Opinion ID: 1844159
Heading Depth: 1
Heading Rank: 1

Heading: Was There a Disposition of the Collateral?

Text: Iowa Code section 554.9504 states in part: 1. A secured party after default may sell, lease or otherwise dispose of any or all of the collateral.... . . . . 3. Disposition of the collateral may be by public or private proceedings and may be made by way of one or more contracts. Sale or other disposition may be as a unit or in parcels and at any time and place and on any terms but every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable. A secured party seeking a deficiency judgment must prove compliance with the Uniform Commercial Code requirements for the disposition of collateral. John Deere Leasing Co. v. Fraker, 395 N.W.2d 885, 887 (Iowa 1986). Vashis argue that the collateral was retained by GECC, and therefore, there was no disposition of it. Disposition is not defined in chapter 554 or in the Uniform Commercial Code. However, the language of section 554.9504(1) and (2) suggests that it means an actual transfer of an interest in the collateral by sale, lease, or contract. See IGF Leasing Co. v. Gordon, 776 P.2d 607, 612-13 (Utah 1989). The issue here is whether a disposition of the collateral to a third party is a condition precedent to a deficiency judgment, as Vashis argue. Section 554.9504(1) provides that a secured party may dispose of the collateral; it does not require it to do so. If the party fails to do so, of course, it runs the risk of a court finding it has retained the collateral in lieu of payment. See Iowa Code § 554.9505(2). We deal with that issue in a later division. Although the trial court concluded that GECC had disposed of the collateral under the provisions of section 554.9504(1), we do not believe such a finding is necessary in order to establish the right to a deficiency judgment. When the evidence shows, as the court found here, that the secured party retains possession of the collateral only because there is no market for it, failure to dispose of the property should not deprive the party of a deficiency judgment.