No. 12756 INTHE 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 theFourth JudicialDistrict, Honorable Edward T. Dussault, Judge presiding. Counsel of Record: ForAppellant: 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: 

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### 8

### 1974 Filed:

# BEC1?

## 1474Mr. JusticeJohn Conway Harrison delivered theOpinion of the Court. Plaintiff, James Talcott, Inc., 

### a New York corporation, Flathead County, brought thisaction inthedistrict court,/to 

### recover a deficiency judgment against defendant Murry Reynolds. The jury held infavor of defendant and plaintiff appeals. On May 3, 1966, defendant purchased a mountain logger from Star Equipment Company inMissoula, Montana. A mountain logger isa device with four large tires, hinged inthe middle and a winch inthe back. Its purpose is toskid logs from the location they are felled toa landing, where they can be loaded onto a truck. To finance the purchase defendant executed a conditional salescontract and a note infavor of plaintiff. The note required defendant 

### tomake 39 monthly installments of $426.96, and

a final installment of $427.08, for a total contractprice of $17,078.52. The conditional salescontract contained a clause giving plaintiff the right todeclare allthe installments immediately due and payable upon any default by defendant. Defendant took possession of the machine, completed the firstfour payments but failed tomake the fifth. Instead of demanding that allpayments be immediately made, pursuant tothe default clause, plaintiff chose togrant an extension. During thenext 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 singlepayment. Plaintiff then notified defendant that the next payment would be due inDecember and requested defendant tonotifyhim if the payment could not be made. Defendant did not respond tothis letter and no other payments 

### were ever made. Defendant then attempted 

### to sell themachine 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 thismethod 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, themountain 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. Trialwas 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. 

### Isplaintiff 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 defaultmay 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 collateralmay 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 isperishable or threatens to decline speedily in value or is of a type customarily sold on a recognizedmarket, 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 themachine's condition at the time of sale. When the defendantwas 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 

## * * 

## *." (Emphasissupplied). Thus, the Uniform Commercial Code does not require the secured creditor to disassemble the collateral and sell itpiece 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 differentmethod from that selected by the secured party isnot of itself sufficient to establish that the sale was not made in a commercially reasonablemanner. 

### 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 conformitywith reasonable commercialpractices among dealers in the type of property sold he has sold in a commercially reasonablemanner 

## * * 

## *. I' 

### (Emphasis supplied)

# . Thus, the reasonablenessof the sale isdetermined not by theprice that isultimately received for the collateral, but by themanner inwhich the saleisconducted. We have examined the transcript closely and have found

no evidence demonstrating the salewas conducted ina commerciallyunreasonablemanner. To the contrary, the transcript isreplete with evidence that plaintiff acted ingood faith and conducted the sale ina commercially reasonable manner. We so hold. In considering issue two, 

### we examine the letter sent on October 13, 1970 todetermine ifplaintiff complied with the notice provision of section 87A-9-504, R.C.M. 1947. During trial plaintiff's creditmanager testified he had written the letter and the letter would have been mailed by his secretary inthe ordinary course of officeprocedures. The letterwas 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 toassure that the debtor isnotified. Section 87A-1-201(26) R.C.M. 1947, states: "(26)A person 'notifies' or 'gives' a notice or notification toanother by taking such stepsas may be reasonably required toinform the other in ordinarycoursewhether or not such other actually comes toknow of it.

## * * *I' (Emphasis supplied). InMontana the receipt of a mailing ispresumed, if the officeprocedure of mailing is carried out. However, when the addressee deniesreceipt, the question 

### is l e f t t othe determinationof thejury. 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. FirstNat. Bank of Grass Range, 90 Mont. 424, 4 P.2d 488. Here, the question isnot whether themailing was received but whether it was properlymailed. Plaintiff argues that the October 13notice of timeand place of salewas sufficient inallrespects, noting thatwhile defendant relied upon the factthe noticemisstated theplace of salehe continually emphasized he did not receive the notice. Plaintiff further argues thathad defendant admitted he received the letter of notice and had offered evidence thathe attempted toattend the sale, but was denied the opportunity because of defect of notice, then and only then, would he have been entitled torecover any damage he might have suffered asa result of the defect. Section 87A-9-507(1), R.C.M. 1947. Such isnot the situation here. How can it be argued thatdefendant was prejudiced by a notice he denies receiving, and therefore could not rely on. To permit defendant torely on such an issuewould be toallowhim toavoid an obligationhe freely and voluntarily entered into. Here, inview of the record made during the course of the trial, it is abundantly clear from defendant's own testimony, when considered with conflictingtestimony given inhisdeposition, that he either had a very loose business officeoperation, ora lack of memory on the answers tothe questions asked as towhen and if he received various letters, notices and phone calls. His wife didmost of his letter writing. She and members of his family pick up themail, but inanswering why he could be sure he had not received the notice of October 13, he said: "There is a lotof those I don't remember. But the reason I would have remembered the one telling us the day and date it was tobe sold, because my attorney toldme I should figure out a way toprotect my interest when it was sold, and consequently I would have been prepared todo that. If I had known when." The record shows and defendant admitted thatplaintiff intended totake the equipment toWashington, hoping tofind 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 equipmentwould be put up for sale. The record is devoid of any proof by defendant, supported or unsupported, suggesting that themethod 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 forplaintiff-appellant.

We concur:

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