Wadsworth v. Yancey Bros. Co.
Decision Date | 03 September 1982 |
Citation | 423 So.2d 1343 |
Parties | 34 UCC Rep.Serv. 1072 Bill WADSWORTH d/b/a Bill's Construction Company v. YANCEY BROTHERS COMPANY. 80-520. |
Court | Alabama Supreme Court |
Roger Killian, Fort Payne, for appellant.
Charles A. McGee, Fort Payne, for appellee.
Appellant Bill Wadsworth appeals from an adverse judgment entered in an action by Yancey Brothers to recover a deficiency from the sale of a repossessed D-8-H Caterpillar tractor after Wadsworth defaulted on the conditional sales contract for which the tractor was collateral.
Debtor raises the issue whether, after debtor's default under a security agreement and creditor's repossession and sale of the collateral, creditor must allege and prove, as part of its prima facie case, ownership of the contract at the time it repossesses and sells the collateral as a prerequisite to its right of action against debtor for a deficiency balance. A secondary issue (or perhaps the primary issue restated), essential to the disposition of this appeal, is whether failure of creditor to give notice to debtor of the assignment of chattel paper, with recourse, altered debtor's obligation to the original creditor under the contract, where, after default for nonpayment, the creditor repossesses and sells the collateral prior to the reassignment of the contract to the original assignor.
Wadsworth also claims the trial court erroneously granted Yancey's motion for directed verdict with respect to his counterclaim for misrepresentation. Because the record reveals that, rather than granting a directed verdict, the trial court in fact designated the counterclaim as a defensive matter in the nature of a set-off, and charged the jury accordingly without objection, we hold that this alleged error is without merit. ARCP 51. Therefore, we limit our consideration on this appeal to the propriety of Yancey's conduct in the repossession and sale of the tractor.
In May of 1978, Wadsworth and Yancey began negotiations for Wadsworth's purchase of the D-8-H tractor. After a one-month rental period under a "buy-try" agreement, which applied the rental payments to the tractor's purchase price, the parties consummated a "conditional sale security agreement" on July 26, 1978, listing a purchase price of $97,926.50 (repair costs and finance charges included). Shortly thereafter, the contract was assigned by Yancey to the First National Bank of Chicago, 1 and later reassigned to Yancey by the bank. The reassignment stamped on the back of the chattel paper bears no date.
When Wadsworth defaulted on the contract, Yancey informed him of its intent to repossess the tractor and to dispose of it at a private sale in a "commercially reasonable manner." Wadsworth responded by indicating a willingness to voluntarily turn the tractor over to Yancey with the understanding that Yancey would attempt to sell the tractor at the best price possible and would also notify Wadsworth of any offers made and of any impending sale.
Following repossession of the tractor in October of 1979, Yancey informed counsel for Wadsworth that Yancey had received an offer of $60,000.00 which, if accepted, would leave a deficiency of $16,247.20. Upon Wadsworth's failure to consent to the sale, this offer was withdrawn. Of the 60 bid advertisements sent out by Yancey, only two were returned as offers. The highest of these was from Yancey and the tractor was sold to Yancey for $55,000.00 in November of 1979.
While the complete agreement is not set out, the record discloses that Yancey and the First National Bank of Chicago had a standing arrangement whereby Yancey made its own collections and took whatever steps it deemed necessary to protect its "with recourse" rights. Yancey's suit for deficiency was filed in February, 1980, and resulted in a jury verdict, and judgment entered thereon, for $22,000.00.
The issue before us, then, in the context of the adverse ruling below, is the propriety of the trial court's denying Wadsworth's motion for directed verdict with respect to Yancey's repossession and sale of the tractor/collateral.
Ordinarily, the directed verdict test may be stated in evidentiary terms: It is the trial court's function to view the evidence most favorably to the non-moving party; and if, by any reasonable interpretation, it can support any inference of material fact sought to be proved by the non-moving party, the motion must be denied. This is true because it is the jury, not the court, that must pass upon the evidence, no matter how slight, when the proffered evidence, if believed, is sufficient to allow reasonable persons to fairly and reasonably make a finding favorable to the party having the burden of proving such fact. Herston v. Whitesell, 374 So.2d 267, 270 (Ala.1979).
Here, however, a two-pronged test is applicable: 1) The sufficiency vel non of evidence, giving rise to a reasonable inference supportive of a conclusion favorable to the non-moving party; and 2) assuming the first prong is met, whether such evidence, if believed, establishes each and every requisite element of plaintiff's claim. See Tew v. Jones, 417 So.2d 146 (Ala.1982).
It is the second prong of this two-pronged test that invokes our analysis of the legal issue stated under art. I: Under the facts of this case, given the "with recourse" assignment by Yancey to the bank without notice to Wadsworth, what are the respective rights of Yancey and Wadsworth upon Wadsworth's default for non-payment?
The parties place considerable stress upon the timing of the reassignment by the bank to Yancey. Wadsworth, in support of his contention that Yancey's repossession and sale was unauthorized--and thus that Yancey was not the proper party in interest to sue for a deficiency--points to Yancey's own journal entry in December, 1979 (the date of Yancey's payment to the bank), as establishing the date of the reassignment. Yancey's claim that the reassignment occurred in March, 1979, is supported by some evidence that it repurchased all its outstanding "with recourse" chattel paper and assumed its own financing at that time, explaining that the journal entry reflects only the receipt of the sale price of the tractor.
The point of these respective contentions is that if the reassignment occurred in November, as contended by Wadsworth, Yancey's repossession and sale took place at a time when Yancey was not the owner of the contract authorizing such action. It follows, then, according to Wadsworth, that, because the repossession and sale were illegal, Yancey is barred from claiming a deficiency. On the other hand, if the reassignment occurred in March, the repossession and sale having occurred in October and November (all before the December journal entry date), Yancey was in fact the holder of the paper authorizing the repossession, the sale, and the suit for deficiency.
Because both dates precede the date of the suit (February, 1980), and because of our holding with respect to the legal relationship of the parties and their respective rights and obligations incident thereto, the time interval between the two dates, as contended by the parties, is not significant. Furthermore, because of our holding of affirmance on other grounds, it is unnecessary to address Appellee's contention that Wadsworth's express consent to the repossession waived the ownership of the contract issue (or, perhaps more accurately stated, estopped the Defendant from raising this issue).
Yancey's brief, in support of the trial court's ruling, states:
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