First Missouri Bank & Trust Co. of Creve Coeur v. Newman
| Decision Date | 07 November 1984 |
| Docket Number | No. 48130,48130 |
| Citation | 680 S.W.2d 767,39 UCC Rep. 1912 |
| Court | Missouri Court of Appeals |
| Parties | 39 UCC Rep.Serv. 1912 FIRST MISSOURI BANK & TRUST COMPANY OF CREVE COEUR, Respondent, v. Joseph D. NEWMAN, and Patricia Ann Newman, Appellants. |
Charles Alan Schoene, St. Louis, for appellants.
Milton P. Goldfarb, Clayton, for respondent.
Plaintiff First Missouri Bank and Trust Company brought suit against defendants Joseph and Patricia Newman in seven counts, seeking recovery on various delinquent notes and overdrawn accounts. The case was tried without a jury, and judgment was entered against defendants on all seven counts. Defendant Joseph Newman 1 appeals from the judgment on four of the counts, all of which were based on secured promissory notes. We reverse and remand for a new trial on these four counts.
In 1975 and 1976, defendant entered into four financing agreements with plaintiff bank. Each of the four promissory notes was secured by a motor vehicle. Defendant defaulted on all four notes, and on May 20, 1976, the bank sent four notices informing defendant that the bank had repossessed all four vehicles. Each notice also stated:
You have ten (10) days to redeem the collateral by presenting [the total amount owed on the note] in certified funds, to First Missouri Bank & Trust Co. ... In the event you do not choose to redeem the above described collateral, it will be sold pursuant to the Uniform Commercial Code, through the competitive bidding process to the highest bidder. You will be liable for any resulting deficiency [sic] if the proceeds of the sale are not sufficient to cover the payoff figure....
After making repairs to the vehicles, the bank sold all four of them for prices below the amounts still owed by defendants. The bank then filed this action to recover the deficiencies. Defendants filed a general denial.
At trial, the parties stipulated to the authenticity of the notes. The court accepted without objection the bank's documentary evidence, consisting of the notes and security agreements, a general ledger detailing the costs of repair and the proceeds of the sale of collateral, and a summary of the bank's requested award. Defendants then offered into evidence the four notices of resale quoted above, along with defendants' interrogatory, "State whether either Defendant was notified of the sale of the collateral held as security for repayment of notes and accounts referred to in the Petition and state the date and manner in which such notice was given," and plaintiff's affirmative answer referencing to the four notices. The bank's counsel objected to defendants' evidence on the ground that no defense of improper notice had been pleaded, but the court overruled the objection and accepted the evidence. No other evidence was admitted on the notice of resale. The bank's sole witness, an employee of the bank, testified as to the nature of the sale. However, upon defendants' objection, this testimony was stricken on the ground that the witness had no personal knowledge of the sale. Thus, no competent evidence was admitted on the nature of the sale.
On appeal, defendant urges error in the trial court's awarding a deficiency judgment on the secured notes because the bank failed to prove compliance with the statutory requirements of notice and commercial reasonableness of the sale of the collateral. Defendant bases his argument on § 400.9-504(3), RSMo.1978, 2 which governs a secured party's right to sell or otherwise dispose of collateral after a debtor has defaulted.
We first address defendant's argument that the bank did not meet the statutory notice requirements. Section 400.9-504(3) requires that when a secured party intends to sell collateral of the type presented here, reasonable notice of the sale must be sent to the debtor. The statutory requirements for reasonable notice of a public sale are different than those for a private sale. "[R]easonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor...." Id. In other words, notice of a private sale may simply state the date after which the collateral will be sold; notice of a public sale must include the time and place of sale. Thus, in order to determine whether sufficient notice of the sale was sent, it may first become necessary to determine whether the sale was public or private. Here, the bank's notice meets the requirements for a private sale, but not for a public sale because no time or place was given.
Because no competent evidence was introduced on the type or manner of sale, it is impossible to discern from the record whether the sale was public or private, and therefore, whether the notice was sufficient. Thus, the issue is whether the bank or the defendants had the burden of proving compliance or non-compliance with the notice requirements. Defendant argues that, as a prerequisite to obtaining a deficiency judgment, the bank must prove that notice was sufficient. The bank argues that by failing to affirmatively plead and prove lack of notice, defendants waived that defense.
Neither the applicable Missouri statute, § 400.9-504, nor the Uniform Commercial Code § 9-504 expressly allocates the burden of proof. We are unable to find any Missouri cases on point, and neither party has cited any. However, we note that the Uniform Commercial Code Comment following § 9-504 states, "[T]his Section follows the provisions of the Section on resale by a seller following a buyer's rejection of goods (Section 2-706) [enacted in Missouri as § 400.2-706]." Construing the notice requirements of § 400.2-706 in Anheuser v. Oswald Refractories Co., 541 S.W.2d 706, 711 (Mo.App.1976), this court stated:
We hold that when a seller avails himself of the remedy afforded by 400.2-706 he must comply with all of the terms of that section and the burden of showing compliance is upon the seller. In this case there was no finding upon this issue .... Defendant [seller] offered no proof. As this case now stands defendant has not pleaded or proved that he complied with 400.2-706 and it may not recover the difference between the sale price and the contract price.
The case was reversed and remanded for a new trial.
The principles announced in Anheuser were applied to the notice requirements of § 400.9-504(3) in ...
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