Opinion ID: 1298626
Heading Depth: 3
Heading Rank: 3

Heading: whether nc's lien was discharged by sale of the tractor

Text: At some point NC evidently repossessed the tractor which, along with the loader, secured the debt in the instant case. NC notified Cobb of its intent to sell the tractor at a private sale. NC did not notify anyone else of the intended sale. It then bought the tractor itself, for $110,000, roughly one-half the price for which NC had sold the tractor, used, to Cobb two years earlier. Mallard argues that this sale was commercially unreasonable and therefore that the value of the tractor presumptively equals the entire amount due on the debt. Alaska Statute 45.09.504(c) authorizes a secured party to dispose of repossessed collateral by public or private sale, so long as the disposition is accomplished in a commercially reasonable manner. The creditor bears the burden of proving that every aspect of the sale was commercially reasonable, especially where, as here, the creditor purchased the property itself in a non-competitive atmosphere. Kobuk Eng'g and Contracting Serv., Inc. v. Superior Tank & Constr. Co-Alaska, Inc., 568 P.2d 1007, 1012 (Alaska 1977). Courts will closely scrutinize a case where the opportunity for self-dealing is present. Id. at 1011. If the sale does not comply with the applicable rules, there arises a rebuttable presumption that the fair and reasonable value of the collateral is at least equal to the amount of the outstanding debt. Id. at 1013. In the instant case NC argues that the sale was authorized by AS 45.09.504(c). That statute expressly allows a secured party to purchase the collateral at a private sale, if the collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations. NC argues that the loader falls within the latter part of this provision. NC argues that the loader is an item which is the subject of widely distributed standard price quotations, and that its purchase was therefore justified. NC based its purchase price on references in a market publication which lists wholesale prices and on another which lists retail prices nationwide. Based on analysis of these publications, NC arrived at a fair market price of $110,000 for the tractor. NC argues that the publications that it relied on constitute indicia of nationwide standard price quotations, and that the purchase of the tractor thus falls within the commercially reasonable conduct permitted by the statute. We have held that the purchase of an automobile under circumstances similar to these was commercially reasonable where the sale was at Blue Book price. Dischner v. United Bank Alaska, 631 P.2d 107, 111 (Alaska 1981). See also Mount Vernon Dodge, Inc. v. Seattle-First Nat'l Bank, 18 Wash. App. 569, 570 P.2d 702, 712 (1977). Our holding in Dischner was based on the fact that the Blue Book represents an industry standard for used car prices. We have never addressed this issue as applied to tractors. In Hayes v. Ring Power Corp., 431 So.2d 226 (Fla.App. 1983), one court held that tractors cannot fit within the statute's terms. The court noted that there is no standard price set for used tractors, and that prices fluctuate depending on market conditions and the condition of the equipment. Id. at 228. The court further noted that the various auction value publications available merely record bids on tractors at public auctions. Id. We find this to be true in the instant case. NC's appraiser, Robert Roskelly, used an auction guide to determine the tractor's price. By his own admission, that guide presented a range in price of $36,000 for the tractor at issue. His final appraisal rests on a complex analysis of national retail and wholesale prices, and on local market conditions. In short, NC was unable to simply consult an industry standard guide to determine the tractor's value. We hold that a tractor is not customarily sold in a recognized market and is not the subject of widely distributed standard price quotations. As a matter of law, then, NC's private sale of the tractor was prohibited by AS 45.09.504(c) and thus was commercially unreasonable. Therefore, a rebuttable presumption arises that the true value of the tractor equals the amount of the outstanding debt. Kobuk, 568 P.2d at 1013. We remand this issue so that the trial court may determine whether NC's appraisal of the tractor is reasonable.