Southgate Bank and Trust Co. v. May

• Decision Date: 20 August 1985
• Docket Number: No. WD,WD
• Citation: 696 S.W.2d 515
• Parties: SOUTHGATE BANK AND TRUST COMPANY, Plaintiff/Respondent, v. Charles B. MAY, Defendant, and Billy J. May, Defendant/Appellant. 35874.
• Court: Missouri Court of Appeals

Page 515

696 S.W.2d 515

SOUTHGATE BANK AND TRUST COMPANY, Plaintiff/Respondent, v. Charles B. MAY, Defendant and Billy J. May, Defendant/Appellant.

No. WD 35874.

Missouri Court of Appeals Western District.

Aug. 20, 1985.

S.W. Longan, III, Patricia L. Lear-Johnson (argued), Kansas City, for defendant-appellant.

Dana K. Kaiser (argued), Kansas City, for plaintiff-respondent.

Before LOWENSTEIN, P.J., and NUGENT and BERREY, JJ.

NUGENT, Judge.

Defendant Billy J. May appeals from a deficiency judgment in favor of plaintiff Southgate Bank and Trust Company based upon a promissory note and security agreement. The bank sold defendant's repossessed collateral, a pickup truck. The defendant claims that the bank sold the truck while negotiations for its redemption between the parties' attorneys were continuing. He argues that the bank did not give him reasonable notice of its intent to sell the collateral and, therefore, the bank is estopped to assert a claim for a deficiency. We agree and reverse.

In 1979, defendant, Charles May, son of defendant, Billy May, purchased a Ford pickup truck. He signed a security agreement and promissory note, and his father signed as a guarantor. The note and security agreement were later sold and assigned to the plaintiff bank.

Charles May defaulted on the payments, and the bank sued him and his father. The father was served with the petition but not the son. On March 1, 1982, the bank repossessed the truck. Billy May was notified by certified letter dated March 1, 1982, that the collateral would be sold at a private sale twenty days from the date of the letter. He was further notified that he could redeem the truck by paying the $3,960.39 balance due and the estimated cost of repossession, $350.00. Mr. May retained S.W. Longan as his attorney.

Mr. Longan contacted the bank's attorney, Edwin Tyson, and began negotiations for redemption. Billy May's credit union agreed to lend him $2,500 to redeem his vehicle. Mr. Longan offered Mr. Tyson that amount as a full settlement of the debt, but the bank rejected the offer. The parties agreed, nevertheless, to continue negotiating because defendant believed that his credit union would lend him additional funds.

The attorneys agreed that the trial date for the suit would be continued until after negotiations were concluded one way or the other. At trial, Mr. Longan testified that he had an understanding with the bank's attorney that the bank would do nothing with the collateral while negotiations continued and that he understood everything concerning the debt was open to negotiation.

Continuing the negotiations, in early April defendant made a second offer of $3,000. Mr. Tyson told Mr. Longan that he would consult with the bank about the offer. Mr. Clement, the bank's officer, testified for the bank that, in fact, he was aware from the beginning of Mr. May's interest in redeeming the collateral, that he knew of the negotiations to settle the bank's claim and had received and rejected defendant's $2,500 offer of settlement. He also testified that, in the meantime, the bank sought and obtained a number of private bids for the pickup.

On June 15, 1982, having heard nothing from Mr. Tyson, defendant's counsel wrote to the bank's attorney asking for a response. Mr. Longan had still not received a response or any further notice from the bank or its attorney of its intent to sell the collateral or of the actual sale when he was informed by his client that the bank had sold the vehicle. Without further notice to defendant, the bank had sold the truck at private sale on April 29 for $1,375.00. Defendant's attorney wrote the bank's attorney on July 1 expressing his astonishment that the collateral had been sold while negotiations were still in progress. Mr. Tyson's response was as follows:

I'm afraid I'm a little bit in the middle of this, since it's passed through several hands other than my own. What I have found out and what I think has happened is your initial offer was $2,500.00 and a release from the bank and we declined. That your offer was then upped to $3,000.00 plus a release and our bank was still unwilling to give a release on this and declined the $3,000.00 and release offer. The bank therefore, went ahead and sold the automobile to the highest bidder.

On June 21, 1982, the bank wrote to defendant that it had sold the collateral and that the deficiency due the bank from defendant was $1,240.01. ¹ The bank filed an amended petition praying for a total judgment $1,759.01.

Before trial, defendant filed a motion for summary judgment supported by his affidavit which recited that "[d]uring the period of March 1, 1982, to April 29, 1982, and beyond, defendant was in the process of negotiating adequate arrangements for redemption by and through my attorney S.W. Longan, III, with the attorney for the plaintiff." The bank filed no counter affidavit. It filed only suggestions in opposition to the motion, but in those suggestions it acknowledged that negotiations were being conducted.

Upon trial to the court the bank presented no evidence that before the April 29 sale it had ever informed defendant or his counsel that his $3,000 offer had been rejected. It presented neither evidence that it had given defendant a second notification of an intent to sell, nor evidence contesting the existence of the attorneys' understanding that the collateral would not be sold pending negotiations, nor evidence that its attorney was not authorized to make such an agreement. The bank made no effort at trial to contradict Mr. Longan's testimony.

At the conclusion of evidence, the trial judge made two findings relevant to the questions presented on this appeal. First, he found that the twenty-day notice of private sale was given by the bank and received by defendant May. Second, he found that negotiations had been carried on between counsel, although "not carried on with vigor by the defendant...." The court then concluded that the bank was not estopped, as defendant had insisted, because defendant May had not "changed his position for the worse. Economically, he was no worse off than he was before. All he had done was, apparently, engaged his credit union to promise him a $3,000 loan if he were able to get title clear to the car...." Accordingly, the court entered judgment for the bank in the amount of $1,240.01 and $180 for its attorney's fee.

On this appeal, defendant May contends, first, that the bank failed to give him reasonable notice of the private sale as required by the Uniform Commercial Code, § 400.9-504(3) ² and, therefore, is not entitled to a deficiency judgment. His second contention is that the bank sold the truck without giving him reasonable notice of the sale and while he was negotiating for the redemption of the truck and, therefore, the bank is estopped to claim a deficiency against him. Finally, defendant asserts that the trial court erred in denying him summary judgment.

We believe that defendant's second point is dispositive and, therefore, address it to the exclusion of the first and third points.

Where the question presented on appeal of a court-tried case is whether the judgment is supported by substantial evidence, the reviewing court is bound to accept as true all evidence favorable to the prevailing party and all the reasonable inferences to be drawn from it, disregarding all contradictory evidence. State ex rel. Miller v. McLeod, 605 S.W.2d 160, 162 (Mo.App.1980). Also, the trial judge as the trier of fact is free to believe all, none or only part of the testimony of any witness. Husky Industries, Inc., v. Craig Industries, Inc., 618 S.W.2d 458, 460 (Mo.App.1981). Thus, ordinarily in a court-tried case the appellate court is bound by the trial court's findings of fact. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.1976) (en banc).

Where the issue on appeal is not the sufficiency of the evidence, however, the appellate court is not bound and need not defer to the trial court's conclusions as to the legal effect of such findings of fact. Schroeder v. Horack, 592 S.W.2d 742, 744 (Mo.1979) (en banc); State ex rel. Sisco v. Buford, 559 S.W.2d 747, 748 (Mo.1978) (en banc); Kelly v. Maxwell, 628 S.W.2d 931, 934 (Mo.App.1982). Moreover, where the facts are derived from the pleadings, stipulations, exhibits, and depositions, MFA Mutual Insurance Co. v. Home Mutual Insurance Co., 629 S.W.2d 447, 450 (Mo.App.1981), or where the evidence is not controverted and "the case is virtually one of admitted facts," Murphy v. Doniphan Telephone Co., 347 Mo. 372, 147 S.W.2d 616 (1941), and State ex rel. Wenneker v. Cummings, 151 Mo. 49, 52 S.W. 29, 31 (1899), or where the evidence is not in conflict, Eckle v. Ryland, 256 Mo. 424, 165 S.W. 1035, 1038 (1914), and General Electric Co. v. Interstate Electric Co., 204 S.W. 933, 934 (Mo.App.1918), no deference is due the trial court's judgment. Where credibility of witnesses is not involved, the rule of deference mandated by Rule 73.01(c)(2) is not applicable. Case v. Universal Underwriters Insurance Co., 534 S.W.2d 635, 637 (Mo.App.1976).

In this case, the trial court based its decision upon the legal conclusion that defendant had suffered no detriment, that he had not changed his position for the worse. In reaching that legal conclusion, the court accepted as established the fact that the attorneys had entered into negotiations for the redemption of the pickup after the bank gave defendant the notice required by the U.C.C., § 400.9-504(3). In other words, the court believed the testimony of defendant's attorney backed by the acknowledgement of those negotiations contained in Mr. Tyson's letter.

Accordingly, we conclude that the uncontroverted evidence before the court establishes beyond any dispute that before and at the time of the April 29 sale the parties' attorneys were still negotiating. Mr. Clements acknowledged that negotiations had begun almost at once. Mr. Tyson's letter confirms the...