General Electric Credit Corp. v. Bo-Mar Constr. Co.

• Decision Date: 24 August 1977
• Docket Number: BO-MAR
• Citation: 140 Cal.Rptr. 417,72 Cal.App.3d 887
• Court: California Court of Appeals Court of Appeals
• Parties: GENERAL ELECTRIC CREDIT CORPORATION, a corporation, Plaintiff and Respondent, v.CONSTRUCTION CO., Raymond E. Bluff, an Individual, and Robert H. Johnson, an Individual, Defendants and Appellants. Civ. 49716.

Page 417

140 Cal.Rptr. 417

72 Cal.App.3d 887

GENERAL ELECTRIC CREDIT CORPORATION, a corporation, Plaintiff and Respondent, v. BO-MAR CONSTRUCTION CO., Raymond E. Bluff, an Individual, and Robert H. Johnson, an Individual, Defendants and Appellants.

Civ. 49716.

Court of Appeal, Second District, Division 3, California.

Aug. 24, 1977.

Caras & Evangelatos, Gary B. McGaha, Los Angeles, for defendants and appellants.

Plotkin & Saltzburg, Martin F. Goldman, Los Angeles, for plaintiff and respondent.

ALLPORT, Acting Presiding Justice.

Defendants Bo-mar Construction Co., Raymond E. Bluff and Robert H. Johnson appeal from a summary judgment in favor of plaintiff General Electric Credit Corporation on its complaint to recover possession of personal property and damages.

The complaint alleges that on September 1, 1972, Crook Company sold a backhoe to Bo-mar pursuant to a conditional sales agreement whereby the unpaid balance was to be paid in monthly installments commencing October 5, 1972. Bo-mar admits the execution of this agreement. It is further alleged that in connection with the transaction Crook Company retained a security interest in the collateral to guarantee the balance of the purchase price and did execute and file with the California Secretary of State a financing statement. Bo-mar admits execution of this statement. It is further alleged that Crook Company assigned its interest in the collateral to General Electric which has performed all of the terms and conditions required of it under the agreement and that on February 6, 1975, Bo-mar breached the agreement by failing to make payments. General Electric then caused the entire balance to be accelerated accompanied by the filing of this action. Except as noted above the answer puts all allegations of the complaint in issue.

The motion for summary judgment was made upon the ground that there is no defense to the action or triable issue of fact and is based upon the records and files, as well as declarations of T. J. Hallacy, Martin F. Goldman and Chuck Green, and was opposed by declarations of Robert H. Johnson, Edward F. Wroe, Raymond E. Bluff and Gary B. McGaha, together with reference to a portion of the deposition of Thomas Hallacy. The motion was granted upon the ground that 'no triable issue of fact as to the propriety of the public auction sale in accordance with contractual or legal requirements' was presented and judgment rendered accordingly. Following a reduction in the amount of the judgment, defendants' motion for a new trial was denied.

Contentions

It is contended that summary judgment was improper because triable issues of fact were raised as to whether the collateral was disposed of at public sale in a commercially reasonable manner and whether defendants were entitled to a set-off or rebate for unearned finance charges assessed in the sales agreement upon default and acceleration. In arguing these contentions defendants concede that the transaction is governed by Division 9 of the California Commercial Code and no argument is presented to the contrary.

Discussion

Insofar as applicable to the facts before us the California Commercial Code in section 9504 subdivison (3) permits a secured creditor, following repossession, to purchase the collateral at a 'public' sale provided he acts in a good faith and commercially reasonable manner. This section provides that '(a)ny sale of which notice is delivered or mailed and published as herein provided and which is held as herein provided is a public sale.' ¹ The validity of the sale depends on compliance with the statutory requirements concerning dispositions and notice. (Atlas Thrift Co. v. Horan, 27 Cal.App.3d 999, 1009, 104 Cal.Rptr. 315.) California case law antedating the code was to the same effect.

'The finding of the court that the sale was not a public one, we think, has ample support in the testimony, lacking as it did any reasonable or customary notice of its time and place. A public sale of pledged property must be made by public auction in the manner and upon the notice to the public, usual at the place of sale in respect to auction sales of similar property and must be for the highest obtainable price. (Civ.Code, sec. 3005.) By section 3010, when so sold, the pledgee, or pledgeholder, may purchase at such sale. By section 3002 the pledgee must give actual notice to the pledgor of the time and place at which the property pledged is to be sold.'

(Lowe v. Ozmun, 3 Cal.App. 387, 393, 86 P. 729, 732.)

Reason dictates that sale of repossessed collateral, to be of protection to a debtor, must ordinarily be done in public, during business hours, upon adequate notice within a reasonable time of repossession and under conditions reasonably calculated to bring the fair market price if the code requirements are to be met. A secured party's failure to allege and prove compliance with the code restrictions against buying at a private sale denies him the right to a deficiency judgment. (Barber v. LeRoy, 40 Cal.App.3d 336, 343, 115 Cal.Rptr. 272.)

The principles governing the propriety of summary judgment are succinctly stated in Johnson v. Canadian Transport Co., 54 Cal.App.3d 827, at 833, 127 Cal.Rptr. 72, at 75, as follows:

"A study of the cases reveals too great optimism on the part of moving parties. The appellate courts have not, on the whole, been favorable inclined to the use of this 'drastic' remedy which deprives a party whose pleading is sufficient of the right to a trial on the issues raised thereby. The remedy is designed to terminate an action promptly where the purported cause of action or defense is sham or otherwise wholly unfounded. But it is futile to seek the order where any basis for a cause of action or defense can be shown. In other words, the moving party should not confuse an opponent's Weak case with No case at all. The court, construing the moving party's affidavits strictly (Supra, § 181) and the counteraffidavits liberally (Supra, § 191), will reverse the summary judgment if any kind of case is shown.' (4 Witkin Cal.Procedure (2d ed. 1971) § 199, p. 2844.)'

So construing the declarations in the instant case, we must conclude that the trial court erred in holding that there was no triable issue of fact as to the propriety of the public auction sale.

First as to the public nature of the sale, one of the declarations of T. J. Hallacy expresses his conclusion that 'a public foreclosure sale was held in the City and County of San Diego, . . . and although properly advertised and noticed, there were no bids forthcoming.' A portion of Hallacy's deposition...