IFG Leasing Co. v. Gordon
| Decision Date | 22 May 1989 |
| Docket Number | No. 20634,20634 |
| Citation | 776 P.2d 607 |
| Parties | 9 UCC Rep.Serv.2d 793 IFG LEASING COMPANY, Plaintiff and Appellee, v. Rodney F. GORDON; Jim Hansen; and Frank A. Nelson; Bonneville Development Corp., dba Ramada Inn of Evanston, Wyoming; and Ecotek National Corp., aka Irving Financial Corp., Defendants and Appellants. |
| Court | Utah Supreme Court |
John G. Marshall, James N. Barber, Salt Lake City, for defendants and appellants.
J. Bruce Reading, Michael W. Spence, Salt Lake City, for plaintiff and appellee.
I
Plaintiff IFG Leasing Company ("IFG") brought this action against the individual defendants to recover a deficiency judgment resulting from Bonneville Development Corporation's default under several leases. After the case was tried, the court entered a memorandum decision and the following findings of fact and conclusions of law:
FINDINGS OF FACT
....
4. That the defendant Bonneville Development Corporation d/b/a Ramada Inn, Evanston, Wyoming, executed and delivered to the plaintiff ... leases on or about the dates indicated....
5. That on or about the dates of the execution of each of the five leases, each of the individual defendants, Hansen, Gordon, and Nelson, executed a continuing and unconditional guaranty agreement whereby they agreed to perform, pay, and discharge all of the defendant Bonneville Development Corporation's obligations under the respective lease agreements.
6. At the time when guaranty agreements were presented with each of the above five leases, the guaranty agreements were not dated and were not identified by lease number.
....
8. That the last payment made by the defendants under any of the lease contracts was on May 13, 1982.
9. Plaintiff attempted to force payments during the summer of 1982, but did not repossess the collateral.
.... 12. That on or about March 30, 1984, letters were sent to the defendants ... informing them of the date after which the personal property, which was the subject matter of the leases, would be sold at private or public sale.
13. The personal property was sold to Commercial Security Bank and First Security Bank during the month of September, 1984 at a private sale for the amount of Eighty-Five Thousand Dollars ($85,000).
14. Expert witness testimony placed the value of the personal property at fifteen to twenty-five percent of the original purchase value. The actual amount received was approximately eighteen percent (18%) of its original value.
....
16. As a part of plaintiff's bargain, it had established residual or salvage value in the equipment of Twenty-Three Thousand Eight Hundred Five Dollars and Sixty-Five Cents ($23,805.63 [sic] ).
17. At the time of the sale of the personal property, a wood carving was retained by the plaintiff and not sold with the other personal property.
....
20. The defendant Bonneville Development Corporation agreed, pursuant to the lease agreements, to pay any reasonable attorney fees.
21. Plaintiff's counsel has submitted an affidavit in support of attorney's fees with their affidavit incorporating actual time and charges made in this matter.
22. All of the parties agreed that the leases were, in fact, financing agreements that were subject to the Uniform Commercial Code.[ 1
From the foregoing findings of fact, the Court now enters its:
CONCLUSIONS OF LAW
1. That the guaranties of the individual defendants ... were intended by the parties to guarantee the leases entered into by Bonneville Corporation and are legally binding contracts. Although these documents may have been blank as to lease number, date, and even the equipment covered, defendants knew or should have known that the documents were intended for the five leases at issue.
2. That the sale of the collateral was commercially reasonable and conformed to the requirements of the Uniform Commercial Code. The sale was a private sale, after notice was given to the individual defendants, and the price obtained was commercially reasonable.
3. The court finds that the sale of the wood carving was not commercially reasonable and allows an offset of Ten Thousand Dollars ($10,000) for the price of this carving.
....
5. The Court finds that the damages should be computed as follows:
....
b. The plaintiff should be awarded the residual value of the equipment in the amount of Twenty-Three Thousand Eight Hundred Five Dollars and Sixty-Five Cents ($23,805.65).
....
The total amount of damages suffered by the plaintiff is Eight Hundred Thirty-Eight Thousand Six Hundred Twenty-Three Dollars and Twenty-Two Cents ($838,623.22).
6. Defendants should be awarded an offset against these damages in the amount of Ten Thousand Dollars ($10,000)....
7. The total amount of damages awarded to the plaintiff should be Eight Hundred Twenty-Two Thousand Six Hundred Twenty-Three Dollars and Twenty-Two Cents ($822,623.22).
8. In addition to the foregoing, plaintiff should be awarded its attorney's fees in the amount of Thirteen Thousand Four Hundred and Eighty-Five Dollars ($13,485.00).
Judgment was entered accordingly, and defendants appealed.
II
Defendants' first point on appeal is that IFG's disposition of collateral in this case was commercially unreasonable and therefore in violation of Utah Code Ann. § 70A-9-504(3) (1980) and its Wyoming counterpart, Wyoming Statutes § 34-21-963(c) (1983). 2 The Wyoming statute is virtually identical to section 70A-9-504, which in pertinent part provides:
(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.
....
(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.
Specifically, defendants claim that the lack of commercial reasonableness is demonstrated by the fact that IFG failed to maximize the value of the collateral. We disagree.
This Court has previously stated:
[W]hether any particular sale is commercially reasonable is to be determined on a case-by-case basis. That determination depends on whether the circumstances of the sale and the manner and business context in which it occurred support a conclusion that the sale was conducted in a commercially reasonable manner. 3
In the instant case, the record supports the trial court's determination that the method, manner, time and place of the sale was in compliance with the requirements of the Uniform Commercial Code. Although defendants complain that IFG did not proceed in an expeditious manner to repossess and sell the collateral, given the evidence as presented, together with the particular nature and location of the equipment and the intervening receivership/bankruptcy involved, the longer-than-usual delay in this case was reasonable.
Moreover, inasmuch as the expert appraiser testified that the equipment should bring between 15 percent and 25 percent of its original value, the 18 percent sale price was within a reasonable range. This determination is further supported by the fact that defendants offered no evidence indicating how the sale price did not reflect the property's fair market value or how they were substantially damaged by the sale. 4 Also, defendants received notice of the sale and neither purchased the collateral for a higher value nor found other purchasers to do the same. Accordingly, the record amply supports the conclusion that the disposition of the collateral was commercially reasonable; thus defendants' first point on appeal is without merit.
III
Defendants next contend that the trial court erroneously awarded a deficiency judgment once it had concluded that the disposition of a portion of the collateral (a wood carving) was commercially unreasonable. However, we do not reach the merits of defendants' claim since the trial court erred in stating its conclusion regarding the collateral. 5
As we have repeatedly noted, conclusions of law are accorded no particular deference on appeal, but instead are reviewed simply for correctness. 6 In this case, the trial court declared in its findings of fact: "At the time of the sale of the personal property, a wood carving was retained by the plaintiff and not sold with the other personal property" (emphasis added). In contrast, however, the court stated in its conclusions of law: "The Court finds that the sale of the wood carving was not commercially reasonable and allows an offset of Ten Thousand Dollars ($10,000.00) for the price of this carving" (emphasis added). As explained below, the court's conclusion was erroneously stated and is not supported by the record.
Initially, determination of this issue on appeal not only requires consideration of the remedies afforded a secured party upon a debtor's default of a security agreement, but also necessitates analysis of several related sections of the Uniform Commercial Code ("UCC"). 7 In Eggeman v. Western National Bank, 8 the Wyoming Supreme Court discussed five principal remedies offered a secured party when a debtor defaults on a security agreement: (1) use of real estate mortgage foreclosure procedures if the security agreement involves coverage for both real and personal property; 9 (2) collection of outstanding accounts receivable from those obligated therefor; 10 (3) utilization of "special remedies" provided for in the security agreement; 11 (4) procurement of a judgment on the underlying obligation and collection thereunder; 12 and (5) possession of the collateral without judicial process and disposal or acceptance of the same in satisfaction of debt. 13 The fifth remedy described relates to UCC sections 9-504 and 9-505 and appears to be the only one relevant to or contemplated by the parties in ...
To continue reading
Request your trial
-
Allen v. Coates
...Commercial Code: Tarpit for the Tardy Creditor, 26 Wake Forest L.Rev. 289, 301 (1991) (footnotes omitted).8 See, e.g., IFG Leasing Co. v. Gordon, 776 P.2d 607 (Utah 1989); Warnaco, Inc. v. Farkas, 872 F.2d 539 (2d Cir.1989) (there is no role for extrastatutory rule that contemplates reposse......
-
State v. Nielsen
...as part of the overall burden necessary to meet the clear error standard of review on appeal. See, e.g., IFG Leasing Co. v. Gordon, 776 P.2d 607, 616–17 (Utah 1989). ¶ 37 Over time our caselaw occasionally has migrated in the other direction—toward the hard-and-fast default notion of a proc......
-
Redevelopment Agency of Salt Lake City v. Daskalas, s. 880302-C
...his decision." Brixen & Christopher, Architects v. Elton, 777 P.2d 1039, 1042 (Utah Ct.App.1989); see also IFG Leasing Co. v. Gordon, Hansen, and Nelson, 776 P.2d 607, 617 (Utah 1989). After a review of the record, we do not find the trial court's determination that Tenants failed to timely......
-
In re Kelaidis
...reasonableness questions under Old § 9-504(3) in nine decisions. Cottam v. Heppner, 777 P.2d 468 (Utah 1989); IFG Leasing Co. v. Gordon, 776 P.2d 607 (Utah 1989); Brigham Truck and Implement Co. v. Fridal, 746 P.2d 1171 (Utah 1987); State Bank v. Broadhead, 734 P.2d 469 (Utah 1987); Haggis ......