Harold Gwatney Chevrolet Co. v. Cooper
| Decision Date | 17 March 1993 |
| Docket Number | No. CA,CA |
| Citation | 850 S.W.2d 19,41 Ark.App. 133 |
| Parties | , 20 UCC Rep.Serv.2d 1174 HAROLD GWATNEY CHEVROLET COMPANY, Appellant, v. Clint COOPER, Appellee. 92-711. . Division I |
| Court | Arkansas Court of Appeals |
Kendell R. Black, Little Rock, for appellant.
Paul Schmidt, Cabot, for appellee.
The trial court denied a deficiency judgment to appellant, Harold Gwatney Chevrolet Company, after finding that it failed to comply with Ark.Code Ann. § 4-9-504(3) (Repl.1991), which requires that reasonable notification of the time and place of sale be given to the debtor before disposition of the collateral securing a debt. Appellant contends that its notice was in compliance with the statute and that the trial court erred in finding the vehicle was sold at public, rather than private, sale.
On March 15, 1989, appellant sold a 1988 Chevrolet Cavalier to appellee, Clint Cooper. The vehicle was financed through a retail installment contract with General Motors Acceptance Corporation (GMAC) which required appellant to repurchase the contract in the event of appellee's default. Appellee defaulted under the terms of the contract, and the automobile was repossessed by appellant. On August 21, 1989, appellant sent appellee the following notice by certified mail, return receipt requested:
Please be advised that Harold Gwatney Chevrolet Company, Jacksonville, Arkansas, will sell at private sale to foreclose their lien on your 1988 Chevrolet Cavalier, serial number 1G1JC5115JJ114046, after August 28, 1989, at their place of business in the regular couse [sic] of business.
Anytime prior to August 28, 1989, you can redeem the automobile by paying to Harold Gwatney Chevrolet Company, the balance due on this vehicle in the amount of $7,538.76, plus expenses.
The amount for which the vehicle is sold at private sale will be credited against the balance you owe on the vehicle. If the sale price is less than the amount owed, Harold Gwatney Chevrolet Company will hold you liable for the balance due them. To the amount owed will be added the following items:
1. The cost of getting the vehicle returned.
2. The cost of getting the vehicle in a saleable condition.
3. Selling expense.
4. Attorney fees if it is necessary to give the account to an attorney for collection.
The vehicle was reconditioned by appellant and placed on its used car lot for sale. The vehicle was sold two months later for $4,907.93, leaving a deficiency of $2,962.31. Appellant sued for judgment on the deficiency, but appellee denied it was entitled to judgment, contending that appellant failed to give him adequate notice of the sale of the vehicle and that the vehicle was not disposed of in a commercially reasonable manner.
At trial, the appellee maintained he did not receive notice of the sale and that the vehicle was disposed of by public sale although the notice of sale specified it would be sold by private sale. The trial court found that the appellant sent notice of private sale to appellee as required by § 4-9-504(3) but held the notice was insufficient because "placing a vehicle on a lot and selling it a good deal of time subsequent to the redeemable time to the general public off of the used car lot is a public sale." On appeal, appellant contends the trial court erred in finding appellee's vehicle was sold by public sale. We agree.
The Uniform Commercial Code does not define "public sale" or "private sale"; however, this court has held that a sale made at auction to the highest bidder "generally" is a public sale. General Elec. Credit Auto Lease, Inc. v. Paty, 29 Ark.App. 30, 32-33, 776 S.W.2d 829, 831 (1989). In his treatise, Uniform Commercial Code, author Ronald Anderson discusses the elements of a public sale:
A sale of collateral is "public" when it is publicly advertised, the sale is open to the public, and the sale is made, after competitive bidding, to the highest genuine bidder; as at an auction.
The opportunity of the public to bid at the sale is the essential criterion that determines that the sale is a public sale and the fact that no bids are made and that the property is transferred by the assignee to the assignor under a repurchase agreement by which the assignor was deemed to have bid an amount equal to the balance due does not bar the conclusion that the transaction was a "public sale."
....
The fact that the collateral is publicly displayed before being sold does not make the sale a public sale.
9 Ronald A. Anderson, Uniform Commercial Code § 9-504:32, at 733 (3d ed. 1985). Another treatise has stated:
The text of the Code is silent on how public and private sales are to be differentiated. Comment One to 9-504 directs us to 2-706 where Comment 4 defines a public sale as an auction. Yet not every sale by auction is a public sale. Some case law is more helpful. Thus, in Lloyd's Plan, Inc. v. Brown [268 N.W.2d 192 (Iowa 1978) ], the Iowa Supreme Court said that: "The essence of a public sale is that the public is not only invited to attend and bid but is also informed when and where the sale is to be held." Other courts have, in the same spirit, stressed that a public sale is one open to the general public or a major segment thereof, and thus contemplates advertising of the notice, time and place of the sale. A private sale, by contrast, is not open to the general public, usually does not occur at a preappointed time and place, and may or may not be generally advertised.
James J. White & Robert S. Summers, Uniform Commercial Code § 27-10, at 594 (3d ed. 1988). And in Benton v. General Mobile Homes, Inc., 13 Ark.App. 8, 678 S.W.2d 774 (1984), this court stated:
The Code does not define either "public sale" or "private sale", but in Union and Mercantile Trust Co. v. Harnwell, 158 Ark. 295, 250 S.W. 321 (1923), the Arkansas Supreme Court adopted the definition of a public sale as one made at auction to the highest bidder.
Although the case relied upon in Benton was not decided under the Commercial Code, other jurisdictions which have addressed this issue have concluded that simply because a vehicle is displayed for sale in a public place does not make the sale a public sale. See Lloyd's Plan, Inc. v. Brown, 268 N.W.2d 192, 196 (Iowa 1978); Boatmen's Nat'l Bank of Carthage v. Eidson, 796 S.W.2d 920, 923 (Mo.Ct.App.1990). And merely because a vehicle is placed on the creditor's car lot for sale does not make the sale a public sale. Security Fed. Sav. & Loan v. Prendergast, 108 N.M. 572, 775 P.2d 1289, 1290-91 (1989); Chrysler Dodge Country, U.S.A., Inc. v. Curley, 782 P.2d 536, 539-40 (Utah Ct.App.1989). See also Contois Motor Co. v. Saltz, 198 Neb. 455, 253 N.W.2d 290 (1977).
Here, the trial court, in finding that the disposition of appellee's vehicle was by public sale, cited this court's holding in Jones v. Union Motor Co., 29 Ark.App. 166, 779 S.W.2d 537 (1989). In that case, the appellant's vehicle was repossessed after she defaulted on the payments due under the retail installment contract. GMAC, the finance company, sent her a notice which stated in part:
Since you have not made your payments, we have taken your vehicle. It is to be held at Union Motor Co., Hwy 81 S., Monticello, AR. It must be held at least until 9:00 a.m. Nov. 3, 1986. It may be sold at any time after that. (A sale includes a lease.)
29 Ark.App. at 168, 779 S.W.2d at 538. The automobile in the Jones case was placed on the appellee's lot for sale to the general public and remained there for approximately four months, when it sold for $275.00. There was evidence that several automobile wholesalers looked at the automobile in order to ascertain its value and that $275.00 was all the appellee could get for it. The circuit court subsequently awarded a $1,347.92 deficiency to the appellee. On appeal, the appellant...
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