Jones v. Union Motor Co., Inc., CA

• Decision Date: 08 November 1989
• Docket Number: No. CA,CA
• Citation: 29 Ark.App. 166,779 S.W.2d 537
• Parties: , 10 UCC Rep.Serv.2d 1487 Willie Mae JONES, Appellant, v. UNION MOTOR COMPANY, INC., Appellee. 89-240.
• Court: Arkansas Court of Appeals

Page 537

779 S.W.2d 537

29 Ark.App. 166, 10 UCC Rep.Serv.2d 1487

Willie Mae JONES, Appellant, v. UNION MOTOR COMPANY, INC., Appellee.

No. CA 89-240.

Court of Appeals of Arkansas,

Division I.

Nov. 8, 1989.

Rehearing Denied Dec. 6, 1989.

Patrick Parsons, Monticello, for appellant.

COOPER, Judge.

Willie Mae Jones appeals from a judgment for the appellee, Union Motor Company, Inc., for the deficiency remaining after the repossession and sale of an automobile. The appellant contends that the sale was commercially unreasonable because the appellee failed to comply with the requirements of the Uniform Commercial Code. We affirm.

On May 29, 1985, the appellant purchased a 1980 Toyota automobile from the appellee and financed $2,767.00 of the purchase price. The appellee took a security interest in the automobile and later assigned the contract to General Motors Acceptance Corporation (hereinafter "GMAC") with recourse. The appellant defaulted in her payments, and on October 24, 1986, the automobile was repossessed and taken to the appellee's lot. On that date, GMAC sent the following notice to the appellant:

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.)

To get your vehicle back you must pay all past due payments, plus expenses. Then you must start your monthly payments again. You can get your vehicle back any time until it is sold. As of the date of this letter you must pay:

                Past Due Payments (2 of $130.89 and one of $_____)  $261.78
                Late Charges                                        $ 60.53
                Expenses                                            $ 30.00  ESTIMATED
                                                                    -------
                Total                                               $352.01
                                                                    -------
                

The longer you wait, the more you may have to pay to get your vehicle back. Only reasonable expenses may be charged. They must be the direct result of retaking, storing, and selling the vehicle. We can also charge you the costs of getting it ready for sale and reasonable lawyers' fees.

If the vehicle is sold, the unpaid balance, expenses, and other liens will be deducted from the sale price. If any money is left, it must be sent to you within 45 days. If you do not get the money, you may have the right to sue for it plus any penalties fixed by law.

If the sale price is less than the total amount you owe, you still owe the rest.

....

Contact us to get your vehicle back. If you have any questions, let us know.

On November 25, 1986, pursuant to the terms of the assignment, the appellee repurchased the contract from GMAC.

The automobile remained for sale on the appellee's lot for approximately four months. In February 1987, it was sold for $275.00, and the appellee then brought suit for the deficiency of $1,347.92. The appellant defended the action on the ground that the sale was commercially unreasonable, and she filed a counterclaim against the appellee for damages resulting from the appellee's failure to provide adequate notice of the sale.

At trial, Jan Coomer, an employee of GMAC, testified the notice was mailed to the appellant on October 24, 1986, by GMAC on its behalf and that the appellee repurchased the contract from GMAC on November 25, 1986. The repossession report was introduced through her testimony. It reveals that, at the time of repossession, the interior and upholstery of the automobile showed excessive wear; that the finish was scratched; that the windshield was broken; that the right front fender was damaged; and that the automobile's mileage was 94,048.

Wayne Dye, Union Motor Company's acting general manager during the relevant time frame, testified that the automobile was in bad condition for resale when it was repossessed and that the brakes were repaired for sale. Dye testified that the automobile was placed on the appellee's lot for sale to the general public after November 3, 1986, and remained there for a period of four months. He testified that appellee had several automobile wholesalers look at the automobile in order to ascertain its value and that $275.00 was all he could get for it.

Willie Mae Jones testified that the automobile was damaged and had been driven over 78,000 miles when she purchased it. She also testified that the automobile looked almost the same when it was repossessed as when she bought it.

On November 10, 1988, the circuit court awarded judgment to the appellee in the amount of $1,347.92, plus costs, attorney's fees, and interest. The court made the following findings:

2. That there was only one notice sent to the Defendant in this case, which was a notice dated October 24, 1986, and which was sent to the Defendant by General Motors Acceptance Corporation; that the said notice received by the Defendant was reasonable notification of the sale conducted by the Plaintiff, Union Motor Company, Incorporated, as required by Arkansas law.

3. That the content and wording of the aforesaid notice was adequate and sufficient and provided the Defendant with the information and notice as required by Arkansas law.

4. That the sale of the Defendant's repossessed vehicle as conducted by the Plaintiff was a private sale and that it was conducted in a commercially reasonable manner.

On appeal, the appellant argues four points: (1) that the trial court erred in finding that the appellee was not required to send an additional notice of sale to the appellant; (2) that the trial court erred in finding that the notice was sufficient under the requirements of the Uniform Commercial Code; (3) that the trial court erred in finding that the sale was conducted in a commercially reasonable manner; and (4) that the trial court erred in not awarding judgment to the appellant on her counterclaim.

For her first point on appeal, the appellant argues that Ark.Code Ann. Section 4-9-504(3) (1987) requires that the secured party which ultimately disposes of the repossessed collateral is required to send the required notice. The appellant argues that, because the appellee repurchased the contract from GMAC after GMAC sent notice to the appellant but prior to the sale of the collateral, the appellee should have sent additional notice to the appellant. The appellant, however, concedes that the Arkansas Supreme Court's holding in Brown v. Ford, 280 Ark. 261, 658 S.W.2d 355 (1983), contradicts this position but urges this Court to overrule that decision.

Arkansas Code Annotated Section 4-9-504(3) provides in pertinent part:

Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor, if he has not signed after default a statement renouncing or modifying his right to notification of sale.

See also Anglin v. Chrysler Credit Corp., 27 Ark.App. 173, 175, 768 S.W.2d 44, 45 (1989).

In First State Bank of Morrilton v. Hallett, 291 Ark. 37, 41-42, 722 S.W.2d 555, 556-57 (1987), the Supreme Court ruled that, when a creditor repossesses collateral and sells it without sending proper notice to the debtor as required by the Uniform Commercial Code, the creditor is not entitled to a deficiency judgment. "When the code provisions have delineated the guidelines and procedures governing statutorily created liability, then those requirements must be consistently adhered to when that liability is determined." First Nat'l Bank of Wynne v. Hess, 23 Ark.App. 129, 134, 743 S.W.2d 825, 827 (1988) (quoting First State Bank of Morrilton, 291 Ark. at 41, 722 S.W.2d at 557). "If the secured creditor wishes a deficiency judgment he must obey the law. If he does not obey the law, he may not have his deficiency judgment." First State Bank of Morrilton, 291 Ark. at 41, 722 S.W.2d at 557, quoting Atlas Thrift Co. v. Horan, 27 Cal.App.3d 999, 104 Cal.Rptr. 315, 321 (1972).

In Brown, supra, an automobile was sold by Lakeshore Motor Company after the contract was repurchased by Lakeshore from Ford Motor Credit Company. The automobile was repossessed by Ford Credit on July 2, 1980, and Ford Credit mailed notice to the debtor that the car was on Lakeshore's lot, that it would be sold at private sale any time after ten days from the date of notice, and that Brown would be liable for any deficiency. On September 2, Lakeshore repurchased the contract from Ford Credit and ultimately sold the automobile sixteen months later, after encountering difficulty in obtaining a purchaser. A deficiency judgment was entered against Brown, who argued on appeal that the sale was not commercially reasonable because Lakeshore failed to sell the collateral within a commercially reasonable time. The Supreme Court disagreed. Brown also argued that the notice given by Ford Credit was insufficient for a sale which was held by Lakeshore sixteen months later. The Court stated:

Brown next argues that the notice given by Ford Credit was insufficient for a sale held by Lakeshore 16 months later. We do not agree. The secured party has only a duty to give reasonable notice of the time after which any private sale will be made. A second notice is not required even though a significant period of time passes before resale. See Ark.Stat.Ann. Section 85-9-504(3) (Supp.1983).

Brown also argues the notice was misleading in that it stated Lakeshore was to sell the car, but the car could be redeemed prior to sale from Ford Credit Company. We find no merit to this argument. Ford Credit was an assignee of the contract and was a secured party along with Lakeshore. Brown admits to receiving notice from Ford Credit. The fact that...