International Harvester Co. v. Fuoss
| Decision Date | 26 May 1988 |
| Docket Number | CA-CV,No. 2,2 |
| Citation | 758 P.2d 649,157 Ariz. 378 |
| Parties | INTERNATIONAL HARVESTER COMPANY and International Harvester Credit Corporation, Plaintiffs/Appellees, v. Robert FUOSS and Janice Fuoss, husband and wife; and Phil Curtis and Nancy Curtis, husband and wife, Defendants/Appellants. 87-0248. |
| Court | Arizona Court of Appeals |
Robert and Janice Fuoss and Phil and Nancy Curtis, guarantors of debts and obligations of a corporation, appeal from a judgment in favor of International Harvester Company and International Harvester Credit Corporation (IH) for the following amounts.
1. Open account--$27,390.62.
2. Deficiency on equipment--$43,181.14.
3. Interest at the rate of 10%--$18,350.91.
4. Costs and attorneys' fees--$13,000.00.
The guarantors argue that 1) they were discharged from any obligation on the open account because IH's action against the corporation primarily liable was barred by the statute of limitations; 2) that they were entitled to notice of resale of repossessed equipment and parts pursuant to A.R.S. § 47-9504(C) and that said notice could not be waived because of A.R.S. § 47-9501(C); and 3) that the resale of equipment and parts taken by IH was not conducted in a commercially reasonable manner.
First, we hold that the running of the statute of limitations does not bar the action against the guarantors because it was filed within the limitations period. Additionally, although we agree that the guarantors could not waive notice of resale and were entitled to sufficient notice of said sale, nevertheless, we affirm the judgment of the trial court for the deficiency against Robert Fuoss, Janice Fuoss and Phil Curtis because there was sufficient evidence that the resale and other disposition of repossessed property were conducted in a commercially reasonable manner. Finally, we reverse the judgment against Nancy Curtis because she was discharged from her guaranty when IH continued to do business with the corporation by extending it credit without notice to her after it knew that she was divorced from Phil Curtis, had no participation in the business, and that the corporation was experiencing financial problems.
Curtis and Fuoss, Inc., an Arizona corporation, was a dealer for IH farm equipment, pursuant to a sales and service agreement. Robert Fuoss, Janice Fuoss, Phil Curtis and Nancy Curtis executed separate guaranty agreements during the first part of June 1979. At that time a divorce action was pending between Phil and Nancy Curtis, and after the divorce was final, Phil remarried. IH had actual knowledge of the divorce but did not obtain a new guaranty from Curtis and his new wife.
The dealer corporation suffered financial difficulties, and IH cancelled the dealership franchise in October 1983. The last purchase on the open account occurred prior to March 1983. Thereafter, IH only allowed COD purchases. When the dealership could not pay its debts, IH by virtue of its security interest in the dealer's new and used equipment, repossessed all of the equipment and parts.
On December 6, 1983, a notice of sale of parts and equipment was mailed to Robert Fuoss, Janice Fuoss, and Phil Curtis stating that the collateral would be sold by private sale on or after December 15, 1983. No notice was mailed to Nancy Curtis. The farm equipment was moved to another IH dealership operated by Sam Stapley in Chandler, Arizona. Mr. Stapley advertised and promoted the sale of the equipment. IH placed advertisements in trade journals and agriculture magazines in Arizona, California and Texas. IH offered financial incentives to potential buyers, including low down payments and interest-free financing. The equipment was sold and a deficiency of $43,181.14 established.
No action was ever brought by IH to recover the debt owed by the corporation, and A.R.S. § 12-543 now bars it from taking any action to collect from the corporation. Although the guarantors might have defended against the action on the ground that the requirements of Rule 17(f) Ariz.R.Civ.P., 16 A.R.S., 1 were not met, this issue was not raised by them either in the trial court or on appeal and is waived. See Rules 9(a) and (i), Ariz.R.Civ.P., 16 A.R.S. As the supreme court in State Automobile & Casualty Underwriters v. Engler, 90 Ariz. 321, 367 P.2d 665 (1961), has stated:
The defendant [surety] urges that the requirement of Rule 17(f) is jurisdictional and cannot be waived. It is the opinion of this court that it is procedural and can be waived. Nowhere in the record does it appear that this matter was urged upon the trial court. This court cannot go behind the record; the defense was waived.
90 Ariz. at 324, 367 P.2d at 667. Because the action against the guarantors was filed within three years, the statute of limitations is not a bar.
We reject IH's argument that the guarantors waived notice by the terms of their agreement. The definition of "debtor," A.R.S. § 47-9105(A)(5), includes guarantors.
5. "Debtor" means the person who owes payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral, and includes the seller of accounts or chattel paper. Where the debtor and the owner of the collateral are not the same person, the term "debtor" means the owner of the collateral in any provision of the article dealing with the collateral, the obligor in any provision dealing with the obligation, and may include both where the context so requires.
The notice required by A.R.S. § 47-9504(C) could not be waived pursuant to A.R.S. § 47-9501(C). First National Bank of Denver v. Cillessen, 622 P.2d 598 (Colo.App.1980); Barnett v. Barnett Bank of Jacksonville, 345 So.2d 804 (Fla.App.1977); McEntire v. Indiana National Bank, 471 N.E.2d 1216 (Ind.App.1984).
On December 6, 1983, the notice of sale of the collateral taken by IH from the corporation was mailed in attempted compliance with A.R.S. § 47-9504(C) stating that the property would be sold at private sale on or after December 15. The return receipts show that Phil Curtis received the notice on December 12, three days before the sale, and Robert and Janice Fuoss received it on December 19, four days after the sale. No notice was sent to Nancy Curtis.
Assuming arguendo that the notice was inadequate and failed to comply with A.R.S. § 47-9504(C), the guarantors are not relieved from liability for the deficiency arising from the sale unless IH disposed of the collateral in a commercially unreasonable manner which resulted in damage or loss to the debtor. Chapman v. Field, 124 Ariz. 100, 602 P.2d 481 (1979).
Whether a particular disposition is commercially reasonable is a question of fact. Gulf Homes, Inc., v. Goubeaux, 124 Ariz. 142, 602 P.2d 810 (1979). Without findings of fact or conclusions of law, we view the evidence and reasonable inferences therefrom in the light most favorable to the party who prevailed in the trial court and will affirm the judgment of the trial court if supported by any competent evidence. Bates & Springer of Arizona, Inc. v. Friermood, 109 Ariz. 203, 507 P.2d 668 (1973); Equitable Life Assurance Soc. of U.S. v. Anderson, 151 Ariz. 355, 727 P.2d 1066 (App.1986).
Implicit in the judgment in favor of IH on the deficiency is the trial court's determination that the disposition of property occurred in a commercially reasonable manner. A.R.S. § 47-9507(B) provides:
B. The fact that a better price could have been obtained by a sale at a...
To continue reading
Request your trial
-
Onions etc., Inc. v. Z & S Fresh, Inc.
...and was in a better position than the bank to know the borrowers financial situation); cf., International Harvester Co. v. Fuoss, 157 Ariz. 378, 381, 758 P.2d 649 (Ariz.Ct.App.1988) (discharge of surety where the creditor knew of the debtor's financial difficulties and knew that the debtor ......
-
Phelps Dodge Corp. v. Schumacher Elec. Corp., 04-2621
...(5th Cir.1981); Logan Bank & Trust Co. v. Letter Shop, Inc., 190 W.Va. 107, 437 S.E.2d 271, 274 (1993); International Harvester Co. v. Fuoss, 157 Ariz. 378, 758 P.2d 649, 652 (1988); Restatement of Security § 124(2) (1941). That is an implication of the duty of performance in good faith tha......
-
Onions Etc., Inc. v. Z&S Fresh, Inc., CASE NO. 1:09-CV-00906-AWI-MJS
...borrower and was in a better position than the bank to know the borrowers financial situation); cf., International Harvester Co., v. Fuoss, 157 Ariz. 378, 381 (Ariz.Ct.App. 1988) (discharge of surety where the creditor knew of the debtor's financial difficulties and knew that the debtor had......
-
Flori Corp. v. Fitzgerald, 2
...on a written contract. No Arizona case is directly on point. The Fitzgeralds argue that the rationale of International Harvester Co. v. Fuoss, 157 Ariz. 378, 758 P.2d 649 (App.1988) supports their contention that an action on a guaranty is governed by the same statute of limitations as the ......