Opinion ID: 2201396
Heading Depth: 1
Heading Rank: 4

Heading: Permitting Recovery for Sale in Other than a Reasonably Commercial Manner Under Section 554.9504.

Text: The bank argues that the district court erred in permitting the jury to consider the Kloosters' claim that their hogs were sold in other than a reasonably commercial manner. Such a claim is not available, the bank contends, when sale is pursuant to established judicial process. If the statutory procedure set forth in Iowa Code chapter 639 had been followed in selling the Kloosters' hogs, we believe the bank's contention would be correct. See Farmers State Bank v. Ballew, 626 P.2d 337, 339 (Okla.App.1981). The parties contractual rights to sale of collateral in a reasonably commercial manner as implemented by the Uniform Commercial Code must yield to specific statutory procedures mandated for sale under judicial process. The bank has a problem, however, in benefiting from that principle in the present case. The alternative statutory procedures were not followed. Accordingly, the Uniform Commercial Code requirements were never displaced by other valid legal procedures. Under the provisions of section 639.48, section 639.49, and section 639.50 three qualified persons must examine the property and determine whether it is in danger of serious and immediate waste or decay or will necessarily be attended with unreasonable expense if kept. This was not done prior to the summary sale of the Kloosters' hogs. The evidence suggests that conditions authorizing an immediate sale could not have been established had such a jury been summoned. In addition, there was considerable evidence that the amount received from this hog sale was substantially less than that which would have been received had the sale been conducted with proper notice. [4] The bank urges that it is protected against liability for these occurrences by the provisions of sections 639.36 and 554.9507(2). We disagree. If the provisions of section 639.36 afford any protection against the Kloosters' claims in the present case, this would only aid the sheriff. Claims against the sheriff have been settled by the parties and are not involved on this appeal. It provides no defense to the bank on the circumstances presented to assert that the challenged procedure was approved by court order. To the extent the Kloosters have been injured by the sale of their property contrary to law, they have a remedy against persons such as the bank who procured, participated in or ratified the illegal acts. Bradshaw v. Frazier, 113 Iowa 579, 583, 85 N.W. 752, 753 (1901). Section 554.9507(2) also affords the bank no defense on the present facts. The Kloosters' claim is not based on a violation of the Uniform Commercial Code. It is based on a violation of sections 639.48-.50. The provisions of the commercial code are only resorted to for purposed of determining an appropriate measure of damages. Because the requirements for sale under the Uniform Commercial Code were not displaced by other lawful procedures for selling the hogs, we believe the Code may be resorted to in determining the measure of the debtor's right to recover for any resulting loss. The instructions of the court concerning sale of the property in other than a reasonably commercial manner adequately conveyed to the jury that its verdict on this count should reflect the difference between the amount which was received from the unadvertised private sale and the amount which would have been received had the sale followed the notice requirements of the Uniform Commercial Code. See Farmers State Bank, 626 P.2d at 339. Although the verdict on this theory of recovery is large it is within the range of evidence offered in the testimony of competent witnesses. We find no other instructional error or error in the admission of evidence which would require setting aside the jury's verdict on the count alleging sale in other than a reasonably commercial manner.