Universal C. I. T. Credit Co. v. Rone, 5--5224

• Decision Date: 04 May 1970
• Docket Number: No. 5--5224,5--5224
• Citation: 248 Ark. 665,453 S.W.2d 37
• Court: Arkansas Supreme Court
• Parties: , 7 UCC Rep.Serv. 847 UNIVERSAL C.I.T. CREDIT CO., Appellant, v. Allen RONE and Thelma Rone, Appellees.

Page 37

453 S.W.2d 37

248 Ark. 665, 7 UCC Rep.Serv. 847

UNIVERSAL C.I.T. CREDIT CO., Appellant, v. Allen RONE and Thelma Rone, Appellees.

No. 5--5224.

Supreme Court of Arkansas.

May 4, 1970.

N. M. Norton, Forrest City, for appellant.

Allen Rone and Thelma Rone, pro se.

FOGLEMAN, Justice.

Appellant, Universal C.I.T. Credit Company, instituted this action for deficiency judgment against Allen and Thelma Rone, appellees. According to appellant, its original loan to appellees was $1,332 including interest and insurance premiums. The obligation was payable in 18 installments of $74 each, due the twenty-second of each month. The security was a 1957 Ford pickup truck and a 1956 Cadillac sedan. The first two installments, due May 22, and June 22, 1963, were paid. There is a disagreement between the parties as to the number of installments delinquent before the security was repossessed. At any rate the vehicles were repossessed on September 11, 1963, and sold on October 22, 1963.

Both appellees stated that they did not receive notice of the sale. Mrs. Rone testified that, at the time the notice was allegedly sent, she and her husband lived on a lot behind her employer's store; that the post office box the notice allegedly was sent to was that of her employer, Mr. Copeland; and that any one of several people, including her, would remove the mail from the box, take it into the store and place it beside the cash register to be picked up by the various addressees. Mr. Copeland did not recall receiving the letter containing the notice but admitted that 'a post office card' which was a receipt for certified mail, bore his signature under the caption 'signature or name of addressee's agent.' The receipt shows October 12, 1963, as date of delivery.

Appellant introduced testimony that the vehicles were sold at public sale and that the automobile was sold for $200 and the pickup truck for $125. The purchaser of the Cadillac testified that he considered the price he paid to be the fair market value. No testimony was offered by appellant as to the value of the truck. Appellant did present testimony through Mr. Ward, its credit manager at the time the sale took place, that it did the best it could to get a a good price. Appellee Allen Rone testified that he had spent substantial sums of money repairing the vehicles and that the value of the automobile was $700 while the value of the truck was $700 or $750. He testified that he bought both vehicles in April of 1963 and that he traded in a 1956 Ford station wagon and paid $1,000 for the vehicles.

Appellant's branch manager, Mr. Kelley, testified that after allowing credits for the proceeds of the sale, payments made by appellees, unearned insurance premiums and unearned interest, and adding the cost of the sale, there remained a balance of $756.26, ¹ the amount sought in this action.

From an adverse judgment based on a jury verdict denying recovery, Universal C.I.T. Credit Company brings this appeal, challenging only the correctness of the court's Instruction No. 2 and the court's refusal to give plaintiff's Instruction No. 1. As to the latter contention there was no error since the proposed instruction did not require that the jury find the sale to be commercially reasonable or conducted according to law as a condition to rendition of a verdict for the entire deficiency.

Appellant's right to a deficiency judgment is established by Ark.Stat.Ann. § 85--9--504(2) (Add.1961). The burden was upon the secured party as the plaintiff to establish the amount for which it was entitled to judgment. This is not an action by the debtor to recover damages because of appellant's failure to proceed in good faith and in a commercially reasonable manner, as is treated by Ark.Stat.Ann. § 85--9--507 (Add.1961). Appellees were entitled to, and did, assert the right to credit for the loss they claimed as having resulted from failure on the part of appellant to comply with the provisions of §§ 85--9--501 to 85--9--507, governing procedure upon default, as a defense to the claim of appellant. Alliance Discount Corp. v. Shaw, 195 Pa.Super. 601, 171 A.2d 548 (1961). See Norton v. National Bank of Commerce of Pine Bluff, 240 Ark. 143, 398 S.W.2d 538; Barker v. Horn, 245 Ark. 315, 432 S.W.2d 21. The failure to give the notice required by the code cannot constitute an absolute defense to an action for a deficiency judgment. Norton v. National Bank of Commerce of Pine Bluff, supra; Carter v. Ryburn Ford Sales, (1970), Ark., 451 S.W.2d 199. We have held that, in determining entitlement to deficiency judgment under such circumstances, the debt is to be credited with the amount that reasonably should have been obtained through a sale conducted according to law, rather than the actual sale price. Norton v. National Bank of Commerce of Pine Bluff, supra; Barker v. Horn, supra.

In an action to recover a deficiency judgment in which the sale of collateral is attacked for want of notice, the burden of showing the giving of any notice required should properly devolve upon the secured party, not solely because it is the plaintiff in the action, but because the proof with respect thereto is peculiarly within its knowledge. ² Mallicoat v. Volunteer Finance and Loan Corp., 57 Tenn.App. 106, 415 S.W.2d 347 (1966). Appellant also had the burden of showing the amount of the deficiency it was entitled to recover. Carter v. Ryburn Ford Sales, supra. Whenever the value of the collateral is an issue in an action to recover a deficiency, there is a presumption that it was worth at least the amount of the debt, and the secured party has the burden of proving the amount that should have been obtained through a sale conducted according to law. Barker v. Horn, 245 Ark. 315, 432 S.W.2d 21. It is only where the sale is conducted according to the requirements of the code that the amount received or bid at a sale of collateral is evidence of its true value in an action to recover a deficiency. Schabler v. Indianapolis Morris Plan Corporation, Ind., 234 N.E.2d 655 (Ct.App.1968).

It cannot be said as a matter of law that there was compliance here with the notice requirements of the commercial code. Not only did appellees deny ever having received any notice of the time and place of sale, the only evidence that such notice was given consisted of a carbon copy of a notice of sale addressed to appellees and dated October 11, 1963, and a postal receipt bearing the names of appellees purportedly signed by C. H. Copeland, found with it in appellant's files by one of its employees who had no connection with or personal knowledge of the matter. ³ The receipt was not identified in relation to the letter, except by date and an unexecuted form labeled 'Receipt for Certified Mail.' The manager in appellant's office at the time of the repossession did no more than identify his signature on the copy of the notice in appellant's file. He had no recollection of the sale of the collateral. No one knew of any notice given to the public. Thus, there was a fact question as to notice of sale and commercial reasonableness....