### 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. 

### DEVERSI 

### Defendant andAppellant.

APPEAL FROM: DistrictCourt of the Fifth Judicial District, In and for the County of Beaverhead, The Honorable Frank Davis,Judgepresiding.

COUNSELOF 

### RECORD: ForAppellant: 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, 

### 1985Mr. 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 grantingtwo deficiency judgments tothe Bank of Sheridan. We reverse the order of theDistrictCourt. Appellant 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 salesover a period of time. A written notice dated November 8, 1982, was sentby the attorney for Bank toDevers statingthat certain listed farm machinery and equipment would be sold ata private auction in Bank's lobby on November 19, 1982, at 10:OO a.m. The local newspapers 

### were unable topublish the notice prior toNov~mber 19, 1982. Therefore, the saledatewas changed toNovember 24, 1982. A notice was published in three local papers listingthe 

### itemsfor sale (includingtwo pieces of equipment not listed on Devers' notice) and stating the following: "Submit Bids to

### JimShires, 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 

### willbe opened November 24, 1982, at 10:OO a.m. We reserve the right torefuse any or all bids. Contact 

### Jim Shires at 842-5411 toview any of these 

### items." This same noticewas posted inBank's lobby. Devers contends he received no notice, written ororal, other than thatdated November 8, 1982, and thathe was never notified of the change in the sale date. Mr. Robert T. Smith, President of the Bank of Sheridan, testified attrial that he was certainMr. Shires, then VicePresident of Bank, had "informed" Devers of the sale. Regarding his conversation with Devers, Mr. Shires testified asfollows: "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 atany 

### time during the month of November to discuss this particular salewith Mr. Devers? "A. On one occasion, Mr. 

### Devers called

### me concerningthepickup thatwas 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 atany 

### timeconcerningthe particular 

### time that the sale was going to take place, oranything of thatnature? "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 thatDevers was given no notice of any sale subsequent toNovember 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 ata sale; 

### Devers' notice of salewas erroneous astothe date and nature of the sale; and the other half of the collateralwas sold atsaleswith no notice toDevers? 2. Assuming Devers 

### is liable for the deficiencies, 

### is the trial court's determination of the amount of deficiency supported by substantialcredible evidence? Our resolution of issue one renders consideration of issuetwo moot. The Uniform Commercial Code 

### is codified in Title 30, Chapters 1through 9of theMontana Code Annotated. Pursuant to

### 5 30-9-504(3), MCA, a secured creditor 

### isentitledtosell. 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 statutesprovide: "Unless collateral 

### is perishable or threatens to decline speedily invalue or

### isof a type customarilysold on a recognized market, reasonable notification of the 

### time and place of any public sale or reasonable notification of the

### timeafterwhich any private saleorother intended disposition 

### istobe made shall be sent by the secured party to the debtor if he has not signed afterdefault a statement renouncing ormodifying hisright tonotificationof sale." 

### 5 30-9-504(3), MCA. Devers never renounced his right tonotification."[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

### metthisburden. Devers alleges thattheNovember 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 eithera private ora public sale. The onlywritten notice given 

### Devers of the initial sale contained the wrong date. It also failed to state that sealed bids

### were tobe submitted. The only evidencepresented by Bank to counter Devers' testimony that he received no notice, written ororal, of the correct date of the salewas 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 toprovide noticeof 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 toNovember 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 

### timepassed, Devers might have found himself in a more stable position and thus able topurchase some of hisown equipment. On the basis of the preceding discussion, 

### we hold that the following finding of the trialjudge 

### is not supported by substantial, credibleevidence. 

### "4. The secured property was sold by the Plaintiff, the livestock ata public auction ata livestock market and the farm machinery and equipment and other property ata 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 inthe saleprocedure." Bank's failure to give the debtor commercially reasonable notice of the sales of his collateral precludes Bank from recovering any deficiencyjudgment from 

### Devers. ~ippert



### v. BlackfeetTribe of the Blackfeet Indian Reservation (Mont.

The decision of the trial court awarding Bank two deficiencyjudgments against Devers 

### isreversed.

We concur: r,