First Westside Bank v. For-Med, Inc.

• Decision Date: 24 March 1995
• Docket Number: No. S-94-247,I,FOR-ME,S-94-247
• Citation: 247 Neb. 641,529 N.W.2d 66
• Parties: , 26 UCC Rep.Serv.2d 965 FIRST WESTSIDE BANK, a State Banking Corporation, Appellee, v.nc., a Nebraska Corporation, and David R. Anderson, Individually, Appellants.
• Court: Nebraska Supreme Court

Page 66

529 N.W.2d 66

247 Neb. 641, 26 UCC Rep.Serv.2d 965

FIRST WESTSIDE BANK, a State Banking Corporation, Appellee, v. FOR-MED, Inc., a Nebraska Corporation, and David R. Anderson, Individually, Appellants.

No. S-94-247.

Supreme Court of Nebraska.

March 24, 1995.

Syllabus by the Court

1. Uniform Commercial Code: Sales. Whether a sale of collateral was commercially reasonable within the meaning of Neb. U.C.C. § 9-504(3) (Reissue 1980) is a question of fact.

2. Judgments: Appeal and Error. In a bench trial of a law action, the trial court's factual findings have the effect of a verdict and will not be set aside on appeal unless they are clearly wrong.

3. Secured Transactions: Sales: Proof. Where a secured party seeks a deficiency judgment, it is that party's burden to show the reasonableness of the sale of collateral.

4. Rules of the Supreme Court: Records: Appeal and Error. Neb.Ct.R. of Prac. 9 D(1)f and g (rev.1992) requires that factual recitations be annotated to the record, whether they appear in the statement of facts or argument section of a brief; the failure to do so may result in an appellate court's overlooking a fact or otherwise treating the matter under review as if the represented fact does not exist.

5. Uniform Commercial Code: Secured Transactions: Debtors and Creditors: Sales. With regard to security transactions, the purpose of the Uniform Commercial Code is to protect both the creditor and the debtor; on the sale of collateral, it is the secured party's duty to the debtor to use all fair and reasonable means to obtain the best price under the circumstances, but the creditor need not use extraordinary means.

6. Uniform Commercial Code: Sales. The determination of whether a particular sale was commercially reasonable turns on the particular facts of each case, and under particular circumstances, a sale may be commercially reasonable notwithstanding the lack of advertising.

7. Uniform Commercial Code: Sales. Among the other factors to be considered in determining whether a sale of collateral was commercially reasonable is the adequacy or insufficiency of the price at which it was sold.

Gary L. Dolan, of Wolfe, Anderson, Hurd, Luers & Ahl, Lincoln, for appellants.

James M. Kelley, Lincoln, for appellee.

WHITE, C.J., and CAPORALE, FAHRNBRUCH, LANPHIER, WRIGHT, and CONNOLLY, JJ.

CAPORALE, Justice.

This is the second appearance in this court of the within action at law for a deficiency judgment under the Uniform Commercial Code. While in the first appearance there was no question concerning the notice of the sale of the collateral given the corporate debtor-appellant therein and herein, For-Med, Inc., and while we held that the individual debtor-appellant therein and herein, David R. Anderson, had received constructive notice of said sale, we nonetheless further held that the district court had erred in entering summary judgment in favor of the creditor-appellee therein and herein, First Westside Bank. This was so because no evidence had been presented from which the district court could have found that the sale was commercially reasonable. As a consequence, we reversed the judgment in favor of First Westside and remanded the cause for further proceedings. First Westside Bank v. For-Med, Inc., 240 Neb. 219, 481 N.W.2d 193 (1992) (First Westside I ). The proceedings giving rise to this second appearance then took place, which again resulted in the district court entering judgment in favor of First Westside in the sum of $18,735.04 plus interest and costs. While For-Med and Anderson concede that the price First Westside obtained for the collateral was not "wholly unreasonable," they nonetheless appealed to the Nebraska Court of Appeals, urging that the district court erred in finding the sale to have been commercially reasonable. However, because this court had decided First Westside I, the appeal was docketed in this court. We now affirm the judgment of the district court.

The dispute is controlled by Neb. U.C.C. § 9-504 (Reissue 1980), which read in pertinent part:

(1) A secured party after default may sell, lease or otherwise dispose of any or all of the collateral in its then condition or following any commercially reasonable preparation or processing....

(2) If the security interest secured an indebtedness, the secured party must account to the debtor for any surplus, and, unless otherwise agreed, the debtor is liable for any deficiency....

(3) Disposition of the collateral may be by public or private proceedings and may be made by way of one or more contracts. Sale or other disposition may be as a unit or in parcels and at any time and place and on any terms but every aspect of the disposition including the method, manner, time, place, and terms must be commercially reasonable.

Whether a sale of collateral was commercially reasonable within the meaning of § 9-504(3) is a question of fact. Chadron Energy Corp. v. First Nat. Bank, 236 Neb. 173, 459 N.W.2d 718 (1990). Thus, in reviewing this matter, we are bound by the rule that in a bench trial of a law action, the trial court's factual findings have the effect of a verdict and will not be set aside on appeal unless they are clearly wrong. Label Concepts v. Westendorf Plastics, 247 Neb. 560, 528 N.W.2d 335 (1995); Gibb v. Strickland, 245 Neb. 325, 513 N.W.2d 274 (1994); Diefenbaugh v. Rachow, 244 Neb. 631, 508 N.W.2d 575 (1993); Mix v. City of Lincoln, 244 Neb. 561, 508 N.W.2d 549 (1993).

With that scope of review in mind, and recalling that where a secured party seeks a deficiency judgment, it is that party's burden to show the reasonableness of the sale of collateral, First Westside I and Adams State Bank v. Navistar Financial Corp., 229 Neb. 334, 426 N.W.2d 525 (1988), we turn our attention to the facts as revealed by the record. In doing so, we note that the parties recite many of the facts in the argument portions of their briefs without annotating them to the record. Neb.Ct.R. of Prac. 9 D(1)f and g (rev.1992) clearly requires that factual recitations be annotated to the record, whether they appear in the statement of facts or argument section of a brief. The failure to do so may result in an appellate court's overlooking a fact, State v. Hernandez, 242 Neb. 78, 493 N.W.2d 181 (1992), or otherwise treating the matter under review as if the represented fact does not exist, Alder v. First Nat. Bank & Trust Co., 241 Neb. 873, 491 N.W.2d 686 (1992). Because in this instance the factual record is relatively short, we have undertaken our own search through it to verify the unannotated facts. We caution, however, that this should not be understood to mean that we shall undertake such a task in any future case.

That having been clarified, we move on. On June 24, 1983, the parties executed a loan and security agreement in the amount of $79,924.89 plus interest, using Anderson's 1978 Blue Bird motor home as collateral. Anderson and For-Med defaulted on the loan, and First Westside elected to accelerate payment and put Anderson and For-Med in default.

After repossession of the collateral, First Westside sold it at private sale for $60,000 and applied the proceeds to Anderson's and For-Med's obligation.

All of the evidence in regard to the manner in which the collateral was sold came from First Westside....