Finch v. Auburn Nat. Bank of Auburn
| Decision Date | 11 February 1994 |
| Parties | 25 UCC Rep.Serv.2d 1300 Stephen Lanier FINCH, E. Lanier Finch, and James Howard Finch v. AUBURN NATIONAL BANK OF AUBURN, a national banking association. M.F. CARPENTER v. AUBURN NATIONAL BANK OF AUBURN, a national banking association. Frank C. MARTIN, Sr. v. AUBURN NATIONAL BANK OF AUBURN, a national banking association. R.A. BIRGEL and Thomas C. Wilkinson v. AUBURN NATIONAL BANK OF AUBURN, a national banking association. AV93000203, AV93000223, AV93000224 and AV93000225. |
| Court | Alabama Court of Civil Appeals |
John Emory Waddell and Ron Storey, Dothan, for M.F. Carpenter.
Edward M. Price, Jr. of Farmer, Price, Hornsby & Weatherford, Dothan, for Thomas C. Wilkinson and R.A. Birgel.
Arnold W. Umbach, Jr. of Walker, Hill, Adams, Umbach, Meadows & Walton, Opelika, for appellee.
RICHARD L. HOLMES, Retired Appellate Judge.
Auburn National Bank of Auburn (Bank) filed suit against nine individuals, alleging that these individuals (hereinafter referred to as debtors) had defaulted under the terms and conditions of a promissory note dated November 4, 1991. The Bank alleged that the debtors owed the Bank the sum of $61,459.32, plus interest, attorney fees, and costs.
Thereafter, the Bank filed a motion for summary judgment. The trial court entered an order, granting the motion for summary judgment in favor of the Bank and against all nine debtors, separately and severally. The trial court awarded the Bank $67,946.50 in principal and interest and $3,907.41 in attorney fees and costs, for a total award of $71,853.91.
The debtors appeal. This case is before this court pursuant to Ala.Code 1975, § 12-2-7(6).
The facts surrounding this appeal are not in dispute. The resolution of the dispute is accomplished by applying the law to the undisputed material facts. Where only a question of law is presented, a case is appropriate for a summary judgment. Rees v. Peoples Bank of Greensboro, 571 So.2d 1035 (Ala.1990).
The promissory note dated November 4, 1991, was a renewal of a loan previously made. The note indicated that the principal of the loan totalled $190,520.42 and that the collateral for the note was 6,350 shares of SouthTrust Bank common stock. The note was signed by all nine debtors. Upon default of the note, the Bank sold the collateral listed in the note, and the net proceeds of $151,752.90 were applied to the principal. Then the Bank filed suit, seeking to recover the deficiency owed on the note. As previously noted, the trial court found in favor of the Bank.
The primary issue on appeal is whether the trial court improperly granted the motion for summary judgment in that the Bank failed to act in a commercially reasonable manner in disposing of the stock, which was collateral for the note. Specifically, the Bank failed to give notice to the debtors of the sale of stock.
At the outset we note that First Alabama Bank of Montgomery, N.A. v. Parsons, 390 So.2d 640 (Ala.Civ.App.1980), modified, 426 So.2d 416 (Ala.1982), provides that although the lack of notice of a default sale is commercially unreasonable behavior, it does not bar a secured party's recovery of a deficiency judgment. If the debtor incurs damages because the creditor failed to meet the notice requirement, these damages may be applied as a "set off" against the total deficiency. First Alabama Bank, 390 So.2d 640.
We further note that Ala.Code 1975, § 7-9-504(3), provides, in pertinent part:
"Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a...
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