Pioneer Dodge Center, Inc. v. Glaubensklee

• Decision Date: 04 June 1982
• Docket Number: No. 17568,17568
• Citation: 649 P.2d 28
• Parties: 33 UCC Rep.Serv. 1588 PIONEER DODGE CENTER, INC., a corporation, Plaintiff and Respondent, v. Marlene GLAUBENSKLEE, Defendant and Appellant.
• Court: Utah Supreme Court

Page 28

649 P.2d 28

33 UCC Rep.Serv. 1588

PIONEER DODGE CENTER, INC., a corporation, Plaintiff and Respondent, v. Marlene GLAUBENSKLEE, Defendant and Appellant.

No. 17568.

Supreme Court of Utah.

June 4, 1982.

Bruce Plenk, Salt Lake City, for defendant and appellant.

David J. Berceau of Robert Ryberg & Associates, Salt Lake City, for plaintiff and respondent.

STEWART, Justice:

Defendant Marlene Glaubensklee appeals from a deficiency judgment entered against her after the sale of a repossessed truck by the plaintiff Pioneer Dodge Center, Inc. We are asked to decide whether the sale of the truck was conducted in a commercially reasonable manner and, if not, whether Pioneer Dodge is barred from recovering the deficiency from defendant.

Defendant purchased a truck from Pioneer Dodge on February 9, 1976, at a purchase price of $4,995, plus tax and license fees for a total of $5,204.88. Chrysler Credit Corporation financed $3,909.89 and defendant traded in her vehicle for a credit of $995 and paid $300 cash. Defendant failed to make the first payment on the note, which called for 36 monthly payments of $138.31 after an initial payment of $200. Chrysler Credit repossessed the truck and, pursuant to a repurchase arrangement with Pioneer Dodge, delivered the truck to Pioneer which paid off the $4,433.42 due. Subsequently, Pioneer Dodge sent notice to defendant that the truck would be sold and that she could make her bid on April 30, 1976, at Pioneer Dodge at 11:00 a. m. Pioneer states that beginning April 12 it began its search for buyers by placing the car on its lot and taking it to five or six local car dealers from whom verbal bids of unknown amounts were received. It was also offered to wholesalers, but the record does not disclose what their responses were.

On April 30, 1976, at 10:00 a. m. an announcement was made over the loudspeaker on the lot of Pioneer Dodge that a truck was being sold at auction. The auction lasted 30 minutes to one hour. Pioneer Dodge entered the sole bid and purchased the truck for $3,700.

Pioneer Dodge filed this action to recover the deficiency. The trial court held that the sale was conducted in a commercially reasonable manner and that the notice given defendant was adequate. The court awarded a deficiency judgment in the amount of $655.27, and attorney's fees of $1,000.

The central issue is whether the sale was conducted in compliance with Utah Code Ann., 1953, § 70A-9-504(3), which provides:

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.... (R)easonable 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 to any other secured party from whom the secured party has received (before sending his notification to the debtor or before the debtor's renunciation of his rights) written notice of a claim of an interest in the collateral. The secured party may buy at any public sale and if the collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations he may buy at private sale.

On the facts of this case, defendant cannot claim any benefit from the error in the notice of sale. Although the auction actually commenced at 10:00 on the day specified, defendant did not appear at 11:00 a. m., the time stated in the notification. Because defendant took no action-indeed, did not even appear personally-to protect her interest in the sale at the later time stated in the notice to her, she was not prejudiced by the error in the designation of the hour of the sale.

Her failure to attend the sale or otherwise take action to protect her interests at the sale, does not, however, relieve the plaintiff from its burden of proving that the sale was conducted in a commercially reasonable manner as required by § 70A-9-504(3). FMA Financial Corp. v. Pro-Printers, Utah, 590 P.2d 803 (1979). Section 70A-9-504(3) requires that "every aspect of the disposition including the method, manner, time, place, and terms must be commercially reasonable." A public sale after default "has traditionally meant 'a sale in which the public, upon proper notice, is invited to participate and given full opportunity to bid upon a competitive basis for the property placed on sale, which is sold to the highest bidder.' " In re Webb, 17 UCC Rep. 627, 630 (S.D.Ohio 1975) (quoting Annot., 4 A.L.R.2d 575 (1949)). The requirement of a public invitation is essential for a public sale under the Uniform Commercial Code. In re Webb, supra; Mallicoat v. Volunteer Finance and Loan Co., 57 Tenn.App. 106, 415 S.W.2d 347 (1966). It is fundamental that a public sale presupposes posting public notices or advertising. In re Bishop, 482 F.2d 381 (4th Cir. 1973); In re Webb, supra; Mercantile Financial Corp. v. Miller, 292 F.Supp. 797 (E.D.Penn.1968); Gezon Motors v. Gould, 18 UCC Rep. 1339 (D.C.Mich.1976); Investor's Acceptance Co. of Livingston, Inc. v. James Talcott Inc., 61 Tenn.App. 307, 454 S.W.2d 130 (1969). The Restatement of Security § 48 comment (1941) defines a public sale as "one to which the public is invited by advertisement to appear and bid at auction for the goods to be sold."

A factual situation somewhat like the instant was presented in In re Bishop, 482 F.2d 381 (4th Cir. 1973). The buyer of a boat defaulted, and the secured party repossessed and moved it to a used car lot. The court stated that the secured party did not

... advertise the sale in any newspaper. It posted no sign announcing the...