Opinion ID: 1805533
Heading Depth: 1
Heading Rank: 6

Heading: was there a waiver?

Text: We now turn to the issue raised by plaintiffs on appeal, whether the trial court erred in finding plaintiffs did not waive their right to notice under § 9-504(3). The law applicable at the time provided that compliance with the Uniform Commercial Code for notification as to the disposition of collateral is a condition precedent to a secured creditor's right to recover a deficiency. City Bank & Trust Co. v. Van Andel, supra . The burden of proof is on the secured party to prove compliance with the statutory requirements of notice and reasonableness of notice. Failure to give notice is an absolute bar to the recovery of a deficiency. Id. Generally, the question of whether there was a waiver is a question left to the trier of fact. Naftzger v. Naftzger & Kuhe, Inc., 26 Conn.App. 521, 602 A.2d 606 (1992) (waiver of arbitration provision); Hanover Ins. Co. v. Fireman's Fund Ins. Co., 217 Conn. 340, 586 A.2d 567 (1991) (waiver of right to assert statutory limitation of suit clause). Courts have held that a voluntary surrender of the collateral for repossession does not automatically extinguish the debtor's right to notice. Gavin v. Washington Post Emp., etc., 397 A.2d 968 (D.C.App.1979); Union Trust Co. of Ellsworth v. Hardy, 400 A.2d 384 (Me.1979). See, also, Simmons Mach. Co. v. M & M Brokerage, Inc., 409 So.2d 743 (Ala.1981) (written waiver required). Such a concept would undercut article 9's policy of promoting peaceful repossessions and ... safeguard[ing] the rights of debtors to redeem, as well as to participate in public sales or otherwise to insist upon `commercial reasonableness' in the course of other dispositions of collateral. Union Trust Co. of Ellsworth v. Hardy, 400 A.2d at 388. Other courts require that the debtor must have been aware of his right to notice before finding he intentionally waived the right. A debtor must have known of his right to prior notice of sale and must have realized he was renouncing that right. Such knowledge cannot be imputed. In cases where the circumstances do not establish that the debtors knew of their right to notice or that they intentionally waived their right, courts have found the agreements do not amount to valid waivers. See Western Nat. Bank of Casper v. Harrison, 577 P.2d 635 (Wyo.1978). See, also, In re Winer, 39 B.R. 504 (S.D.N.Y.1984) (signed statement did not show intent to waive). In City Bank & Trust Co. v. Van Andel, 220 Neb. 152, 368 N.W.2d 789 (1985), we held that a debtor's right to notice under § 9-504(3) could be waived by his conduct. Although not deciding the case on the merits, we held there was sufficient evidence of the debtor's waiver of notice to overcome a motion for summary judgment. In support of our decision, we cited in the opinion two cases which presented facts where the debtor's conduct amounted to an implicit waiver of the right to notice. In Commercial Credit v. Wollgast, 11 Wash.App. 117, 521 P.2d 1191 (1974), the debtor had voluntarily relinquished possession of the collateral with the intent that the secured party would sell it. In addition, the debtor had notice of the secured party's intent to sell the collateral and was unable to take any action financially. In Nelson v. Monarch Invest. Plan of Henderson, Inc., 452 S.W.2d 375 (Ky.1970), the debtor transferred the property to the secured party with instructions that the secured party should sell at the best price. The debtor also indicated no further interest in the property and no future intent to bid on it. The court noted that the debtor presented no evidence that notice to him would have resulted in a higher sale price, and it concluded that the evidence established an intentional relinquishment of the right to notice. In Citizens State Bank v. Sparks, 202 Neb. 661, 276 N.W.2d 661 (1979), this court found there was no waiver by the debtor of the right to notice, because the debtor had not intentionally transferred possession of the collateral or title to it, and the debtor had expressed an interest in retaining the collateral. In reviewing cases from other jurisdictions as well as the limited number in our own, it appears that in order to constitute waiver, there must be a sufficient manifestation of the debtor's intent to waive his right to notice. Simmons Mach. Co. v. M & M Brokerage, Inc., supra . See, also, Citizens State Bank v. Sparks, supra ; Nelson v. Monarch Invest. Plan of Henderson, Inc., supra . Such manifestation may take the form of conduct which evidences a voluntary, intentional, and complete rejection of any interest in the subject collateral. Evidence that the debtor relinquished his interest in the collateral with the intent and knowledge that the collateral be sold by the secured party is appropriate to determine whether or not he waived his right to notice. See, id.; James Talcott, Inc. v. Reynolds, 165 Mont. 404, 529 P.2d 352 (1974); Commercial Credit Corporation v. Wollgast, 11 Wash.App. 117, 521 P.2d 1191 (1974). Applying the foregoing principles to the facts before us, we cannot say the trial court's finding that there was no waiver of the right to notice was erroneous. Although the actions of defendants constituted a voluntary surrender of the collateral, there is no further evidence provided by plaintiffs that defendants intended to waive their right to be notified of the disposition of the collateral. Plaintiffs maintain that defendants' participation in the inventory of the bar and restaurant served to waive their right to notice under § 9-504(3). However, the court found that although Buford Rachow, along with Maxine Diefenbaugh, participated in the inventory, it was unclear who assigned the values to the items in the bar and restaurant and whether valuation was based on wholesale or retail. The evidence is unclear. Regardless, Buford Rachow's participation alone does not evidence an intent to waive notice because it is not clear that his intent in participating in the inventory process was to relinquish any further rights he had as a debtor. Under these circumstances, we find that plaintiffs failed to establish that defendants' conduct resulted in a waiver of their right to notice of the disposition of the collateral under § 9-504(3).