also Associates Commercial Corp. v. Parker Used Trucks, Inc. & J.R. Parker, 601 So.2d 398, 400, (Miss.1992); Murray v. Payne, 437 So.2d 47, 50 n. 2 (Miss.1983); McComb Equipment Co. v. Cooper, 370 So.2d 1367, 1368 (Miss.1979); Walker v. V.M. Box Motor Co., Inc., 325 So.2d 905, 906 (Miss.1976). In the case sub judice, the trial judge construed the foregoing statutory provision and ruled that mailing the letter to the Stewarts was sufficient as a matter of law but insufficient as a matter of fact.

This Court's analogous decision in Carter v. Allstate, 592 So.2d 66, 75 (Miss.1991), is illustrative of the trial judge's reasoning. In Carter, this Court decided that a certificate of mailing establishes a presumption that a notice of cancellation of an insurance policy reached its destination (the insured's last known address). However, this presumption "may be rebutted by the insured who contends that he or she did not actually receive the notice." But "mere denial of receipt is insufficient to create a triable issue of fact." In other words, " '[p]roof of mailing of notice of cancellation ... shall be sufficient proof of notice'--absent countervailing evidence of sufficient weight to rebut the presumption that it was received." Id.

Another case--In re Carter, 511 F.2d 1203, 1204 (9th Cir.1975)--is particularly on point. In In re Carter, the creditor repossessed a harvester (farm equipment) after the debtor failed to make his monthly payment. The creditor then mailed a certified letter, return receipt requested, to the debtor notifying him of the public sale of the harvester. The letter was returned unclaimed, and the creditor made no further attempt to notify the debtor--although the creditor knew of the debtor's whereabouts. After the sale, the creditor sued the debtor seeking a deficiency judgment. The debtor claimed that the creditor failed to provide him with notice of the sale and should therefore be barred from recovering a deficiency judgment; the creditor countered that he complied with the dictates of the commercial code and that the presumption of receipt should apply. The bankruptcy judge agreed with the debtor, and the Ninth Circuit affirmed. The Ninth Circuit explained:

The presumption that a letter duly mailed was received by an addressee is not conclusive, but rebuttable by satisfactory evidence to the contrary. Consequently, where, as here, there is uncontradicted evidence that the letter mailed was not received, the presumption of receipt is overcome.

The notice requirement is for the protection of the debtor. Its purpose is to permit the debtor to bid at the foreclosure sale or to otherwise assure that the sale was conducted in a commercially reasonable manner. Here that purpose has been frustrated by the failure of the [creditor] to attempt a second delivery when it knew the notice had not been received by the debtor.

Id. at 1204-05 (construing statutory law in a state which adopted the UCC); see, e.g., Day v. Schenectady Discount Corp., 125 Ariz. 564, 611 P.2d 568 (1980) (creditor's knowledge of debtor's nonreceipt of notice of sale imposed further duties on creditor of making additional efforts to provide notice in order to comply with UCC 9-504(3)); Commercial Credit Corp. v. Cutshall, 28 U.C.C.Rep.Serv. 277 (Tenn.App.1979) (same); Geohagan v. Commercial Credit Corp., 130 Ga.App. 828, 204 S.E.2d 784 (App.1974) (same).

In the case sub judice, the spirit and principles of Carter v. Allstate, In re Carter, and other related cases are reflected in the trial judge's ruling. Fidelity's return receipt established a presumption that the notice reached its destination (the Stewarts' address) and that the Stewarts received notice of the sale. The Stewarts, however, rebutted this presumption by proving that they did not sign the return receipt and by presenting the testimony of Bernice Morris who admitted that she did not give the letter to the Stewarts after she signed for it. Thus, a factual dispute arose and the judge resolved it in favor of the Stewarts.

III. CONCLUSION

In sum, the trial judge agreed with Fidelity's contention that it complied with relevant law on providing notice of the sale of a debtor's repossessed collateral. However the judge concluded that Fidelity should have done more once it learned that someone other than the Stewarts had signed the return receipt. Restated, Fidelity provided sufficient notice as a matter of law but not as a matter of fact.

The foregoing should not be construed as advocating adoption of an actual-notice requirement. Sending reasonable notice is all that Miss.Code Ann. Sec. 75-9-504(3) requires. In cases in which the creditor knows that the debtor has not received notice, ...