EXECUTIVE FINANCIAL SERVICES, INC., Appellant,
v.
Robert M. GARRISON, Virginia C. Garrison, Robert M.
Garrison, II, Christine L. Garrison and Sperry
Corporation formerly known as Sperry
Rand Corporation, Appellees.
No. 83-1751.
United States Court of Appeals,
Eighth Circuit.
Submitted Nov. 30, 1983.
Decided Dec. 9, 1983.
John F. Barry, Partin, Partin & Barry, Kansas City, Mo., for appellees.
Allen J. Lebovitz, Kansas City, Mo., for appellant.
Bеfore LAY, Chief Judge, HENLEY, Senior Circuit Judge, and ARNOLD, Circuit Judge.
PER CURIAM.
Executive Financial Services, Inc. (EFS) appeals from the district court's grant of summary judgment in favor of appellees in EFS's suit fоr a deficiency judgment after repossession and sale of secured collateral. EFS contends the district court erred in holding that written notice is necessary undеr Missouri's counterpart to Uniform Commercial Code Sec. 9-504(3) as a prerequisite to a secured creditor's right to a deficiency judgment. EFS also alleges that aрpellees waived their right to notice under the statute. Finding the district court's construction of Missouri law to be reasonable,
Appellee Robert M. Garrison enterеd into a written agreement to lease computer equipment from EFS. Garrison became dissatisfied with the equipment, refused to make further payments and surrendered рossession of the equipment to EFS which subsequently sold it. EFS then sued the Garrisons2 for the remaining rentals due under the agreement. The Garrisons moved for summary judgment alleging that no oral or written notice of sale had been given to them. EFS claimed that oral notice had in fact been given, or, in the alternative, that the Garrisons waived their right to notiсe by surrendering the equipment. It is uncontested that no written notice was given by EFS to the Garrisons prior to the sale of the collateral.
The district court, following a heаring, concluded that Missouri law requires that notice to the debtor be in writing under V.A.M.S. Sec. 400.9-504(3) (1965). The court further held that the Garrisons did not waive their right to notice. The court noted that in Missouri a secured party's failure to comply with the notice requirements in Sec. 9-504 precludes a deficiency judgment in favor of that party. Because there was no written notice given, the district court ordered summary judgment in favor of the Garrisons. This appeal followed.
The parties agree that the transaction is within the scope of Article Nine of Missouri's commercial code since the lease was "intended to create a security interest" in the computer. V.A.M.S. Sec. 400.9-102(1)(a) (1965). Therefоre, the principal issue on appeal is whether V.A.M.S. Sec. 400.9-504(3) requires notice to the debtor to be in writing or whether oral notice will suffice. There appears to be no Missouri case which addresses this precise issue.
V.A.M.S. Sec. 400.9-504(3) provides in pertinent part:
[R]easonable notification of the time and place of any public sale or reasonablе notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor.
(Emphasis addеd.) Whether written notice is required under this section of the Uniform Commercial Code has been the subject of conflicting decisions among the states. See, e.g., McKeе v. Mississippi Bank & Trust Co.,
The district court reasoned that a Missouri court, if faced with the issue, would require written notice for several reasons. Executive Financial Services v. Garrison,
Although several cases ... have suggested that oral notice is sufficient, these findings are almost certainly contrary to draftsmen's intent. Section 9-504 requires that the secured party "send" notice and 1-201(38) tells us that: ' "Send" in cоnnection with any writing or notice means to deposit in the mail or deliver for transmission by any other usual means of communication with postage provided for and properly addressed....' It is most difficult to fit an oral message into the quoted language. Rather the subsection seems to contemplate mail or telegraphic notice.
J. White & R. Summers, Uniform Commercial Code 1112 (2d ed.1980).
The second reason given by the district court for requiring written notice is its belief that a Missouri court would opt for an interpretation giving greater protection tо the debtor. The notice requirement protects the debtor's right to redeem the collateral. V.A.M.S. Sec. 400.9-504 comment 5. The court cited Gateway Aviation, Inc. v. Cessnа Aircraft Co.,
Finally, we agree with the district court that requiring writtеn notice also protects the secured party by eliminating the problems of proof associated with proving that oral notice was given and that it reasоnably informed the debtor of the intended sale. A written notice requirement "should spare judges and litigants much grief." Executive Financial Services,
Since this question has nоt been determined by the Missouri courts, it was up to the district court to determine what a Missouri court would probably rule in a similar case. Where it has not been shown that the district judge misapplied the state law, we will usually defer to the view taken by the district court sitting in the state in question. See, e.g., Mitchell v. City of Minneapolis,
In addition, we agree with the district court's holding rеgarding EFS's contention that the Garrisons waived their right to notice by surrendering the collateral. In Clune Equipment, supra, the Missouri appellate court rejected a creditor's argument that the debtor waived notice prior to default. The court stated "the statutory notice provision may not be waived ... to the extent that it gives rights to the debtor and imposes duties on the secured creditor." Id. at 108. We believe a Missouri court would adhere to this view if confronted with a post-default waiver. To adopt appellant's construction of the statute would discourage debtors from the cooperative delivery of possession of the collateral and wоuld frustrate the policies of Article Nine in promoting peaceful repossessions and protecting the debtor's rights upon default. See Union Trust Co. v. Hardy,
In sum, the judgment of the district court is affirmed.4
Notes
The Honorable Joseph E. Stevens, Jr., United States District Judge, Western District of Missouri
Robert Garrison's wife, son and daughter-in-law were joined as guarantors of the lease. This suit originated in state сourt, but when the Garrisons, as third party plaintiffs, sued Sperry Corporation for breach of warranty Sperry removed the case to federal district court pursuant to 28 U.S.C. Secs. 1332, 1441(c). Summary judgment was granted for the Garrisons against EFS on March 29, 1982. EFS appealed but this court dismissed the interlocutory appeal as premature. Thereafter, Garrison's suit against Sperry was settled and Garrison's counterclaim against EFS was voluntarily dismissed, thus disposing of all remaining issues and making the summary judgment final for appeal purposеs
EFS cites GAC Credit Corp. v. Small Business Admin.,
Since we have held written notice is required, we do not reach the Garrisons' contentions that, even if oral notice is permissible under the statute, the oral notice given here was insufficient because it did not tell the Garrisons the date on which the subsequent private sale was to take place