Opinion ID: 1805533
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: In March 1983, plaintiffs, Lyle H. Diefenbaugh and Maxine Diefenbaugh, acquired a bar and restaurant known as Little Nashville. Plaintiffs managed the establishment until July 1983, when they hired defendants, Buford Rachow and Virginia Rachow, to manage the establishment. In December 1983, defendants agreed to purchase the business for $16,000. On December 16, defendants executed a note, a security agreement, and a financing statement to finance their purchase of the bar and restaurant. Under the note, defendants would make 60 installment payments of $377.06 each, beginning January 20, 1984, and continuing on the same day of each month until the maturity date, December 20, 1988. Defendants made four payments under the note, but by March 1984, defendants were in default of the note. After several discussions between the two parties, defendants returned the property and plaintiffs accepted it. An inventory was taken of the items in the bar and restaurant, and plaintiffs applied the inventory's value against the balance due under the note. Defendants never received written notice regarding the disposition of the property. Plaintiffs sought a deficiency judgment based on the remaining balance of the secured promissory note executed by defendants. The trial court dismissed the cause of action for the balance due on the secured note because of the failure to give notice required by § 9-504(3). The unsecured note for $1,191.09 was signed by defendants on July 9, 1985. This unsecured note was the basis of plaintiffs' first cause of action. However, in January 1984, defendants paid federal taxes in the amount of $746.45. The taxes were for months in 1983 when plaintiffs were still owners of Little Nashville. After entering judgment on that note, the trial court setoff the judgment by the amount representing employee withholding taxes which defendants paid on behalf of plaintiffs. Plaintiffs assert the trial court erred in finding that (1) defendants were entitled to a setoff for withholding taxes paid on the cause of action based on the unsecured note and (2) defendants had not waived their right to notice under § 9-504(3) regarding the secured note.