*1 I Because adhere to set my opinion forth in In Re Opinion of Justices, 114, 526, 15, 87 S.D. 203 N.W.2d dated January the initial reorganization of the executive branch contemplated Section Article IV of the Constitution is a matter of legislative rather than executive duty authority, answer by me to questions propounded in letter of your 8, 1973, February would be academic. I must Accordingly, respectfully decline to answer those questions.
Respectfully submitted this 12th day of February, 1973.
ROGER L. WOLLMAN Associate Justice PARKSTON, FARMERS STATE OF BANK Respondent OTTEN, al., et Appellant N.W.2d
(204 178) (File 1973) Opinion February No. 10884. filed *3 Jones, Falls, Robert L. Sioux for and defendant appellant, Otten. George Parkston,
Horstman & Braley, for and plaintiff respondent, Farmers State Bank Parkston, and and defendant respondent, Raymond Weiss.
BIEGELMEIER, Presiding (on reassignment). Justice Defendant, Otten, and George one George Weiss signed note $2,200. to plaintiff bank for To secure this loan Otten executed a security agreement to the bank aon tractor and 4, 1969, trailer. On April Otten was in default in payment of the loan, bank, whereupon under its security agreement, and (without Weiss any right) physical took possession the collateral and thereafter possession retained of it. No were ever proceedings taken for sale or other disposition of the collateral under our Uniform Commercial Transactions, Code—Secured herein cited as UCC. See SDCL 57-35 through 57-39. on this action 17, 1969, the bank commenced
On July did either not mention only. complaint note Otten against bank had taken possession or that the agreement the security Weiss, trial, 17, 1969, as prior On September collateral. due, note, and as he bank the amount paid cosigner against he made claim been made a party-defendant had then Weiss Otten cross-claimed paid. against for the amount so Otten possession from the damages resulting taking and the bank for of the provisions failing the collateral 4, 1970, at tried to court on March UCC. The action was still in of the possession which time the bank and Weiss were seized. property court, 27, 1970, trial, entered May
Following $2,051.25 based on against for Weiss Otten general judgment of a lien on any property the note without mention 4, than 13 months after April This was more security agreement. 1969, of the collateral. when the bank and Weiss took possession Thereafter, of the bank been property, having 10, on and on July since was levied sold April Weiss costs, which, totaled satisfy judgment $2,132.49. has as error the assigned
On the defendant Otten appeal *4 is for It damages. dismissal the lower court of cross-claim by the failure of the bank delay that the or rather Otten’s contention they of the collateral after any and to make disposition Weiss foreclosure contrary took it was to the law governing of possession are therefore liable for the loss they of interests and security him. by sustained a secured has on default the party right SDCL 57-39-8
By and has the by to take of the collateral SDCL 57-39-9 sell, of it. SDCL 57-39-11 dispose lease or otherwise disposition not here that provides, exceptions applicable, made that may by public private proceedings; collateral be or may sale be as a in unit or parcels
“and at time and any any every terms but place manner, method, aspect including time, place terms must be commercially reasonable. * * * reasonable notification of the time and place any public sale or reasonable notification the time after which sale any private or other intended dis- is position to be made shall be sent by the secured * * debtor, party to the *. The secured party may buy at public sale and if the collateral is aof type sold in customarily a recognized market or is aof type which is the subject widely distributed standard price quotations he may buy private at sale.” The other “intended disposition” in this section must include that mentioned in SDCL 57-39-15, which a secured permits party possessionto to retain propose the collateral in satisfaction of the obligation, in which event written notification of such proposal must be sent to the debtor and if he objects thereto in writing days within 30 the secured party dispose must the collateral under SDCL 57-39-9 57-39-13. The latter through includes § 57-39-11, quoted supra, which provides guidelines sales under a interest.
We believe the intent these sections is that secured creditor options may has two to sell proceed initially —he notice, after as SDCL property giving provided by etc. 57-39-11 or to retain collateral satisfaction of the propose obligation notice thereof as If giving by SDCL 57-39-15. provided no be objection made to the latter the creditor becomes proposal owner of the collateral and the debt If objection is satisfied. made, however, the creditor must under SDCL 57-39-11 proceed as he might have done initially.1 When the creditor complies section the debtor is liable if any. for the See deficiency, SDCL 57-39-10. This the same conclusion voiced the author of “FINANCING UNDER ARTICLE OF THE IOWA UNI CODE”, 167-8, FORM COMMERCIAL 17 Drake L.Rev. 143 at where isit stated: *5 statutes, i.e.,
1. This requirements construction of these the of notice of sale debt, security or notice that is to be retained in of satisfaction necessity constitutionality obviates the of a proceedings decision on the may without such rights party. notice which a affect v. Cf. Fuentes Shevin, 1972, 67, 1983, 556, 407 U.S. 92 32 L.Ed.2d S.Ct. and cases there- in cited. to default, secured has party “Upon * * *. the collateral Unless of the collateral possession * ** here present] not type perishable [or or public of the property must party dispose secured be ‘commercially must proceedings (which private debtor to the notice every respect) upon reasonable’ * ** goods to retain the must elect party or the secured notice to debtor of the debt upon in full satisfaction ** supplied) *.” (emphasis pursue must under SDCL 57-39-8 A creditor who takes possession failure so described options, of the above his claim under one failed to If the bank and Weiss damages. him to subjects to do interests in with the law foreclosure governing comply have they subjected collateral making disposition liability damages. to themselves to Otten Co., 1929, 54 S.D. Carlberg in Erickson v. The This Court when a rule that 296, 223 the general N.W. recognized fails with the to foreclose to attempting mortgagee liable for the damages he of the statute becomes requisites sustained. within a to make a of the collateral duty a reasonable manner is on the imposed time and in
reasonable act diligently protect him to to secured to party require creditor are so well stated in the debtor. Duties interests of Marston, 1970, Mich.App. National Bank Michigan we from it. extensively N.W.2d that quote however, mean,
“This does not
bank
to the
owes no duties to defendant with respect
also, M.C.L.A.
440.9207 (Stat.-
collateral. See
§
It
unfair
Rev.
would be
Ann.1964
19.9207).
pos-
debtor of the
deprive
allow creditor
use of the collateral for an unreasonable
session and
the asset or the pro-
of time
not
length
apply
its
of the debt.
liquidation
ceeds from sale toward
Moreover,
unfair to allow a
it would
equally
all,
at
creditor
take
if the creditor
*6
For
security.
never intended to
of the
dispose
the debtor
during
deprived
is
period
he
have been able to make
possession may
profita-
use
far
may
ble
of the asset or
have
to
gone
greater
sell.
a creditor
than
creditor to
Once
lengths
he must
commercially
has
act
sale,
lease,
manner toward
reasonable
proposed
retention where
or other
permissible,
disposition.
1964 Rev.
(M.C.L.A. §
§
440.9504[1] [Stat.Ann.
feasible,
If such
is
not
19.9504(1)]).
returned,
course,
must be
still
to
subject,
asset
the creditor’s
interest. To the extent
security
debtor,
injury
creditor’s inaction results
has a
of recovery.
the debtor
M.C.L.A.
(See
1964, Rev. 19.9501(1)]).”
§ 440.9501[1] [Stat.Ann.
§
Another
in this new field of
opinion pertinent
law is
Inc.,
Bradford v. Lindsey Chevrolet
Company,
Ga.App.
“The Commercial here, Code itself applies result is the same. See 109A-9—501 et seq.
Georgia Uniform Commercial Code. The action of the holder in legally repossessingthe under contract, sale conditional the retention same without sale and without excuse for not selling, and without demand for payment of contract, period of approximately 50 days before suit on the contract and for over 16 months from the filing time of suit trial, to the time of con- stituted a rescission and satisfaction of the contract and no recovery could had thereon.”
We there recognize was some talk about a settlement of debt, but neither that nor the other claimed excuses for delay a sale merit. any The excuses were either immaterial or not evidence, supported by the they cannot be charged Otten when he did nothing prevent the enforcement rights under the security agreement. See also Braswell Bank, *7 161 S.E.2d Ga.App. American National 117 was held a of sale under the UCC where failure to notice give was security recovery. and the holder denied wrongful California, in An in a case of first opinion impression Horan, 1972, v. 104 Cal.App.3d Atlas Thrift Company our conclusion. There the is persuasive Cal.Rptr. and the was liable for debt of his son-in-law defendant law; his defense to if the was in accordance with deficiency sale deficiency property an for a from a sale of the resulting action send a was that did not under a security agreement plaintiff son-in-law, had to his and it not notice of the sale him or written under commercially in a reasonable manner conducted the sale states: * Commercial Code. Our SDCL 57-39-11 California * * * * * to notification shall be sent “reasonable [of sale] In an review the debtor”. This a written notice. extended requires in we in general which are reasoning authorities and wrote: agreement the California court * * * * * * failed to “Plaintiff in to Commercial Code at least two He failed respects. notice and he failed to conduct give required a commercially sale in reasonable manner. We hold this failure to be a bar to deficiency a judgment”.
We a failure to as law where equate give required by notice sale is as held to be of the same effect where the creditor retains legal an unreasonable time the bank property for (as and Weiss did and takes no to here) proceeding conduct sale. The resulting damage the debtor the same. Horan,
In Atlas v. Company Thrift the creditor also supra, made the claim the remedies in given debtor the California UCC SDCL were exclusive and (our 57-39-17) therein. barred claim of not damages expressly provided The rejected California court creditor’s contention and to claim his loss as a permitted damages by debtor allowing above setoff to a The cited deficiency judgment. opinions reach relief other than that stated in SDCL 57-39-17 granting same result.
A delivered to the not finding that title was truck but to the trailer is immaterial as the truck and trailer were sold on title have execution sale without such and could been so sold under the failure to deliver the security agreement; trailer title may have been a default in the but it was no reason agreement, sale delay under the agreement. set question damages the amount to be off or the credit to which debtor is entitled where the creditor has not proceeded accordance with the of law has provisions been considered several In opinions. Home Finance Company Ratliff, Ky.1964, 374 S.W.2d court wrote: *8 a balance of on owed $501.14 “Ratliff (debtor) * * *.
original purchase The verdict the car’s placed value $900.00. at Ratliff was of the benefit of deprived a sale public car under the advertised and normal Appellant circumstances. was remiss in its to obligation Ratliff to a conduct proper sale. Ratliff’s could damage not exceed car, value market of the less the sum due from Thus, Ratliff Home to Finance. the balance due $398.86, Ratliff is the difference between the market value of the car and his debt to Home Finance.” This to seems be the general rule—the value less the debt. In 1966, Mallicoat Volunteer Finance & Loan Corp., 106, 57 347, Tenn.App. S.W.2d the trial found judge debtor $340.12. owed After quoting T.C.A. 47-9-507 (our 57-39-17, SDCL UCC 9-507(1) ), the said Supreme Court trial had judge not found the value of the collateral so as to determine the loss, debtors’ and it remanded the action to the trial to court determine
“the amount still due plaintiff finance (the company), if any, after allowing defendants an off set for (debtors) the amount due them.” court,
Our in principle, this recognized rule of damages Erickson v. The 296, Carlberg 54 S.D. Company, N.W. when it said: with
“for failure to of the statute comply requisites chattel measure mortgage foreclosures], [as * ** * * * is the value of the less the damages property amount of the mortgage remaining unpaid.” debt and obtained record title to the tractor trailer as Weiss judgment at the sheriffs sale under execution of the purchaser deny made to the bank. Otten did not originally note debt, and in this state of the record it alter inappropriate that judgment.
The failure of the bank and Weiss to in a proceed manner to with the statutes with comply reasonable time and reference to of the collateral resulted in loss to Otten which he is entitled to This is consistent with damages. for loss for when there is failure to recovery provided under the circumstances set out SDCL 57-39-17. The the UCC only finding claim evidence resulted in damages $2,500; and trailer was from court that the value of tractor $1,886.88 and other record it owed complaints appears Otten 4, 1969, $1,898.64. interest $11.76 total April claim denying against erred in Otten’s having The trial court action is remanded damages, the and Weiss for the bank them for Otten against enter a judgment directions to and costs from 1969.2 April with interest $601.36 *9 DOYLE, HANSON, concur. JJ., WOLLMAN WINANS, J., dissents.
WINANS, (dissenting). Justice printed 2. It a The note sued on was introduced in evidence. was on form payable by assignment the bank to Weiss to the bank. No or endorsement judge make appears thereon. Neither did the trial an endorsement on the merged judgment, procedure in which was note it was a referred to that Mann, opinion. in Farmers Bank v. a recent and Merchants State prior that having 173. trial occurred 87 90 203 N.W.2d This S.D. raised, judgment will not having been the and these defects not decision be reversed.
171
my
It is
bank
opinion
the
and Weiss
with the
complied
of the
requirements
Uniform Commercial
Code (U.C.C.)
Thus,
their
foreclosing
security interest.
for all of the reasons
below,
indicated
I would affirm the decision of the trial court.
all,
First of
the steps
taken
the bank to
its
foreclose
security interest complied with the U.C.C. Pursuant
to SDCL
57-39-8, well
as
as the terms of the security
agreement,
bank
had the
right
possession of
collateral after Otten defaulted
on the security agreement. After
taking
possession
collateral,
the bank
to foreclose
sought
its security interest by
an
bringing
action on the secured note. Such a judicial
proceeding
authorized
specifically
by the
a
U.C.C. as method
foreclosing
security interest. SDCL 57-39-1.
an
By bringing
note,
action on the
the bank did not waive
its
to possession
of the collateral under
the security agreement. SDCL 57-39-1
specifically provides that the
rights
remedies of the secured
are
party
cumulative.
satisfied,
until
Accordingly,
the debt is
may
creditor
proceed with any
remedies,
number of
as
so long
are
they
consistent. Olsen v. Valley
Aurora,
National Bank of
Ill.App.2d
Furthermore, “timely”. disposition of collateral was U.C.C., Under the no time is set within which specific collateral, secured party must make a except the case of consumer which to SDCL 57-39-14 goods pursuant ninety days must sold within after the secured takes party 9-504, cases, See U.C.C. 6. In all possession. comment other merely U.C.C. that the collateral be sold within requires commercially reasonable of time. SDCL 57-39-11. What period *10 constitutes a time commercially depends entirely reasonable the facts and circumstances each of case. particular case, the present
In the the found that properly lower court was in of collateral caused a by the bank the delay by disposing factors, an the attempt by combination justifiable including installments, bank the defendant to get pay delinquent obtain, subsequent money bank’s of an action to commencement in to trial. expected delay bringing and the matter judgment, factors, In the evidence was sufficient to sustain the these light in trial court’s the bank’s finding delay disposing under the collateral was reasonable circumstances.
I would also affirm the trial court’s decision for the reason debtor, case, under circumstances this would not that the even if bank had failed to damages comply entitled to trial, the was party with the U.C.C. At the time of secured still the collateral. possessionof provides: SDCL 57-39-17 not party
“If that the secured it is established of this provisions accordance proceeding restrained on may be ordered or chapter disposition has disposition If terms and conditions. appropriate * * * from to recover right the debtor has occurred failure to by secured loss caused party any of this chapter.” provisions statute, Otten, above was quoted The under the remedy to make a of the collateral. the bank compel has exists where collateral damages only to recover been the secured disposed party. already al., et Appellants
TAYLOR al., Respondents PENNINGTON CO. et 395) N.W.2d (204 (File 15, 1973) February Opinion No. 10953. filed