No. 12756 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

19 74 

JAMES TALCOTT, INC., 

a New York Corporation, 

Plaintiff and Appellant, 

MURRY REYNOLDS, d/b/a 

REYNOLDS & SON, 

Defendant and Respondent. 

Appeal from: District Court of the Fourth Judicial District, 

Honorable Edward T. Dussault, Judge presiding. 

Counsel of Record: 

For Appellant : 

McGarvey, Morrison, Hedrnan and Moore, Kalispell, 

Montana 

James D. Moore argued, Kalispell, Montana 

For Respondent : 

Alex C. Morrison argued, Plains, Montana 

Submitted : September 17, 1974 

Decided: OEc f 8 1974 

Filed : BEC 1 ? 1474 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

Plaintiff, James Talcott, Inc., a New York corporation, 

Flathead County, 

brought this action in the district court,/to recover a deficiency judgment against defendant Murry Reynolds. The jury held 

in favor of defendant and plaintiff appeals. 

On May 3, 1966, defendant purchased a mountain logger 

from Star Equipment Company in Missoula, Montana. A mountain 

logger is a device with four large tires, hinged in the middle 

and a winch in the back. Its purpose is to skid logs from the 

location they are felled to a landing, where they can be loaded 

onto a truck. 

To finance the purchase defendant executed a conditional 

sales contract and a note in favor of plaintiff. The note required defendant to make 39 monthly installments of $426.96, and 

a final installment of $427.08, for a total contract price of 

$17,078.52. The conditional sales contract contained a clause 

giving plaintiff the right to declare all the installments immediately due and payable upon any default by defendant. 

Defendant took possession of the machine, completed the 

first four payments but failed to make the fifth. Instead of 

demanding that all payments be immediately made, pursuant to the 

default clause, plaintiff chose to grant an extension. During 

the next four years, when the contract should have been paid in 

full, defendant was granted a total of ten extensions but only 

24 of the required 40 payments were made. 

On November 18, 1969, defendant made a single payment. 

Plaintiff then notified defendant that the next payment would be 

due in December and requested defendant to notify him if the 

payment could not be made. Defendant did not respond to this letter 

and no other payments were ever made. Defendant then attempted 

to sell the machine to settle the account but no interested buyer 
could be found. 

On June 29, 1970, some eight months after the last payment had been made, plaintiff wrote a letter to defendant stating that a representative from Lynnwood Equipment Company would 

pick up the machine and transport it to the Seattle area where 

it would be sold. In the early part of August 1970, defendant 

delivered the machine to Lynnwood's agent who transported it 

to the Seattle area where it was prominently displayed on Lynnwood's lot. After nearly two months of futile efforts directed 

toward selling the machine, plaintiff, on September 21, 1970, 

wrote to defendant advising him that Lynnwood was unable to sell 

the machine and recommending the machine be sold at auction in 

the latter part of October 1970. Plaintiff also requested defendant to contact him if this method of selling the machine was not 

acceptable. Again, defendant did not respond, so the following 

letter was written: 

"Mr. Murry Reynolds dba 

REYNOLDS & SON COMPANY 

P. 0. Box 1434 

Trout Creek, Montana 59874 

October 13, 1970 

Re: Account No. 3520 

Dear Mr. Reynolds: 

Since you have not responded to our letter of September 21, we 

have authorized the sale of the mountain logger by Murphy 

Auctions, 757 Main Street, Edmonds, Washington. The equipment 

will be sold to the highest bidder on Friday, October 30, 1970. 

Very truly yours, 

JAMES TALCOTT, INC. 

R. W. Stotts, Jr. 

Credit Department 

On October 30, 1970, the mountain logger was sold by 

Murphy Auctions for $2,600. Plaintiff deducted the $2,000 less 

the expenses of the sale from the defendant's account and sued 

to recover the deficiency. Trial was held and the jury returned 

a verdict in favor of defendant. Plaintiff's motions for a 
directed verdict and for a judgment notwithstanding the verdict 

were denied. 

Three issues have been set forth for consideration: 

1. Was the sale of the mountain logger commercially 

reasonable? 

2. Did plaintiff comply with the notice of sale provisions of the Uniform Commercial Code? 

3. Is plaintiff barred from securing a deficiency judgment if he failed to comply with the notice of sale provisions 

of the Uniform Commercial Code? 

In considering issue one, the pertinent provision of 

the Uniform Commercial Code is set forth. Section 87k-9-504, 

R.C.M. 1947, provides: 

" (1) A secured party after default may sell, 

lease or otherwise dispose of any or all of the 

collateral in its then condition or following 

any commercially reasonable preparation or processing. Any sale of goods is subject to the 

Chapter on Sales (Chapter 2) * * * 

"(2) If the security interest secures an indebtedness, the secured party must account to the 

debtor for any surplus, and, unless otherwise 

agreed, the debtor is liable for any deficiency. *** 

"(3) Disposition of the collateral may be by 

public or private proceedings and may be made by 

way of one 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 includinq 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 notitication ot the time atter 

whlch any prlvate sale or other lntended dlsposltion is to be made shall be sent by the secured 

party to the debtor * * *.I1 (Emphasis supplied) . 

The trial transcript reveals that Murphy Auctions is a 

major auctioneering outlet through which Lynnwood Equipment 

Company had transacted business on several occasions. The auctions are held three times a year and are preceded by substantial 
advertising in the Seattle Times and the Post Intelligence 

and by a brochure that is sent to prospective purchasers and 

interested parties. Approximately 350 people attended the 

auction. Bidding on the equipment varied somewhat from item 

to item depending upon the interest and the condition of the 

particular piece of equipment. The mountain logger did receive competitive bidding. William Beaman, an employee of 

Lymood Equipment Company, testified he had attended the auction and the price received for the machine was a fair price 

considering the machine's condition at the time of sale. 

When the defendant was confronted with the preceding 

evidence, he attempted to show the unreasonableness of the sale 

by introducing evidence indicating a better price could have 

been received elsewhere, and that the machine could have brought 

a better price if it had been disassembled and sold for parts. 

On these two points the Uniform Commercial Code is explicit. 

Section 87A-9-504(3), R.C.M. 1947, states: 

"(3) * * * Sale or other disposition may be - as a 

unit or in parcels * * *." (Emphasis supplied). 

Thus, the Uniform Commercial Code does not require the 

secured creditor to disassemble the collateral and sell it piece 

by piece. 

Section 87A-9-507 (2), R.C.X. 1947, states: 

"The fact that a better price could have been 

obtained by a sale at a different time or in a 

different method from that selected by the secured 

party is not of itself sufficient to establish 

that the sale was not made in a commercially 

reasonable manner. If the secured party either 

sells the collateral in the usual manner in any 

recognized market therefor or if he sells at 

the price current in such market at the time 

of his sale or if he has otherwise sold in conformity with reasonable commercial practices 

among dealers in the type of property sold he 

has sold in a commercially reasonable manner * * *. I' (Emphasis supplied) . Thus, the reasonableness of the sale is determined not by the 
price that is ultimately received for the collateral, but by 

the manner in which the sale is conducted. 

We have examined the transcript closely and have found 

no evidence demonstrating the sale was conducted in a commercially unreasonable manner. To the contrary, the transcript 

is replete with evidence that plaintiff acted in good faith 

and conducted the sale in a commercially reasonable manner. 

We so hold. 

In considering issue two, we examine the letter sent on 

October 13, 1970 to determine if plaintiff complied with the 

notice provision of section 87A-9-504, R.C.M. 1947. During trial 

plaintiff's credit manager testified he had written the letter 

and the letter would have been mailed by his secretary in the 

ordinary course of office procedures. The letter was neither 

certified nor registered. Defendant denied receiving the letter. 

The Uniform Commercial Code does not require the debtor 

receive actual notice of the sale, it only requires the creditor 

take reasonable steps to assure that the debtor is notified. 

Section 87A-1-201(26) R.C.M. 1947, states: 

"(26) A person 'notifies' or 'gives' a notice or 

notification to another by taking such steps as 

may be reasonably required to inform the other in 

ordinary course whether or not such other actually 

comes to know of it. * * *I' (Emphasis supplied). 

In Montana the receipt of a mailing is presumed, if the 

office procedure of mailing is carried out. However, when the 

addressee denies receipt, the question is l e f t t o the determination of the jury. Treasure State Industries v. Leigland, 151 

Mont. 288, 443 P.2d 22; Crissey v. State Highway Comrn., 147 

Mont. 374, 413 P.2d 308; Renland v. First Nat. Bank of Grass 

Range, 90 Mont. 424, 4 P.2d 488. Here, the question is not 

whether the mailing was received but whether it was properly 
mailed. 

Plaintiff argues that the October 13 notice of time and 

place of sale was sufficient in all respects, noting that while 

defendant relied upon the fact the notice misstated the place 

of sale he continually emphasized he did not receive the notice. 

Plaintiff further argues that had defendant admitted he received 

the letter of notice and had offered evidence that he attempted 

to attend the sale, but was denied the opportunity because of 

defect of notice, then and only then, would he have been entitled 

to recover any damage he might have suffered as a result of the 

defect. Section 87A-9-507(1), R.C.M. 1947. 

Such is not the situation here. How can it be argued 

that defendant was prejudiced by a notice he denies receiving, 

and therefore could not rely on. To permit defendant to rely on 

such an issue would be to allow him to avoid an obligation he 

freely and voluntarily entered into. 

Here, in view of the record made during the course of 

the trial, it is abundantly clear from defendant's own testimony, 

when considered with conflicting testimony given in his deposition, 

that he either had a very loose business office operation, or a 

lack of memory on the answers to the questions asked as to when 

and if he received various letters, notices and phone calls. His 

wife did most of his letter writing. She and members of his 

family pick up the mail, but in answering why he could be sure 

he had not received the notice of October 13, he said: 

"There is a lot of those I don't remember. But 

the reason I would have remembered the one telling us the day and date it was to be sold, because my attorney told me I should figure out a 

way to protect my interest when it was sold, 

and consequently I would have been prepared to do 

that. If I had known when." 

The record shows and defendant admitted that plaintiff 

intended to take the equipment to Washington, hoping to find a 
better market for its collateral. At least twice before the 

sale defendant was invited to contact plaintiff if he disagreed 

with the proposed manner of disposition. Not only did defendant 

fail to respond, but he assumed from the very day plaintiff 

took possession, that the equipment would be put up for sale. 

The record is devoid of any proof by defendant, supported or unsupported, suggesting that the method of sale was commercially 

unreasonable. Clearly he failed to get past the provisions of 

section 87A-9-507(2), R.C.M. 1947, and that issue should not have 

been submitted to the jury. 

Plaintiff having acted in good faith and substantially 

complied with the provisions of the Uniform Commercial Code, and 

defendant having failed to introduce any contrary evidence, the 

trial court should either have granted plaintiff's motion for a 

directed verdict, or his subsequent motion for judgment notwithstanding the verdict. 

Judgment is reversed and the cause is remanded with 

directions to enter judgment for plaintiff-appellant. 

We concur: 

,,,,,,--,-T---'--------Z-L-- 

~hief/usticeI' 

+--22-- 

Justices