Case Title: Hess v. Thomas

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1993-04-21T00:00:00Z

Document:
Hess v. Thomas1993 WY 61851 P.2d 10Case Number: 92-275Decided: 04/21/1993Supreme Court of Wyoming
Douglas M. HESS, 

Appellant 
(Plaintiff),

v.

Pamela A. Fordyce 
THOMAS,

 Appellee 
(Defendant).

Appeal from District 
Court, Sheridan County, James N. Wolfe, J.

Jerry A. Yaap of 
Bishop, Bishop & Yaap, Casper, for appellant.

Tom C. Toner of 
Yonkee & Toner, Sheridan, for appellee.

Before MACY, 
C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, JJ.

TAYLOR, 
Justice.

[¶1]      The question of 
whether Wyoming will continue to follow the absolute bar approach preventing a 
non-complying secured party from securing a deficiency judgment under the 
Uniform Commercial Code (UCC) is presented by this appeal. We hold that a 
secured party's failure to give a reasonable notice before disposing of 
collateral bars a deficiency judgment. We affirm the district court's summary 
judgment in favor of a co-maker of a promissory note.

I. 
FACTS

[¶2]      In 1990, Douglas 
M. Hess (Hess) purchased $4,600,000.00 in assets from the receiver of the failed 
First National Bank of Sheridan, Wyoming. Among the assets obtained by Hess was 
a promissory note and security agreement executed in 1985 by Pamela A. Fordyce 
Thomas (Thomas) and Michael G. Fordyce (Fordyce). The collateral for the unpaid 
loan included a boat, motor and trailer; a 1984 Ford truck; and a 1985 G.M.C. 
Suburban.

[¶3]      Thomas and 
Fordyce divorced in 1988. According to terms of their property settlement, 
Fordyce received the boat, motor and trailer, and the Ford truck. Thomas 
received the Suburban. Fordyce assumed repayment responsibility for two-thirds 
of the unpaid balance on the promissory note and Thomas assumed responsibility 
for the remaining one-third.

[¶4]      Asserting the 
debt was unpaid, Hess repossessed the collateral from both Fordyce and Thomas. 
Hess orally agreed to release Fordyce from his portion of the debt for the sum 
of $5,800.00, the agreed value of the collateral in his possession. After 
repossessing the Suburban, an agent for Hess contacted Thomas to request she 
transfer title to Hess. Thomas refused until she could seek the advice of her 
attorney. Hess responded by filing suit against Thomas seeking a deficiency 
judgment of $20,691.41 which he claimed was the unpaid principal and interest 
for one-half of the note minus a credit of $5,000.00 for the value of the 
Suburban. Prior to filing suit, without any notice to Thomas, Hess had placed 
title to the Suburban in his name and eventually sold it to a third party for 
$5,000.00.

II. 
DISCUSSION

[¶5]      A summary 
judgment is affirmed when there are no genuine issues of material fact and the 
judgment is correct as a matter of law. Powder River Oil Co. v. Powder River 
Petroleum Corp., 830 P.2d 403, 406-07 (Wyo. 1992).

[¶6]      The security 
agreement between the parties stated: "In the event of default under this 
agreement the Debtor and the Secured Party have the rights and remedies provided 
in Article 9 of the Uniform Commercial Code and, in addition, those provided in 
this agreement." The specific rights of a debtor under the UCC or the duties of 
the secured party may not be waived except as specifically permitted. Wyo. Stat. 
§ 34.1-9-501(c) (1991). Among the rights of the debtor granted by Wyo. Stat. § 
34.1-9-504(c) (1991) (emphasis added) (hereinafter § 9-504) is the right to be 
informed of the disposition of collateral:

(c) Disposition of the 
collateral may be by public or private proceedings and may be made by way of one 
(1) or more contracts. Sale or other disposition may be as a unit or in parcels 
and at any time and place and on any terms but every aspect of the disposition 
including the method, manner, time, place and terms must be commercially 
reasonable. 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 
signed after default a statement renouncing or modifying his right to 
notification of sale. In the case of consumer goods no other notification need 
be sent. In other cases notification shall be sent to any other secured party 
from whom the secured party has received (before sending his notification to the 
debtor or before the debtor's renunciation of his rights) written notice of a 
claim of an interest in the collateral. The secured party may buy at any public 
sale and if the collateral is of a type customarily sold in a recognized market 
or is of a type which is the subject of widely distributed standard price 
quotations he may buy at private sale.

[¶7]      It is undisputed 
that no notice of public or private sale of the Suburban was given to Thomas. 
Without a notice, the purpose of § 9-504 "`to give the debtor an opportunity 
either to discharge the debt and redeem the collateral, to produce another 
purchaser, or to see that the sale is conducted in a commercially reasonable 
manner'" is frustrated. Coones v. Federal Deposit Insurance Corporation, 848 P.2d 783, 803 (Wyo. 1993) (quoting Buran Equipment Co. v. H & C Inv. Co., 
Inc., 142 Cal. App. 3d 338, 190 Cal. Rptr. 878, 881 (1983)).

[¶8]      In Aimonetto v. 
Keepes, 501 P.2d 1017, 1019 (Wyo. 1972), Wyoming first accepted the absolute bar 
approach which prevents a non-complying secured party from obtaining a 
deficiency judgment. We recently reaffirmed the validity of this approach in 
Coones, 848 P.2d at 802:

In Wyoming, the secured 
party's compliance with the notice obligations of § 9-504(c) is a condition 
precedent to the recovery of a deficiency. Stephens [v. Sheridan Public Emp. 
Federal Credit Union,] 594 P.2d [473,] 476 [(Wyo. 1979)]; Jackson State Bank. v. 
Beck, 577 P.2d 168, 171 (Wyo. 1978) (quoting Aimonetto v. Keepes, 501 P.2d 1017, 
1019 (Wyo. 1972)). The policy behind this court's adoption of the absolute bar 
approach is that it furnishes the most definite deterrent to noncompliance. 
Howard Foss, The Noncomplying Secured Party's Right to a Deficiency, 21 UCC L.J. 
226, 240 (1989).

[¶9]      Hess argues, 
using unpersuasive authority, that the rule in Wyoming should be modified. We 
decline the invitation to modify our rule. The bar on deficiency judgments 
creates a "final and potentially most significant consequence of a creditor's 
misbehavior * * *." 2 James J. White & Robert S. Summers, Uniform Commercial 
Code § 27-19 (3rd ed. 1988).

III. 
CONCLUSION

[¶10]   The failure of Hess, the secured 
party, to provide the statutorily required reasonable notice of the disposition 
of the collateral to Thomas, the debtor, precludes Hess as a matter of law from 
seeking a deficiency judgment.

[¶11]   The summary judgment in favor of 
Thomas is affirmed.