NO. 91-206 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

AGRICREDIT ACCEPTANCE CORPORATION, 

Plaintiff and Respondent, 

\ -vsc/. 1 

OMAR MICHELS, -I 

Defendant and Appellant. 

APPEAL FROM: District Court of the Ninth Judicial District, 

In and for the County of Glacier, 

The Honorable R. D. McPhillips, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

David F. Stufft; Frisbee, Moore, Stufft & Olson, Cut 

Bank, Montana 

For Respondent: 

Kevin C. Meek; Alexander, Baucus & Linnell, P.C., 

Great Falls, Montana 

Filed: 

Submitted on Briefs: August 1, 1991 

Decided: September 24, 1991 
Justice John Conway Harrison delivered the Opinion of the Court. 

Plaintiff, Agricredit Acceptance Corporation (Agricredit), 

initiated this suit to recover a deficiency judgment from the 

defendant, Omar Michels, after the lawful repossession and 

subsequent sale of collateral in which Agricredit held security 

interests. Omar Michels appeals from a summary judgment of the 

District Court of the Ninth Judicial District, Glacier County, 

Montana, granting summary judgment in favor of Agricredit. We 

reverse. 

The issue is whether the District Court erred in granting 

plaintiff's motion for summary judgment by ruling that Agricredit 

conducted a commercially reasonable sale when it sold two pieces 

of Michels' farm equipment. 

1. 

This case involves the sale of two pieces of farm equipment 

repossessed from Michels. Following repossession, Agricredit 

conducted separate sales and sold each piece of equipment applying 

the net sales proceeds to the balance due on Michels' accounts. 

On June 27, 1986 Michels purchased a 1982 Massey-Ferguson 

Model 850 combine from Palmer Implement, Inc. Michels and Palmer 

Implement, Inc. entered into a retail installment contract and a 

security agreement for the sale of the combine. Palmer Implement, 

Inc. assigned this contract and security agreement to MasseyFerguson Credit Corporation which in turn assigned the contract and 

security agreement to Agricredit. 
The terms of the contract required Michels to make four annual 

payments of approximately $11,367, which he failed to do. In 

addition, the contract allowed Agricredit to accelerate the balance 

due on the contract or repossess the collateral in the event of 

default. Sometime after Michels defaulted, Agricredit lawfully 

repossessed the combine. 

After failure to make the payments, on October 22, 1988 

Michels was sent a notice of repossession and pending sale of the 

combine setting forth the balance due plus expenses of 

repossession. The notice specified that the combine would be sold 

at a public sale on November 8, 1988 at Munson Equipment in Shelby, 

Montana. 

On November 3, 1988 Agricredit published a notice regarding 

the sale of the combine in the classified section of the Shelbv 

Promoter, a weekly newspaper. This notice set forth the make and 

model of the combine; the date, time and place of the sale; and an 

out-of-state phone number for interested parties to make inquiries 

regarding the combine. 

The net proceeds from the sale of the combine totalled $12,500 

which was applied to Michels' past due account. On November 17, 

1988 Agricredit notified Michels of the sale. This notice stated 

that $32,998.99 was the balance due on the contract, however, after 

deducting the $12,500, the total net proceeds of the sale, Michels 

owed Agricredit a deficiency in the amount $20,594.79. 

Agricredit sought a second deficiency after a default and 

subsequent sale relating to a Versatile Model 850 four wheel drive 

3 
tractor purchased by Michels from Palmer Implement, Inc. under 

contract dated November 16, 1986. This deficiency arose from 

Michels' default on the November 16, 1986 contract and security 

agreement. Michels had entered into this contract and security 

agreement with Palmer Implement, Inc. for the purchase of a 

tractor. As with the combine contract, Palmer Implement, Inc. 

assigned the contract and security agreement to Agricredit. 

Michels agreed to pay the purchase price of $33,000 for the 

tractor. Michels received $9,000 credit for a trade-in plus he 

paid $2,000 cash for a total down payment of $11,000. This 

contract required Michels to make yearly payments in the amount of 

$9,203.70 beginning December 1, 1987 until the account was paid in 

full. In the event of default, Agricredit had the right to 

accelerate the remaining payments due or repossess the collateral. 

Michels defaulted on the tractor contract when he failed to make 

the December 1, 1987 payment. After notice published in the Shelby 

paper, notice to Michels and public sale, Agricredit sent Michels 

a notice stating that after deducting the net sales proceeds of 

$16,000 from the balance due on the tractor account at the time 

Agricredit repossessed the tractor, Michels owed a $10,508.70 

deficiency to Agricredit. 

When Michels failed to pay the deficiencies, Agricredit filed 

suit in the District Court against Michels for the deficiencies. 

On January 31, 1991, the District Court granted summary judgment 

in favor of Agricredit. The District Court found that Agricredit 

was entitled to the deficiencies because it conducted commercially 

4 
reasonable sales when it sold the combine and tractor. The 

District Court found the sales to be commercially reasonable 

because Agricredit notified Michels of the pending sales pursuant 

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

Michels, in opposing summary judgment in this matter submitted 

to the trial court the affidavit of Sherwin Palmer, a former farm 

equipment dealer in Shelby. This affidavit stated the following: 

SHERWIN PALMER, being first duly sworn upon his oath, 

deposes and says: 

1. My name is Sherwin Palmer. 

2. I am 62 years of age. 

3. I was a Massey Ferguson dealer in the Cut Bank 

area from 1971 to 1987. 

4. Massey Ferguson, through its credit agency, 

First Massey Ferguson Credit, and subsequently Agricredit 

Acceptance Corporation, has conducted and transacted 

business in Montana on a regular and systematic basis. 

5. I know Mr. Elmer Fandrich. Fandrich was one of 

the Agricredit Acceptance Corporation collection men who 

would regularly come into the Cut Bank area and not only 

work on accounts with me, but would also travel through 

the Cut Bank/Glacier County area and confer with farmers 

who had accounts with Agricredit Acceptance Corporation. 

Fandrich would travel into my area approximately every 

two months at the minimum. 

Prior to Fandrich being assignedthis territory, 

the previous credit man would come to Cut Bank on a 

regular basis of not less than once a month. He met with 

me, talked with me and worked on accounts and attempted 

to encourage the sale of farm equipment through his 

company. These were not isolated instances. In 

addition, he would work the rural areas and talk to 

farmers about Agricredit loans. 

6. 

7. I am also very familiar with the sale of farm 

equipment in northcentral Montana. Almost all farm 

equipment is sold by implement dealers in the farm 

publication commonly known as "The Prairie Star." It is 

5 
on very remote occasions that any farm equipment is ever 

sold by an implement dealer in [the] weekly newspapers 

commonly referred to as "The Cut Bank Pioneer Press" or 

"The Shelbv Promoter" for the reason that farmers simply 

do not read these advertisements in looking for quality 

farm equipment. 

8. I am very familiar with the 1982 Massey Ferguson 

850 combine. This combine was sold by my business to Mr. 

Omar Michels. The combine was in excellent condition at 

the time Mr. Michels delivered the combine to Agricredit 

Acceptance Corporation. It had very few hours on it. 

In Fall 1988, this combine had a book value of 

$30,325.00. In addition, the headers had individual 

values as follows: 24' header - $2,123.00; 13' header - 

$1,512.00. Attached to my affidavit is the "Official 

Guide Tractors and Farm Equipment" published by the 

National Farm & Power Equipment Dealers Association for 

this combine. 

9. It is my opinion based upon my experience as a 

Massey Ferguson implement dealer that this combine would 

have sold higher than simply the book value due to its 

excellent condition if it had been properly advertised. 

I know the person, Jim Edwards, who bought the combine 

at the repossession sale. This individual feels that he 

got a "steal." Since Mr. Edwards has purchased this 

machine, there has been very little work required as it 

was a quality, well-maintained machine at all times. 

10. I am also familiar with the 1977 Versatile 

Series I1 4 wheel drive tractor. I took this tractor in 

on trade and subsequently sold it to Mr. Michels. In 

1988, the tractor had a new engine and a new axle 

installed. In addition, the tractor had excellent tires 

at the time the tractor was delivered to Agricredit 

Acceptance Corporation. Once again, based upon my 

opinion knowing the condition of the tractor and the 

trade area, this tractor would have sold if properly 

advertised in the area of $30,000.00. [Signed by Sherwin 

Palmer; dated October 26, 1990.1 

The District Court found that Agricredit satisfied its 

obligation of conducting commercially reasonable sales of the 

combine and tractor. 

We hold that the District Court erred in granting summary 

judgment in view of Mr. Palmer's affidavit set forth above, which 

6 
raised a genuine issue of material fact concerning whether the 

sales were commercially reasonable. The judgment of the District 

Court is reversed and the case remanded. 

We concur: 

7 
September 24, 1991 

CERTIFICATE OF SERVICE 

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

following named: 

David F. Stufft 

Frisbee, Moore, Stufft & Olson 

P.O. Box 547 

Cut Bank, MT 59427 

Kevin C. Meek 

Alexander, Baucus & Linnell 

P.O. Box 2629 

Great Falls. MT 59403 

ED SMITH 

EME COURT