Case Name: Allis-Chalmers Corporation, a foreign corporation, appellee, v. Glen Haumont et al., appellees, Herman S. Fales et al., appellants
Court: Nebraska Supreme Court
Jurisdiction: Nebraska
Decision Date: 1985-07-26
Citations: 220 Neb. 509
Docket Number: No. 84-311
Parties: Allis-Chalmers Corporation, a foreign corporation, appellee, v. Glen Haumont et al., appellees, Herman S. Fales et al., appellants.
Judges: Krivosha, C.J., Boslaugh, White, Hastings, Caporale, and Shanahan, JJ.
Reporter: Nebraska Reports
Volume: 220
Pages: 509–516

Head Matter:
Allis-Chalmers Corporation, a foreign corporation, appellee, v. Glen Haumont et al., appellees, Herman S. Fales et al., appellants.
371 N.W.2d 97
Filed July 26, 1985.
No. 84-311.
David C. Huston of Tedd C. Huston, P.C., for appellant William E. Shaw.
Kenneth E George of State, Yeagley & George, for appellants Fales et al.
Daniel M. Placzek of Luebs, Dowding, Beltzer, Leininger, Smith & Busick, for appellee Allis-Chalmers.
Krivosha, C.J., Boslaugh, White, Hastings, Caporale, and Shanahan, JJ.

Opinion:
Per Curiam.
The plaintiff, Allis-Chalmers Corporation, manufactures farm implements. On December 8, 1977, it entered into a "Dealer Sales and Service Agreement" with M & G Implement, Inc., of Broken Bow, Nebraska. The agreement was executed on behalf of M & G Implement, Inc., by the defendants Glen Haumont, president, Doris J. Haumont, Herman S. Fales, and William E. Shaw. As a part of the transaction, the defendants Haumonts, Fales, William E. Shaw, and Sharon Shaw executed guaranty agreements in which the defendants guaranteed the payment of all obligations of M & G Implement, Inc., to the plaintiff under the dealer agreement.
The plaintiff retained a security interest in all of its products, both new equipment and parts inventory, that were delivered to M & G Implement, Inc., pursuant to the agreement, and further had a security interest in all used equipment received by M & G Implement, Inc., as trade-ins for the plaintiff's products.
On January 19,1982, the plaintiff discovered that there had been sales of the plaintiff's products out of trust by M & G Implement, Inc. The dealer had sold equipment in which the plaintiff held a security interest, but the plaintiff had not received the amount due upon the sale of that equipment. The plaintiff requested immediate payment of M & G Implement's indebtedness and, shortly thereafter, demanded possession of the collateral which secured that indebtedness.
By March 25, 1982, the plaintiff had repossessed all of the new and used equipment it claimed a security interest in, except for two items. The plaintiff took back the new equipment and parts at the invoice price, including freight; the used equipment was sold at private sales.
The dealer agreement between M & G Implement, Inc., and the plaintiff was terminated on April 30,1982.
This action was commenced against the defendant guarantors to recover $123,376.14, the balance alleged to be due the plaintiff from M & G Implement, Inc., under the dealer agreement. The defendants' answers alleged that because the plaintiff had failed to give the defendants notice as required by Neb. U.C.C. § 9-504(3) (Reissue 1980) in disposing of the collateral, the plaintiff was not entitled to a deficiency judgment.
The trial court found that the plaintiff was entitled to judgment against the defendants Herman S. Fales, William E. Shaw, and Sharon Shaw in the amount of $61,039.93, and judgment for an additional $25,015.21 against the defendant William E. Shaw. The defendants Glen Haumont and Doris J. Haumont were excluded from the trial court's determination because of a bankruptcy stay. The defendants Fales and Shaws have appealed.
The principal issue is whether the plaintiff's action for a deficiency judgment was barred by its failure to give notice as required by § 9-504(3).
Article 9 of the Nebraska Uniform Commercial Code, unless otherwise excluded, applies "to any transaction (regardless of its form) which is intended to create a security interest in personal property or fixtures including goods, documents, instruments, general intangibles, chattel paper, or accounts . ." Neb. U.C.C. § 9-102(l)(a) (Reissue 1980). Since there was no applicable exclusion, the plaintiff's disposition of the collateral taken as security for M & G Implement's indebtedness was controlled by § 9-504. Subsection (3) of that section is relevant here. It provides in part:
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.
In Borg-Warner v. Watton, 215 Neb. 318, 338 N.W.2d 612 (1983), this court stated: " 'Each guarantor is entitled to notice as a "debtor" under the definition of such in Neb. U.C.C. § 9-105(l)(d) (Reissue 1980) as one "who owes payment or other performance of the obligation secured Id. at 323,338 N.W.2d at 615. This court continued, stating the rule in this jurisdiction " 'that compliance with the notice provisions of the Uniform Commercial Code is a condition precedent to the right of a creditor to recover a deficiency judgment----The failure to give the requisite notice is an absolute bar to recovery.' " (Citations omitted.) Id. See, also, Havelock Bank v. McArthur, ante p. 364, 370 N.W.2d 116 (1985); City Bank & Trust Co. v. Van Andel, ante p. 152, 368 N.W.2d 789 (1985).
This case is further- controlled by this court's holding in DeLay First Nat. Bank & Trust Co. v. Jacobson Appliance Co., 196 Neb. 398, 243 N.W.2d 745 (1976). In DeLay, as in the case at bar, there was more than one disposition of collateral, only some of which the defendant was properly notified of prior to its occurrence. This court said:
We believe the intent of the Uniform Commercial Code would appear to mandate that the entire disposition of collateral by the secured party be viewed as one transaction, and that every aspect of that transaction be in accord with the requirements of the Uniform Commercial Code. To adopt any other rule would place upon the court the sometimes impossible and time-consuming task of attempting to determine the amount of recoverable deficiency as well as the amount of unrecoverable deficiency.
What we said in Bank of Gering v. Glover, supra, is pertinent herein: "The creditor is given several options in disposing of collateral and very minimal formal requirements. The burden on the secured creditor is to comply with the law. The act is framed in his interest. It is not onerous to require him to give notice of the time and place of sale. In some instances it will be to the creditor's advantage to do so. On the other hand, to permit him to proceed otherwise does place an onerous burden on the debtor."
We adhere to the position we adopted in Bank of Gering v. Glover, supra. The right to a deficiency judgment depends on compliance with the statutory requirements. We now hold that if a creditor wishes a deficiency judgment he must comply with the law in each transaction. While this rule may seem harsh, we are persuaded by the fact that the burden is on the secured creditor to comply with the law. The act is framed in his interest. It is not onerous to require him to observe the provisions of the law.
Id. at 408-09, 243 N.W.2d at 751.
The defendants contend that the plaintiff is barred from recovering a deficiency judgment because it did not comply with the notice provisions of § 9-504(3) in its disposition of the repossessed equipment.
The plaintiff does not deny that it did not give notice to the defendants regarding the new equipment and parts which it took back. It contends that no notice was required as to new equipment and parts because it acted pursuant to Neb. Rev. Stat. § 69-1501 etseq. (Reissue 1981). M&GImplement, Inc., was fully reimbursed for all new equipment and parts on hand when the dealer agreement was terminated. As to the new equipment and parts, the plaintiff argues: "There was no deficiency that resulted and, as such, no reason for any notice to Defendants-Appellants that the new items were to be taken back as per section 69-1501." Brief for Appellee at 9.
Although the defendants received credit for the full invoice price of the new equipment and parts, including freight, this was an "other disposition" under § 9-504, and the plaintiff was required to give the required statutory notice prior to the disposition.
As to the used equipment, letters were sent to the defendants, captioned "*** NOTICE OF PRIVATE SALE "; two such notices sent to the defendant Herman Fales were returned address unknown; the notice intended for the defendant Sharon Shaw was sent to the address of her former husband, the defendant William E. Shaw, and possibly not forwarded. On this basis the trial court found that only the defendant William E. Shaw was liable for that part of the deficiency attributable to sale of the used equipment.
DeLay First Nat. Bank & Trust Co. v. Jacobson Appliance Co., supra, requires that the creditor "comply with the law in each transaction." This the plaintiff failed to do. As a consequence, the plaintiff cannot recover a deficiency judgment against any of the defendants.
The judgment of the district court is reversed and the cause remanded with directions to dismiss the petition.
Reversed and remanded with DIRECTIONS TO DISMISS.
Grant, J., participating on briefs.