Moe v. John Deere Co.

• Decision Date: 02 December 1993
• Docket Number: No. 18308,18308
• Citation: 25 UCCRep.Serv.2d 997,516 N.W.2d 332
• Parties: 25 UCC Rep.Serv.2d 997 Ted MOE, Plaintiff and Appellant, v. JOHN DEERE COMPANY, Defendant and Appellee, and Day County Implement Company, Defendant. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 332

516 N.W.2d 332

25 UCC Rep.Serv.2d 997

Ted MOE, Plaintiff and Appellant, v. JOHN DEERE COMPANY, Defendant and Appellee, and Day County Implement Company, Defendant.

No. 18308.

Supreme Court of South Dakota.

Considered on Briefs Dec. 2, 1993.

Decided May 25, 1994.

Bret Chancelor Merkle, Samp Law Offices, Sioux Falls, for plaintiff and appellant.

James M. Wiederrich, Woods, Fuller, Shultz & Smith, Sioux Falls, for defendant and appellee.

MOSES, Circuit Judge.

This is an appeal by Ted Moe (Moe) from a summary judgment granted by Third Judicial Circuit Court in favor of John Deere Company (Deere) and Day County Implement Company (Implement). We reverse.

FACTS

On September 29, 1983, Moe bought a farm tractor from Day County Equipment in Watertown, South Dakota. He purchased a John Deere D8850 for a cash price of $121,268.00. In financing the transaction, Moe traded in two old tractors for the amount of $77,543.00 and agreed to pay the $59,802.40 difference in five equal installments of $11,960.48 each due on October 1st for the years 1984, 1985, 1986, 1987 and 1988. After the contract was completed it was assigned to Deere on September 30, 1983.

Moe was two months late in paying his first installment. Rather than paying $11,960.48 on October 1, 1984, Moe paid $12,212.87 on December 3, 1984. On October 1, 1985, Moe was again unable to timely pay his second installment. Deere waived full payment and extended the time in which Moe was to make this payment. On January 13, 1986, Moe made a partial payment in the amount of $6,200.00, over three months late. Moe and Deere agreed that Moe was to pay a second amount on March 1, 1986 in the amount of $6,350.17 to complete the second installment. On March 10, 1986, Deere sent a notice to Moe indicating that Moe's second installment was past due and that he had until March 20, 1986 to pay $6,389.48 to bring his account current. Again Moe missed this payment deadline.

Deere did not follow up on the delinquent payment until a representative from Deere contacted Moe sometime in May or the first part of June 1986, over seven months after the second installment was originally due. Deere's representative and Moe agreed that Moe would pay $2,000.00 of the $6,389.48 plus interest owing to Deere and Deere would allow Moe to pay the balance when he started to harvest. Deere's representative and Moe failed to specify the due date for either the $2,000.00 payment or when the balance was due. Moe had no further conversations with the representative from Deere about the $2,000.00 until after Deere repossessed the tractor on July 30, 1986.

Moe, who was in Oklahoma at the time of repossession, did not receive any notice from Deere's representative that the tractor was going to be repossessed because his payments were delinquent. Deere reassigned Moe's contract to Implement following the repossession. On August 1, 1986, Deere mailed from Minneapolis, Minnesota a certified letter dated July 31, 1986 to Moe which indicated that Deere "[found] it necessary to gain possession of the equipment involved." This letter apparently was returned to Deere undelivered to Moe. Thus, Deere hand-addressed a new letter and sent it to Moe who picked it up on August 18, 1986. The letter indicated:

We intend to reassign your contract to the above named dealer. Once we reassign it, two weeks from the date of this letter, you will contact them on all matters concerning the disposition of the equipment or the amount owed under the contract. They intend to dispose of said collateral by public or private sale. If you wish to redeem this equipment, you must pay to John Deere Company $37,591.20 plus any expenses incurred from this repossession, in cash certified funds, before we reassign the contract.

We hope you will be able to pay this amount within the prescribed period. If you have any questions regarding this matter please contact us. M.K. Mehus, Manager Financial Services.

Implement sold the tractor on August 19, 1986 for $44,000.00. Implement paid Deere in full on the contract and applied the proceeds to the debt and turned over the excess proceeds to Moe's lender by mailing two (2) checks totalling $2,616.77 to the Farmers and Merchants Bank on December 1, 1986.

Moe sued Deere and Implement on the following causes of action: (1) wrongful repossession; (2) fraudulent repossession; (3) commercially unreasonable sale; and (4) failure to account for the surplus.

Deere moved for partial summary judgment on the third and fourth issues of commercially unreasonable sale and failure to account for surplus. The trial court granted Deere's motion. Then, Deere moved for summary judgment on the first and second issues of wrongful repossession and fraudulent repossession. On February 5, 1993, the trial court issued an order granting Deere's summary judgment motion on both issues. Moe appeals.

STANDARD OF REVIEW

In reviewing a grant of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party has demonstrated that there is no genuine issue of material fact and he is entitled to judgment as a matter of law. Breen v. Dakota Gear & Joint Co., 433 N.W.2d 221, 223 (S.D.1988); Groseth Intern. Inc. v. Tenneco, Inc., 410 N.W.2d 159, 164 (S.D.1987); Wilson v. Great N. Ry. Co., 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968). The evidence must be viewed most favorably to the nonmoving party and reasonable doubt should be resolved against the moving party. Groseth, 410 N.W.2d at 164 (citing Trapp v. Madera Pacific, Inc., 390 N.W.2d 558 (S.D.1986); Wilson, 157 N.W.2d at 21). Summary judgment is an extreme remedy which should be awarded only when truth is clear and all reasonable doubts touching the existence of a material fact should be resolved against the movant. Tucek v. Mueller, 511 N.W.2d 832 (S.D.1994). "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The rules of procedure favor the resolution of cases upon the merits by trial or summary judgment rather than on failed or unartful accusations. 5 C. Wright & Miller, Federal Practice and Procedure, § 1357 (1971); Janklow v. Viking Press, 378 N.W.2d 875, 877 (S.D.1985).

ISSUE

DO GENUINE ISSUES OF MATERIAL FACT AS TO WHETHER MOE WAS IN

"DEFAULT" PRECLUDE THE GRANTING OF SUMMARY JUDGMENT?

We recognized in First Nat. Bank of Black Hills v. Beug, 400 N.W.2d 893, 896 (S.D.1987), that "[t]he term 'default' is not defined in the Uniform Commercial Code, thus we must look to other sources for a definition." Id. at 895. Then, we turned to hornbook law for a definition of default:

'Default' triggers the secured creditor's rights under Part Five of Article Nine. But what is 'default?' Article Nine does not define the word; instead it leaves this to the parties and to any scraps of common law lying around. Apart from the modest limitations imposed by the unconscionability doctrine and the requirement of good faith, default is 'whatever the security agreement says it is.'

Id. at 896 (quoting J. White & R. Summers, Uniform Commercial Code § 26-22 at 1085-86 (2d ed. 1980)).

Several jurisdictions recognize that the determination of default is not a matter of law for the court to decide. Whether a breach or a default exists is a question of fact. Palmiero v. Spada Distributing Company, 217 F.2d 561 (9th Cir.1954). "[I]t is equally well-settled that whether the parties' conduct constitutes a breach 'presents a pure question of fact that the trier of fact alone may decide.' " Concise Oil & Gas v. La. Interstate Gas Corp., 986 F.2d 1463, 1496 (5th Cir.1993) (quoting Turrill v. Life Ins. Co. of North America, 753 F.2d. 1322, 1326 (5th Cir.1985)); Town of Breckenridge v. Golforce, Inc., 851 P.2d 214 (Colo.Ct.App.1993). In Breckenridge, the Colorado Court of Appeals stated, "Whether there has been a breach of a contract is an issue for the fact finder." Breckenridge, 851 P.2d at 216. In Bator v. Mines Development, Inc., 513 P.2d 220 (Colo.Ct.App.1973), the court stated that a "[d]etermination of whether a party has performed under a contract is ultimately a question of fact." Id. at 225 (citation omitted).

Here, the promissory note provided a definition of default:

The borrower shall be in default upon the occurrence of any one or more of the following events: (1) the Borrower shall fail to pay, when due, any amount required hereunder, or any other indebtedness of the borrower to the Lender of any third parties; (2) the Borrower shall be in default in the performance of any covenant or obligation under the line of credit or equivalent agreement for future advances (if applicable) or any document or agreement related thereto; (3) any warranty or representation made by the Borrower shall prove false or misleading in any respect; (4) the Borrower or any Guarantor of this promissory note shall liquidate, merge dissolve, terminate its existence, suspend business operations, die (if individual), have a receiver appointed for all or any part of its property, make an assignment for the benefit of creditors, or file or have filed against it any petition under any existing or future bankruptcy or insolvency law; (5) any change that occurs in the condition or affairs (financial or otherwise) of the Borrower or any Guarantor of this promissory note which, in the opinion of the lender, impairs, the Lender's security or increases its risk with respect to this promissory note or (6) an event of default shall occur under any agreements intended to secure the repayment of this promissory note. Unless prohibited by law, the Lender may, at its option, declare the entire unpaid balance of principal and interest immediately due and payable without notice or demand at any time after default as such term is defined in this paragraph.

Technically, there was a breach of the security agreement and the promissory note...