No. 91-040 IN THE SUPREME COURT OF THE STATE OF MONTANA 1992

MACK FINANCIAL CORPORATION, Plaintiff and Respondent,-vsJOSEPH A. TEZAK and MARJEAN TEZAK, d/b/a TEZAK CONCRETEAND 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.

es & Hoffman,Virginia Cit: COUNSEL OF RECORD: For Appellant: Mark David 11 Montana For Respondent:

Filed: offman Jon

Terry J. MacDonald and Paul C. Meismer; Garlington, Lohn & Robinson, Missoula, Montana

Submitted on Briefs: March 12, 1992 Decided: June 29, 1992

f ClerkJustice 

### 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 againstJosephandMarjean Tezak and their construction company (hereinafter Tezak) forrepossession,saleand 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 ?j30-9-504 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 saleof repossessed collateral inviolation 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 2cement trucks fromMack. Tezak experienced financial difficulties and the contractswere consolidated and repayment schedules were renegotiated on several occasions. Tezak's inability to keep his payments up todate finallyculminated inMack 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. Immediatelypreceding a show causehearing, set forApril 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 stipulationwasdraftedbyMack'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 stipulationwas 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 afterMay 12, 1983 atprivate sale. Tezak contacted Mack's attorney at that time, Gary Walton (Walton). There is a factual dispute regarding what ensued. Tezak contends Walton toldhim thathe should "ignore and disregard" the notice. Mack contends that the instruction to ignore or disregard was conditioned upon execution of thestipulated 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 contendsthatbecause theApril 28, 1983 noticewasvoid 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,Tezakmoved for summary judgment, alleging there existed no factual dispute regarding Mack's failure to provide notice prior to sale. Although Tezak referred tohismotion asone for summary judgment, itwas 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 casepresentsonly questions of law,the judgemay 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 inpart: Securedparty's right todisposeof collateral after 4default

# -- effect 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 intendeddisposition is tobe 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 thedebtor reasonable notificationof the time after which repossessed collateralwill 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,wasconditionedupon executionof thestipulatedagreement. In other words, if Walton's instructions to disregard were conditioned upon execution of the stipulated agreement, Tezak's failureto execute the stipulation precludeshim fromdisregarding 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 themandate of $j30-9-504, MCA. Tezak testified thathewas instructedby 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 didyoudiscuss withMr. Tezak in regard to that notice? 

### A. Itold Mr. Tezak that as far as 

### Iwas concerned,he should-- I 

### don't know if I used the word ignore but I told him thathe should disregard thatnotice of private sale. And I did so with the understanding that Mr. Gilbert (Tezakvsattorney) was going to execute the stipulation that had already been sent to him. 

### Q. So it was your understanding that if Mr. Gilbert signedthe stipulationand filed it,youwould 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 ityourposition that theApril 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 followedthrough with the stipulationinJune,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 disregardwas conditional. A directed verdict is appropriatewhen thereonly remain questionsof law. Section25-7- 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 reasonablenotice. In light of the juryverdict in favor of Mack,we need not address the issue of damages raised by Tezak. The District Court is affirmed.

Justice

/JusticeTerry N. TrieweiLer dissenting. Idissent 

### from the opinion of themajority. In the event that collateral is sold at a private sale, S 30-9-504,MCA, requiresreasonable notification of thetimeafter which the private salewill 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 todisregard 

### the

### noticewas conditionedupon 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 theunderstanding

### that Mr. Gilbert [Tezak'sattorney] 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'tpay 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 Idid ignore it. And 

### I came home and called Mr. ~ilbert and told him that 

### Iguess itwas sent in error. I just forgot about it. Tezakls recollection was consistentwithWaltontstestimonyto the effect thathe felt that any notice should have come fromhim. 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. Thatlsright. 

### I felt that the notice should come from our office. The majority s conclusion that Walton conditioned waiver of thenotice 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 thebalance 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? Andwhy 

### did he affirmatively represent that Tezak had until July 1by 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 isthatthecreditor'sattorney represented one thing to the debtor and unbeknownst to 

### him, the creditor 

### was doing something else. These facts,and thisCourt's holding, complywith 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, defendantwas entitled to damages over and above thevalue of thatdeficiencyhasnotbeen decidedby the majority opinion and 

### I,therefore, express no opinion on that issue. Iwould reverse theDistrict Court's orderdenying defendant's motion fora directedverdict on the 

### issue of liability. Iexpress

no opinion whether under these circumstances, plaintiffwould have been entitled 

### to an award of damages.