No. 92-398 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

FIRST NATIONAL BANK OF LEWISTOWM, 

a Banking Corporation, 

Plaintiff and Respondent, 

Third-Party Plaintiff, 

THERESA DESMANAIS, f/k/a THERESA 

O'FBILLY and THERESA MORK, 

Third-Party Defendant. 

.PPEAL FROM: District Court of the Tenth Judicial District, 

In and for the County of Fergus, 

The Honorable Peter Rapkoch, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Jerrold L. Nye; Nye & Meyer, Billings, Montana 

For Respondent: 

James L. Stogsdill, Attorney at Law, Lewistown, 

Montana 

Filed: 

Submitted on Briefs: January 21, 1993 

Decided: April 7, 1993 
Justice John Conway Harrison delivered the Opinion of the Court. 

Appellant Gary Mork (Mork) appeals from a judgment entered in 

the Tenth Judicial ~istrict Court, Fergus County, ordering him and 

third-party defendant Theresa Desmanais (Desmanais) to pay the 

deficiency incurred by respondent First National Bank of Lewistown 

(the Bank) upon the sale of collateral securing the debt on a 

promissory note. We affirm. 

The dispositive issue on appeal is whether the Bank met the 

statutory notice requirements of 55 30-1-201(26) and 30-9-504(3), 

MCA . 

On March 17, 1980, Mork and Desmanais, who was Mork's wife at 

the time, borrowed $15,000 from the Bank to purchase a mobile home. 

They signed a promissory note promising to pay the Bank a total of 

$38,899.80 in principal and interest over a fifteen-year period. 

The mobile home was listed as collateral for the loan and the Bank 

properly perfected a security interest in it. 

The Morks listed their address as #17 Hickory Lane, Lewistown, 

Montana, on all of the loan documents, including the promissory 

note, the security agreement, the HUD/FHA credit application, the 

HUD/FHA placement certificate, and the purchase documents from the 

mobile home dealer. They listed #6 Willow Lane, Lewistown, 

Montana, as their previous address on the HUD/FHA credit 

application. At the time they signed the documents, though, they 

had not moved to #17 Hickory Lane as that was the address where the 

mobile home eventually was to be located. 

Mork and Desmanais eventually divorced. According to Mork's 

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third-party complaint, Desmanais received the mobile home in the 

divorce and agreed to indemnify him for any claims the Bank might 

have against him. 

Due to financial difficulty in July 1987, Desmanais entered a 

loan extension agreement allowing her to forego paying two monthly 

installments and extending the maturity date of the loan. In 

October 1988, the Bank contacted Desmanais because she was again 

behind in her payments. After conferring with her attorney, 

Desmanais voluntarily turned the mobile home over to the Bank. 

Once the Bank had regained title it sent both Desmanais and Mork a 

request to waive the requirement that the Bank notify them when it 

intended to sell the mobile home. Desmanais signed this request. 

The Bank sent Mork's request by regular and certified mail to #6 

Willow Lane. The post office returned the requests unopened. The 

Bank also sent Desmanais and Mork a document entitled "NOTICE OF 

PRIVATE SALE AND RIGHT TO REDEEM REPOSSESSED COUATERAL.ll It sent 

Morkas copy to #6 Willow Lane. This document also was returned 

unopened. 

The Bank eventually sold the home through a mobile home 

realtor for $4,000. After paying lot rental and commission, the 

Bank received $3,173, leaving a deficiency of $8,088.24 still due 

and owing on the note. The Bank sued only Mork for the deficiency. 

Mork filed a third-party complaint against Desmanais seeking to be 

indemnified for any judgment entered against him. She did not 

appear in this action, so her default was entered. The District 

Court awarded the Bank a judgment against Mork and Desmanais for a 

principal balance of $8,088.24 on the note; interest of $4,245.39; 

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attorney's fees of $500: and costs of $180.50. The District Court 

also allowed Mork to recover from Desmanais any and all sums he 

paid to the Bank by reason of the judgment. 

On appeal, Mork claims that the Bank is not entitled to a 

deficiency judgment against him because it failed to satisfy the 

notice requirements of 5 30-9-504(3), MCA. That section provides 

in pertinent part: 

30-9-504. Secured party's right to dispose of 

collateral after default - effect of disposition. 

(3) (a) . . . [Elvery aspect of the disposition 

including the method, manner, time, place, and terms must 

be commercially reasonable. . [Rleasonable 

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. In the case 

of consumer goods no other notification need be sent. . 

(b) Notification by the secured party is reasonable 

under subsection (3)(a) and constitutes steps reasonably 

required to inform another in the ordinary course under 

30-1-201(26) if it is sent by certified mail to the most 

recent address provided by the debtor or another secured 

party as follows: 

(i) the address stated on the security agreement or 

other applicable loan document in the case of a debtor . . . 

(ii) such other address of which the secured party 

receives notice in writing from the debtor . . . prior 

to the time notification is sent to the most recent 

address previously given under subsection (3) (b) (i) or 

this subsection (3) (b) (ii) . 

Section 30-1-201(26), MCA, referenced in subsection 3(b) above, 

provides : 

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. . . . The secured party bears the burden of proving the commercial 

reasonableness of the sale, includingthe commercial reasonableness 

of the notification. Bank of Sheridan v. Devers (1985), 217 Mont. 

173, 176, 702 P.2d 1388, 1390. Failure to give reasonable notice 

precludes the secured party from recovering a deficiency judgment. 

Bank of Sheridan, 702 P.2d at 1390: Westmont Tractor Co. v. 

Continental I, Inc. (1986), 224 Mont. 516, 523, 731 P.2d 327, 331; 

Wippertv. Blackfeet Tribe (1985), 215 Mont. 85, 90, 695 P.2d 461, 

465. However, § 30-9-504 (3) , MCA, must be read in conjunction with 

5 30-1-201(26), MCA, which does not require that the debtor receive 

actual notice of the sale; it only requires that the creditor take 

reasonable steps to assure that the debtor is notified. Talcott, 

Inc. v. Reynolds (1974), 165 Mont. 404, 410, 529 P.2d 352, 355; 

Dulan v. Montana Nat'l Bank (1983), 203 Mont. 177, 184, 661 P.2d 

28, 31. 

Mork relies solely on Bank of Sheridan and Westmont Tractor 

Co. to argue that because the notices were sent to #6 Willow Lane 

rather than #17 Hickory Lane--the address on the loan documents-- 

the notice requirements of § 30-9-504(3), MCA, have not been met, 

so the Bank is precluded from recovering a deficiency from him. 

Michael Phillips, assistant vice-president of the Bank, 

testified as to the Bank's efforts to locate Mork. Mr. Phillips 

asked Desmanais if she knew how to contact Mork. She informed him 

that she had not spoken with Mork since their divorce. Mr. 

Phillips also explained why the notices were sent to #6 Willow 
Lane. His understanding was that the mobile home would eventually 

be placed at #17 Hickory Lane, but at the time the documents were 

signed, the Bank knew that the Morks lived at #6 Willow Lane. It 

is undisputed that the Morks never sent written notice to the Bank 

that they had actually moved to #17 Hickory Lane. In fact, the 

Bank finally located Desmanais and the mobile home in Colstrip. 

Further, the District Court found that following the closing of the 

loan the Bank had sent all correspondence and notification to the 

Morks at #6 Willow Lane, none of which were returned to the Bank. 

Finally, when Mork moved from Lewistown, he did not notify the Bank 

where he could be contacted. 

The Bank sent notice to Mork at his last known address. We 

conclude that the Bank satisfied the statutory notice requirements 

under these facts. Having concluded that the Bank could properly 

recover a deficiency judgment, we need not address Mork's request 

for penalties and attorney's fees. 

Affirmed. 

We concu 

v-- /f 

Chief ~ustice // 
April 7, 1993 

CERTIFICATE OF SERVICE 

I hereby certlfy that the following order was sent by United States mail, prepaid, to the 

following named: 

Jerrold L. Nye 

Nye & Meyer, P.C. 

3317 Third Avenue North 

Billings, MT 59101 

James L. Stogsdill 

Attorney at Law 

314 Bank Electric Building 

Lewistown, MT 59457 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA