No. 91-040
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
MACK FINANCIAL CORPORATION,
Plaintiff and Respondent,
-vs-
JOSEPH A. TEZAK and MARJEAN TEZAK, d/b/a TEZAK
CONCRETE AND CONSTRUCTION,
Defendants and Appellants.
APPEAL FROM: District Court of the Fifth Judicial District,
In and for the County of Madison,
The Honorable Frank Davis, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Mark David 11offman Jones & Hoffman, Virginia Cit:
Montana
For Respondent:
Terry J. MacDonald and Paul C. Meismer; Garlington,
Lohn & Robinson, Missoula, Montana
Submitted on Briefs: March 12, 1992
Decided: June 29, 1992
Filed:
f
Clerk
Justice R. C. McDonough delivered the Opinion of the Court.
This is an appeal from a jury trial and judgment of the Fifth
Judicial District, Madison County. Mack Financial Corporation
(Mack) filed a complaint against Joseph and Marjean Tezak and their
construction company (hereinafter Tezak) for repossession, sale and
a deficiency judgment on cement trucks Tezak was purchasing under
a retail installment contract. Tezak counterclaimed that Mack
fraudulently induced surrender of the trucks and then disposed of
the trucks contrary to an agreement of the parties and contrary to
the Uniform Commercial Code. The District Court denied Tezak's
motion for summary judgment, allowing the issue of whether Tezak
received reasonable notice of sale, as required under ?j 30-9-504
MCA, to go to the jury. The District Court further denied Tezak's
request that the jury be instructed that Mack had violated the
Uniform Commercial Code. The jury verdict was in favor of Mack.
Tezak appeals and we affirm.
The issues for our review are:
I. Did the District Court err by denying Tezak's motion for
summary judgment, on the issue of liability, for failure to give
reasonable notice of sale of repossessed collateral in violation of
5 30-9-504 (3) (a), MCA?
11. Did the District Court err by failing to instruct the
jury that Mack failed to give reasonable notice of the sale and
that therefore the jury must consider damages including lost
profits suffered by Tezak?
Tezak purchased, under separate installment contracts, two
2
cement trucks from Mack. Tezak experienced financial difficulties
and the contracts were consolidated and repayment schedules were
renegotiated on several occasions. Tezak's inability to keep his
payments up to date finally culminated in Mack filing this action.
There is no dispute that Tezak was delinquent in payment of the
agreement and that the trucks themselves were collateral for the
agreement.
After the action was filed, Tezak indicated to Mack that he
was considering challenging service of process and form of the
summons. Immediately preceding a show cause hearing, set for April
19, 1983, the attorneys for the parties discussed the service
problem and made an agreement. Under the agreement, Tezak was to
deliver the trucks and voluntarily submit to jurisdiction. Mack
agreed to provide Tezak 10 day notice of any sale of the cement
trucks. A stipulation was drafted by Mack's attorney and forwarded
to Tezak. The stipulation included only the terms of voluntary
appearance in the action and delivery of the trucks but failed to
mention the portion of the agreement relating to notice of sale.
The stipulation was never executed or filed.
On or about May 4, 1983, Tezak received notice from Mack,
dated April 28, 1983, that the trucks would be sold on or after May
12, 1983 at private sale. Tezak contacted Mack's attorney at that
time, Gary Walton (Walton). There is a factual dispute regarding
what ensued. Tezak contends Walton told him that he should "ignore
and disregard" the notice. Mack contends that the instruction to
ignore or disregard was conditioned upon execution of the
stipulated agreement.
On June 23, 1983, Tezak received a second 10 day notice of
private sale, this time from Walton. However, the trucks had
actually been sold on June 15th and 18th, 1983, respectively.
Tezak contends that because the April 28, 1983 notice was void and
the June 23, 1983 notice came after the trucks were actually sold,
Mack failed to provide reasonable notice of sale as required by
law. At trial, at the close of testimony, Tezak moved for summary
judgment, alleging there existed no factual dispute regarding
Mack's failure to provide notice prior to sale. Although Tezak
referred to his motion as one for summary judgment, it was actually
a motion for a directed verdict and we treat it as such.
Section 25-7-302, MCA, provides:
Where, upon the trial of an issue by a jury, the
case presents only questions of law, the judge may direct
the jury to render a verdict in favor of the party
entitled thereto.
The test commonly employed to determine if the evidence is legally
sufficient to withdraw cases and issues from the jury is whether
reasonable men could draw different conclusions from all the
evidence. If only one conclusion is reasonably proper, then the
directed verdict is proper. Cremer v. Cremer Rodeo Land and
Livestock Co. (1979), 181 Mont. 87, 592 P.2d 485. Evidence
introduced by the plaintiff Mack, will be considered in a light
most favorable to plaintiff and as proving whatever it tends to
prove. Cremer I81 Mont. at 91.
Section 30-9-504, MCA, provides in part:
Secured party's right to dispose of collateral after
4
default --
e f f e c t of disposition.
.
(3) (a) . . Unless collateral is perishable or
threatens to decline speedily in value or is of a type
customarily sold on a recognized market, reasonable
notification of the time and place of any public sale or
reasonable 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 if he
has not siqned after default a statement renouncinq or
modifvinq his riqht to notification of sale. [Emphasis
added ]
Section 30-9-504, MCA, clearly requires that a secured party must
provide the debtor reasonable notification of the time after which
repossessed collateral will be privately sold. Mack contends that
the April 28, 1983 notice does provide adequate notice of private
sale in conformity with the statute.
The dispositive issue for our review is whether or not
Walton's instruction to Tezak, to disregard the April 28, 1983
notice, was conditioned upon execution of the stipulated agreement.
In other words, if Walton's instructions to disregard were
conditioned upon execution of the stipulated agreement, Tezak's
failure to execute the stipulation precludes him from disregarding
the April 28, 1983 notice. If, however, the instruction was
unconditional, Tezak properly disregarded the April 28, 1983
notice, and was entitled to re-notice. The June 23, 1983 notice
was not provided prior to sale of the trucks and therefore would
not fulfill the mandate of $j 30-9-504, MCA.
Tezak testified that he was instructed by Walton to disregard
the April 28, 1983 notice without any reference to the imposition
of any conditions. Attorney Walton also appeared as a witness at
the trial. We note the following excerpt from his testimony:
Q. What did you discuss with Mr. Tezak in regard to that
notice?
A. I told Mr. Tezak that as far as I was concerned, he
should-- I don't know if I used the word ignore but I
told him that he should disregard that notice of private
sale. And I did so with the understanding that Mr.
Gilbert (Tezakvs attorney) was going to execute the
stipulation that had already been sent to him.
Q. So it was your understanding that if Mr. Gilbert
signed the stipulation and filed it, you would be willing
to renotice the sale?
A. Right.
Transcript of Proceedings, Volume IV, page 13.
On cross examination, Walton was asked and provided:
Q. ...
is it your position that the April 28 notice was
invalid in light of your instruction to Joe Tezak to
ignore it?
A. Well, I think it depends on whether they had
followed through with the stipulation in June, which they
did not.
Transcript of Proceedings, Volume IV, page 25.
We conclude that reasonable men could draw different
conclusions from the above evidence and inferences therefrom.
There remains a factual issue regarding whether or not the
instruction to disregard was conditional. A directed verdict is
appropriate when there only remain questions of law. Section 25-7-
302, MCA. We further conclude that the April 28, 1983 notice,
standing alone, provides reasonable notice of sale within the
meaning of § 30-9-504, MCA. The District Court was not in error
for submitting the case to the jury for resolution. Furthermore,
the District Court did not err by refusing to give an instruction
that required the jury to find that Mack had failed to give
reasonable notice. In light of the jury verdict in favor of Mack,
we need not address the issue of damages raised by Tezak. The
District Court is affirmed.
Justice
/
Justice Terry N. TrieweiLer dissenting.
I dissent from the opinion of the majority.
In the event that collateral is sold at a private sale,
S 30-9-504, MCA, requires reasonable notification of the time after
which the private sale will be conducted.
In this case, notice was given that a private sale would be
conducted sometime after May 12, 1983. However, the attorney for
the party which issued the notice advised the debtor to disregard
it. Therefore, the notice was void and no subsequent notice was
provided prior to the sale of the collateral.
The majority concludes that a jury could find that the
attorney's advice to disregard the notice was conditioned upon the
execution of a stipulation by the debtor's attorney. However,
there was no such testimony by the creditor's attorney. He
testified that "1 told him he should disregard that notice of
private sale." He also testified that he gave that advice "with
the understanding that Mr. Gilbert [Tezak's attorney] was going to
execute the ~tipulation.'~ However, there is no indication in
either Walton's testimony or Tezak's testimony that Waltonls
understanding was communicated to Tezak. Tezak gave the following
testimony:
A. And he told me to disregard that notice. He said,
"don't pay any attention to it. It should not have
been sent to you. Just disregard it." He said
that our deal was, nothing has changed. We went
through this private sale and auctions all over
again, went through it all over again.
He said, "that's the way it will be. And any
documentation you get from Mack Finance, just
ignore it. his is between us." So I did ignore
it. And I came home and called Mr. ~ilbertand
told him that I guess it was sent in error. I just
forgot about it.
Tezaklsrecollection was consistent with Waltontstestimony to
the effect that he felt that any notice should have come from him.
During cross-examination he testified as follows:
Q. And after Joe Tezak talked to you about that
notice, is it true that you told him to ignore or
disregard, or something to that effect, the notice
itself?
A. Thatls right. I felt that the notice should come
from our office.
The majority s conclusion that Walton conditioned waiver of
the notice upon execution of a stipulation is not only unsupported
by the direct testimony, it is inconsistent with Wafton's
subsequent actions. On June 20, 1983, he sent a letter to Joseph
Tezak in which he affirmatively advised Tezak that he had until
July 1, 1983, in which to redeem his collateral. The letter
stated:
You have not less than ten (10) days from the date of
this notice of private sale and until July 1, 1983, in
which to redeem the collateral by paying the balance and
costs in full. If full payment is not received by that
date, you are hereby notified that Mack Financial
Corporation will offer the collateral for sale at a
private sale to be held on or after July 1, 1983.
If Walton intended the previous waiver of notice to be
conditioned on execution of a stipulation which had never been
executed, why was it necessary to send an additional notice? And
why did he affirmatively represent that Tezak had until July 1 by
which to redeem his collateral? Why is Tezak being bound by a
notice which even the creditor's attorney did not consider
effective?
The fact is that the creditor's attorney represented one thing
to the debtor and unbeknownst to him, the creditor was doing
something else. These facts, and this Court's holding, comply with
neither the spirit nor the letter of the statutory notice
requirements in the Uniform Commercial Code.
Under these circumstances, the defendant was entitled to a
directed verdict on the issue of whether he had received adequate
notice pursuant to 5 30-9-504, MCA.
It should be noted that the plaintiff waived its right to
recover a substantial deficiency prior to the trial in this case.
Whether, under 5 30-9-507, MCA, defendant was entitled to damages
over and above the value of that deficiency has not been decided by
the majority opinion and I, therefore, express no opinion on that
issue.
I would reverse the District Court's order denying defendant's
motion for a directed verdict on the issue of liability. I express
no opinion whether under these circumstances, plaintiff would have
been entitled to an award of damages.