No. 84-432 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1985 

BANK OF SHERIDAN, a Montana Banking 

Corp. , 

Plaintiff and Respcndent, 

-vsCLOYD W. DEVERS I 

Defendant and Appellant. 

APPEAL FROM: District Court of the Fifth Judicial District, 

In and for the County of Beaverhead, 

The Honorable Frank Davis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Datsopoulos, MacDonald & Lind; Edward A. Murphy, 

Missoula, Montana 

For Respondent : 

Kirwan & Barrett; Kelly M. Hogan, Bozeman, Montana 

Filed: 

Submitted on Briefs: June 6, 1985 

Decided: July 30, 1985 
Mr. Justice Frank B. Morrison delivered the Opinion of the 

Court. 

Cloyd W. Devers appeals the January 18, 1984, findings 

of fact and conclusions of law and the July 24, 1984, order 

of the Fifth Judicial District Court granting two deficiency 

judgments to the Bank of Sheridan. We reverse the order of 

the District Court. 

Appel lant Cloyd Devers (Devers) executed two promissory 

notes to the Bank of Sheridan (Bank) on April 16, 1981, one 

for $94,802.71 and the other for $21,580.03. The notes were 

secured by Devers' farm machinery, equipment and livestock. 

Devers subsequently defaulted on the notes. Devers filed a 

petition for bankruptcy on August 21, 1981. Bank filed a 

complaint August 25, 1981, demanding the $104,021.90 due and 

owing on the two notes. Subsequentl-y, with the Bankruptcy 

Court's permission, Bank repossessed the collateral. The 

livestock was immediately sold at a public auction in Idaho 

Falls, Idaho. The farm machinery and equipment were sold at 

various sales over a period of time. 

A written notice dated November 8, 1982, was sent by the 

attorney for Bank to Devers stating that certain listed farm 

machinery and equipment would be sold at a private auction in 

Bank's lobby on November 19, 1982, at 10:OO a.m. The local 

newspapers were unable to publish the notice prior to Nov~mber 19, 1982. Therefore, the sale date was changed to November 24, 1982. A notice was published in three local papers 

listing the items for sale (including two pieces of equipment 

not listed on Devers' notice) and stating the following: 

"Submit Bids to Jim Shires, Bank of Sheridan, P. 0. 

Box 587, Sheridan, Mt. 59749 

"Please enclose a separate sealed envelope with 

your bid enclosed, showing 'equipment bid1 on the 

outside of envelope. Bids will be opened November 

24, 1982, at 10:OO a.m. We reserve the right to 
refuse any or all bids. Contact Jim Shires at 

842-5411 to view any of these items." 

This same notice was posted in Bank's lobby. 

Devers contends he received no notice, written or oral, 

other than that dated November 8, 1982, and that he was never 

notified of the change in the sale date. Mr. Robert T. 

Smith, President of the Bank of Sheridan, testified at trial 

that he was certain Mr. Shires, then Vice President of Bank, 

had "informed" Devers of the sale. Regarding his conversation with Devers, Mr. Shires testified as follows: 

"Q. I'll refer you to the auction sale, private 

auction sale of November 24th, 1982, and the days 

prior to that. Did you have occasion at any time 

during the month of November to discuss this particular sale with Mr. Devers? 

"A. On one occasion, Mr. Devers called me concerning the pickup that was being sold, yes. 

"Q. Do you recall approximately when that conversation took place? 

"A. Some time inbetween taking possession of the 

equipment and the sale. 

"Q. Did he question you at any time concerning the 

particular time that the sale was going to take 

place, or anything of that nature? 

"A. I believe we discussed that. We talked about 

the sale and the fact that we were taking bids on 

the equipment, yes." 

Approximately one-half of Devers' farm machinery and 

equipment was sold at the November 24, 1982, sale. The 

remaining equipment was sold at several different "private 

treaty" sales over the course of several months. It is 

undisputed that Devers was given no notice of any sale subsequent to November 24, 1982. 

After the collateral was sold, Bank filed a motion for 

judgment by default on September 26, 1983, requesting deficiency judgments of $36,995.21 on one note and $7,908.96 on 

the other, attorney's fees, collection expenses and costs. 
Following a bench trial, Bank was awarded deficiency judgments of $29,926.22 and $7,908.83, as well as $5,733.58 for 

the cost of the sales. 

In his appeal of the order, Devers raises the following 

issues: 

1. Whether the trial court erred in holding Devers 

liable for deficiencies on two promissory notes when: approximately one-half of the notes' collateral was sold at a 

sale; Devers' notice of sale was erroneous as to the date and 

nature of the sale; and the other half of the collateral was 

sold at sales with no notice to Devers? 

2. Assuming Devers is liable for the deficiencies, is 

the trial court's determination of the amount of deficiency 

supported by substantial credible evidence? 

Our resolution of issue one renders consideration of 

issue two moot. 

The Uniform Commercial Code is codified in Title 30, 

Chapters 1 through 9 of the Montana Code Annotated. Pursuant 

to 5 30-9-504(3), MCA, a secured creditor is entitled to sell. 

collateral after a default, so long as "every aspect of the 

disposition including the method, manner, time, place, and 

terms" are commercially reasonable. This includes a commercially reasonable notification to the debtor of the pending 

sale. Montana statutes provide: 

"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." 5 30-9-504(3), MCA. 

Devers never renounced his right to notification. 
"[Tlhe burden of proving the commercial reasonableness 

of the disposition of collateral is on the secured party." 

Farmers State Bank v. Mobile Homes Unlimited (1979), 181 

Mont. 342, 347, 593 P.2d 734, 737. The burden of proving the 

commercial reasonableness of the notification of a debtor of 

an impending sale is therefore on the secured party. Bank 

has not met this burden. 

Devers alleges that the November 8, 1982, notice of sale 

was commercially unreasonable because it contained an incorrect sale date and stated that the sale would be private, 

when in fact the actual sale conducted was public. We need 

not decide the nature of the November 24, 1982, sale as the 

notice given Devers was commercially unreasonable notice of 

either a private or a public sale. 

The only written notice given Devers of the initial sale 

contained the wrong date. It also failed to state that 

sealed bids were to be submitted. The only evidence presented by Bank to counter Devers' testimony that he received no 

notice, written or oral, of the correct date of the sale was 

Mr. Shire's testimony quoted previously. However, Shires 

never testified that he told Devers the correct date of the 

sale. Further, neither the sale notices in the newspapers 

nor the notice posted in Bank's lobby could be relied on by 

Bank to provide notice of the correct date and method of sale 

to Devers. See Liberty National Bank of Fremont v. Greiner 

(Ohio App. 1978), 405 N.E.2d 317, and Hodges v. Norton 

(N.C.App. 1976), 223 S.E.2d 848. 

Finally, Bank failed to provide Devers with notice of 

any sale held subsequent to November 24, 1982. In order for 

the manner of disposition of the collateral to have been 

commercially reasonable and fair to debtor, notice of these 

subsequent sales should also have been provided. As time 
passed, Devers might have found himself in a more stable 

position and thus able to purchase some of his own equipment. 

On the basis of the preceding discussion, we hold that 

the following finding of the trial judge is not supported by 

substantial, credible evidence. 

"4. The secured property was sold by the Plaintiff, the livestock at a public auction at a livestock market and the farm machinery and equipment 

and other property at a private sale conducted by 

the Plaintiff. The Defendant had both actual and 

constructive notice of the various sales and, in 

fact, by his conduct, ratified, approved and participated in the sale procedure." 

Bank's failure to give the debtor commercially reasonable notice of the sales of his collateral precludes Bank 

from recovering any deficiency judgment from Devers. ~ippert 

v. Blackfeet Tribe of the Blackfeet Indian Reservation (Mont. 

The decision of the trial court awarding Bank two deficiency judgments against Devers is reversed. 

We concur: 

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