Equality Bank of Evansville v. Suomi

ROONEY, Justice

(Retired), dissenting.

I. MAJORITY OPINION

I seem to have a blind spot in this case since I am unable to find logic in the majority opinion. It addresses only the motion for Summary Judgment of the Bank of Evansville, Wyoming f/d/a Jeffrey City State Bank (Bank), plaintiff below, and finds that “the Bank failed to meet its burden of demonstrating specific facts by competent evidence sufficient to create a *331genuine issue of material fact concerning its right to maintain a deficiency action against the Suomis.” The Bank should not want “to create an issue of material fact” in its motion for summary judgment. It should want to show to the contrary, i.e., that there is not a genuine issue as to any material fact. That showing, together with a showing that it is entitled to a judgment as a matter of law is sufficient for a grant of the requested judgment. McDonald v. Mobil Coal Producing, Inc., 789 P.2d 866 (Wyo.1990); Robinson v. Bell, 767 P.2d 177 (Wyo.1989).

The facts in this case are not controverted. They are set forth in the majority opinion and also hereinafter in the section captioned “Proposed Opinion.” There is not here a disagreement between the parties concerning the facts of this case. That is evidenced by both parties so stating in their separate Motions for Summary Judgment. As noted in the majority opinion, the fact that both parties moved for summary judgment does not prevent the court from recognizing the existence of a genuine issue of a material fact, Seay v. Vialpando, 567 P.2d 285 (Wyo.1977), but the dual motions are to be considered by the court in its determination of the existence or lack of existence thereof. W.R.C.P. 56(c) provides in pertinent part:

“The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Emphasis added.)

Certainly, the fact that both parties moved for a summary judgment evidenced the assumption by them that there was no disagreement concerning the material facts in this case, nor did they argue such on appeal.

There is a disagreement between the parties as to whether or not Dale Suomi and Becky Suomi (Suomis) can be held responsible for payment of the note of Richard Burrus a/k/a Rick Burrus and Patricia D. Burrus (Burrus) to the Bank, but this disagreement is not one of fact. It is a disagreement on whether or not the responsibility is imposed by law. Under the facts of this case, I would hold that it is.

II. EQUITY

If the Bank loans money to Burrus secured by a recorded chattel mortgage (security agreement) on a mobile home, and Burrus sells the vehicle to Suomis, it is lawful for the Bank to repossess and sell the vehicle upon the failure of full payment according to the terms of the note and of the mortgage. Such repossession was done here, and it does not pertain to the issue before us. The issue before us results from an effort by the Bank to hold Suomis responsible for the deficiency resulting from the sale.

Suomis knew of the mortgage obligation. The sale of the vehicle by Burrus to Suomis was conditioned upon approval by the Bank. The approval was not given, but Burrus and Suomis consummated the transaction anyway. Burrus could not give clear title to the vehicle until the lien on it was removed. Suomis knew this, but they had possession and use of the vehicle. They were beneficiaries of the financing by the Bank to this extent.

Burrus had the money paid by the Suom-is for the vehicle, and he had the prior use of it. He could be content as long as he could either conceal his whereabouts and not be called upon to pay the Bank loan, or (if so called upon) as long as he could proceed against Suomis under an agreement with them, if there was one, whereby Suomis agreed to pay the loan.

The Bank, however, was the loser in the transaction. The loan to Burrus was not repaid. The sale of the security for the loan did not satisfy the balance due on the loan. Burrus had disappeared. If the Bank could not collect the deficiency from Suomis, it will have to suffer the loss. It, and other banks with knowledge of the result reached here, would probably require larger down payments in the future before making loans on the security of vehicles in order to avoid inability to collect deficiencies on repossessions, all to the det*332riment of those seeking loans, and all for the purpose of avoiding scams by individuals arranging the sequence of events as here occurred.

Suomis had knowledge of the Bank’s interest in the vehicle. Not only does Wyo. Stat. § 31-2-104 (1989) require endorsement of the security on the title to the vehicle, but Suomis agreed in the buy/sell agreement with Burrus to assume the loan or refinance it. If it was assumed, Suomis would be contractually obligated for the full amount of the loan, including any deficiency after sale of the vehicle upon default. If it was refinanced, the Bank loan to Burrus would be paid in full, and Suomis would be contractually obligated for the full amount (including deficiency if the vehicle had to be sold for less than the amount due upon default) to the entity refinancing the loan.1 In either case, Bur-rus would no longer be obligated to the Bank. The title to the vehicle would so reflect.

Suomis did not contractually assume the loan with the Bank — although they tried to do so, and they did not refinance the loan. But such requirements in the buy/sell agreement reflected the intention of Bur-rus and of Suomis to have the Bank loan be an obligation of Suomis for payment in full — including any deficiency after sale of the security. The Bank was a third-party beneficiary of the buy/sell agreement.

The effect of the third-party beneficiary doctrine is to establish a duty to, and a priority in, a third party to a contract by operation of law. It allows a stranger to a contract to enforce the obligation. The test is whether the parties to a contract intend or contemplate that the third party shall be benefitted. Wyoming Machinery Company v. United States Fidelity and Guaranty Company, 614 P.2d 716 (Wyo.1980); Peters Grazing Association v. Legerski, 544 P.2d 449 (Wyo.1975); Restatement (Second) of Contracts, §§ 135-43 (1981). In this instance, Suomis and Bur-rus intended the Bank to be benefitted by full payment of the outstanding loan secured by the vehicle through Suomis’ assumption or through Suomis’ refinancing of the outstanding loan with the Bank. The institution of this action by the Bank evidenced its agreement to be so benefit-ted.

III. PROPOSED OPINION

The majority opinion finds it unnecessary to address all of the issues raised in this appeal since its holding on the issue addressed is dispositive of the other issues. My disagreement with the majority of the court on the issue addressed by it makes it necessary to determine if I would join the result reached by the majority of the court (affirm Appeal No. 91-195 and dismiss Appeal No. 91-196) upon consideration of the other issues. Upon consideration of such issues, I would reverse the denial of the Bank’s motion for summary judgment and the granting of Suomis’ motion for summary judgment in Case No. 91-195 and affirm the grant of Bank’s motion for summary judgment and the denial of Suomis’ motion for summary judgment in Case No. 91-196, and I would remand the case for entry of judgment accordingly. Following are my reasons for doing so:

The Bank’s appeal is from the denial of its motion for summary judgment2 and granting the motion for summary judgment of Suomis on Bank’s action for deficiency judgment after a sale of the property securing a loan, the ruling being on the ground that there was an insufficient no*333tice of the sale (Case No. 91-195). Sjiomis appeal from the grant of a summary judgment against them on their counterclaim for damages allegedly occasioned by the insufficient notice, and on their counterclaim for damages resulting from an alleged breach of a fiduciary duty (Case No. 91-196).

I would reverse the denial of the Bank’s motion for summary judgment and the granting of Soumis’ motion for summary judgment in Case No. 91-195; affirm the grant of Bank’s motion for summary judgment and the denial of Soumis’ motion for summary judgment in Case No. 91-196; and remand for entry of judgment accordingly.

Bank brought this action in the district court against Suomis and against Burrus.3 The note was secured by a 1979 Chateau Mobile Home and was given to obtain financing for the purchase of it. On July 24, 1980, Burrus and Suomis had entered into an agreement for sale by Burrus and purchase by Suomis of the mobile home. It provided in part:

“The parties understand that this agreement is conditional upon the approval of the Jeffrey City State Bank.
# * * # * #
“(a) Buyers shall assume or refinance the present indebtedness on said home to the Jeffrey City State Bank. Buyers shall be responsible for all late fees and penalties occasionned [sic] by their late payment. Buyers understand this obligation might remain in Sellers' name and that continued delinquency shall injure Sellers’ credit and may be the basis for Sellers declaring a default herein[.]” (Emphasis added.)

Suomis made the required payments until 1982 when they agreed to sell the mobile home to Mike and Lori Warren. The Warrens agreed to refinance the loan with the Bank, but the Bank refused to accept the Warrens as debtors in place of Suomi. After payment defaults, the Bank repossessed the mobile home. On March 1, 1983, the president of the Bank sent the following notice to Suomi:

“Be advised by this writing, as of this day March 1,1983, the Jeffrey City State Bank has repossessed your 1979 Chateau Mobile Home used as security on loan number 20-12706 at this Bank.
“You are hereby notified you have until March 18th, 1983 to pay the balance of this note, $15,111.36 plus repairs and rent costs of $250.00 for a total of $15,-362.36 in full, or this bank will sell the mobile home to the highest bidder and you will be liable for any deficiency.
“Please contact me with any questions you may have regarding the above situation.”

The Bank was not contacted, and the sale was made. This action was then instituted to collect the deficiency plus interest, fees, costs and expenses.

In their answer, Suomis alleged, among other things, that they were not liable to Bank inasmuch as the notice of sale of the mobile home was incomplete. They counterclaimed (1) on the same basis, i.e., the notice failed to indicate whether the sale was to be private or public; the time and place of the sale, if it were to be a public one; or the time of the private sale, if it were to be a private one; all alleged to be contrary to Wyo.Stat. § 34-21-966 (1977), wherefore, they were damaged, and (2) for an alleged breach of fiduciary duty to them in failing to finance the Warrens’ purchase of the mobile home, wherefore they were damaged.

Case No. 91-195

Bank words the issues on appeal in this case:

“Was the notice given by the bank March 1, 1983 and received by Dale Suo-mi for Dale and Rebecca Suomi March 5, 1983 inadequate as a matter of law under the provisions of W.S. § 34.1-9-504(c)?
“If notice is found to be not in accordance with the notice provision of W.S. *33434.1-9-504(c), then what are the options and considerations facing the parties and the courts?”
Suomis word them:
“1. Did the Bank present any evidence to oppose Defendants’ Motion For Summary Judgment to dismiss Plaintiff's Complaint?
“2. Was the Notice of repossession and foreclosure sent pursuant to W.S. § 34.1-9-504 defective as a matter of law?
“3. Is the Bank entitled to set-off the amount of the deficiency from the amount due Defendants pursuant to W.S. § 34.1-9-507?”

A. SUFFICIENCY OF THE NOTICE OF SALE

(Bank’s first issue, Sounds’ second issue)

In its Judgment Amending Order on Motions for Summary Judgment, the district court held that Suomis were entitled to judgment inasmuch as “Plaintiff failed to give adequate notice to Dale and Rebecca Suomi pursuant to the provisions of W.S. 34.1-9-504(c) (1990 recodification).”

Wyo.Stat. § 34.1-9-504(c) provides in pertinent part:

“Disposition of the collateral may be by public or private proceedings * * * but every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable. * * * [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[.] * * * In the case of consumer goods no other notification need be sent. * * * ”

The question, then, is whether or not the March 1, 1983 letter from the Bank gave Suomis “reasonable notice” of the intended disposition of the secured property. The official comments by the authors of the Uniform Commercial Code include:

“ ‘Reasonable notification’ is not defined in this Article; at a minimum it must be sent in such time that persons entitled to receive it will have sufficient time to take appropriate steps to protect their interests by taking part in the sale or other disposition if they so desire.”

Wyo.Stat. § 34.1-9-504, Official Comment.

The notice here was mailed eighteen days before the contemplated sale or disposition of the mobile home — sufficient time to take the steps referred to in the Official Comments to the Code. It also reflected the fact of repossession and the status of the debt, and it invited any question concerning the “situation.” The invitation was not accepted, and Suomis took no steps to protect their interests.

Suomis refer to Aimonetto v. Keepes, 501 P.2d 1017 (Wyo.1972), as authority for the notice required to have been insufficient. In Aimonetto, the debtor pledged a diamond bracelet as security on a note. After a conversation between the parties concerning the necessity for a sale of the bracelet, the creditor sold it. The fact that a sale was actually to be made was not communicated to the debtor (as was done here). He was not allowed a period of time in which to make payment or otherwise protect his interests (as was done here). We held that the trial court erred in finding that there was sufficient “constructive notice” under the statute. The Aimonetto case is definitely distinguishable from this case on the facts.

Likewise, the holding in Stephens v. Sheridan Public Employees Federal Credit Union, 594 P.2d 473 (Wyo.1979), (referred to by Suomi), that whether or not proper notice of intended sale of collateral was given to the debtors is a question of fact precluding summary judgment, is factually distinguishable from this case. In Stephens, the debtor denied receiving any notice as claimed by the creditor — obviously a question of fact. Here the fact of receipt of notice is not questioned. The sufficiency of it is, and such is a question of law.

Suomis contend that the notice “implied” a public sale through the use of the words “highest bidder,” wherefore the time and place of such sale were improperly omitted from this notice. Under the facts of this *335case, I do not agree. Wyo. Stat. § 34.1-9-504(c), does not require the notice to specify whether or not the sale is to be “private” or “public.” It does require the notice in case of a contemplated public sale to specify “the time and place” for it, and it requires notification “of the time after which any private sale or other intended disposition is to be made.” The notice did specify the time after which a sale or other intended disposition would be made — indicating the contemplation of a private sale. It did not set forth a time and place for a public sale — indicating that such was not contemplated. The word “bid” does not necessarily indicate a public sale. It is not uncommon for a canvass to be made of selected potential purchasers for an offer or bid on an item available for sale without presenting the item to the public for bids, especially when the sale is by one (such as a bank) finding it necessary to make a number of such sales.

In this case, Suomis had “reasonable notice” of the contemplated action to be taken by the Bank and of the potential liability for a deficiency. They did not respond to the invitation to question the Bank concerning the “situation.” The time between the notice and the intended disposition was sufficient for Suomis to determine the details of the “situation” and to take steps to protect their interests. The notice of sale meets the requirements of the statute.

B.PENALTY IF NOTICE WAS INSUFFICIENT

(Bank’s second issue)

I need not address the propriety of a penalty for an insufficient notice since the notice in this case was sufficient.

C.FAILURE TO PRESENT EVIDENCE IN OPPOSITION TO SOUMIS’ MOTION FOR SUMMARY JUDGMENT

(Soumis’ first issue)

This is the issue addressed in the majority opinion and responded to in Sections I and II, supra.

D.SET-OFF OF DEFICIENCY AGAINST PENALTY FOR SALE OF GOODS WITHOUT PROPER NOTICE

(Soumis’ third issue)

We need not address the propriety of a set-off against a penalty for sale of goods without proper notice since the notice in this case was proper.

Case No. 91-196

Suomis word the issues on appeal in this case:

“1. Did the trial court error [sic] in failing to grant Summary Judgment on Defendant’s Counterclaim for wrongful repossession?
“2. Did the Trial Court error [sic] in failing to grant Summary Judgment on Defendants’ Counterclaim for breach of fiduciary duty?

Bank argues that:

“A. Appellants are not entitled to summary judgment on their counterclaim for wrongful repossession.
“B. Appellants are not entitled to summary judgment on their counterclaim for breach of fiduciary duty.”

E.WRONGFUL REPOSSESSION

(First issue of each party)

We need not address the wrongful repossession issue since the repossession in this case was not wrongful. (See supra.)

F.UNLAWFUL CONVERSION

(Second issue of each party)

During Soumis’ negotiations with Warrens for sale of the mobile home, the Bank requested and received a power of attorney from Suomis to transfer title to the mobile home. Suomis contend that a fiduciary relationship was thus established between them and the Bank, and that the Bank put itself “in the uncompromising position of having to finalize the loan with the Warrens and transfer title, thereby releasing the Suomis from any further obligations under their agreement with the Burrus’.”

*336The Bank may have had a duty to transfer the title to the Warrens in accordance with Sounds’ direction, and there is no indication that it would not fulfill this trust. However, and as stated by the Bank, the power of attorney did not constitute an “agreement of the parties which would vary the terms of the written documents with respect to this loan, its assumption by appellants, or their obligation to the bank. * * * The fact that it [the Bank] was not able to salvage defendants’ sale to yet another party does not cause it to be guarantor of defendants’ debt.”

The fact that the Bank and Suomis had a relationship of trust relative to the execution of a transfer of title does not, in itself, amount to a commitment by the Bank to loan money to the purchaser of the mobile home. The decision by the Bank to loan money to the Warrens, or not to do so, was separate and apart from a decision by it to transfer title of the mobile home on behalf of Suomis. The refusal of the Bank not to loan money to the Warrens was not a breach of a fiduciary duty owed by it to Suomis.

. The Bank agreed to transfer title to Warrens under a power of attorney given to it by Suomis for such purpose, all in anticipation of an assumption of the debt to Bank by Warrens or upon refinancing of the loan.

. A denial of a motion for summary judgment is not always appealable. See Collins v. Memorial Hospital of Sheridan County, 521 P.2d 1339 (Wyo.1974) and Kimbley v. City of Green River, 663 P.2d 871 (Wyo.1983). In this case, both parties moved for a summary judgment. The grant of one would be a denial of the other. Both parties appealed. Whether or not the appeal of the denial was proper is, therefore, irrelevant. The determination of the merits of the case by the district court as proper or improper is before us whether or not the denial of motions for summary judgment are appealable.

. Service on Burrus was not accomplished. Attempted service on Becky Suomi by registered mail was returned as "unclaimed,” but Becky Suomi appears in the action by joining Dale Suomi in an answer and counterclaim.