Court Opinion

ID: 9665202
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:42:34.872149+00
Date Added: 2024-06-11T18:15:13.893881
License: Public Domain

Boslaugh, J.,
dissenting.
Except in certain circumstances, Neb. U.C.C. § 9-504(3) (Reissue 1980) requires that a secured party give “reasonable notification” of the time after which any private sale is to be made. In comment 5 of the 1972 comments to § 9-504, it is stated: “ ‘Reasonable notification’ is not defined in this Article; at a minimum it must be sent in such time that persons entitled to receive it will have sufficient time to take appropriate *470steps to protect their interests by taking part in the sale or other disposition if they so desire.”
Consistent with this commentary, we have recognized that the purpose underlying the § 9-504(3) notice requirements is to ensure that a debtor entitled to notice at least has an opportunity to protect his interests, whether by redemption, finding prospective purchasers for the collateral, or otherwise. City Bank & Trust Co. v. Van Andel, 220 Neb. 152, 368 N.W.2d 789 (1985); Havelock Bank v. McArthur, 220 Neb. 364, 370 N.W.2d 116 (1985). In other words, the purpose of the statutory notice is to inform the debtor that the collateral is about to be sold to satisfy all or a part of the debt.
Clearly, a guarantor is entitled to notice as a debtor under § 9-504(3). Allis-Chalmers Corp. v. Haumont, 220 Neb. 509, 371 N.W.2d 97 (1985). But saying that a guarantor is entitled to notice as a debtor provides no justification for requiring that the guarantor be notified with more specific information than the primary obligor.
In previous cases not involving notice to guarantors, we have indicated that the only notice required by § 9-504(3) as to a private sale is written notice of the time after which the collateral will be sold. Citizens State Bank v. Sparks, 202 Neb. 661, 276 N.W.2d 661 (1979); Contois Motor Co. v. Saltz, 198 Neb. 455, 253 N.W.2d 290 (1977).
The U.C.C. is recognized by several courts to embody a general scheme which makes distinctions along functional, rather than formal, lines. See, MBank Dallas, N.A. v. Sunbelt Mfg., Inc., 710 S.W.2d 633 (Tex. App. 1986); Chase Manhattan Bank, N.A. v. Natarelli, 93 Misc. 2d 78, 401 N.Y.S.2d 404 (1977). If the notices in this case served their purpose, they should have been held to satisfy the requirements of § 9-504(3). There seems to be no question but that the notices here met the express statutory requirements and gave the guarantors sufficient time to protect their interests. Thus, it would seem that the notices were sufficient.
In Reeves v. Habersham Bank, 254 Ga. 615, 331 S.E.2d 589 (1985), the court rejected the argument of three guarantors who claimed that they had not received reasonable notice as required by the Georgia equivalent to § 9-504(3). The guarantors based *471their argument on the fact that the notice had been sent to them because of their status as secondary lienholders on the collateral, and not because of their status as debtors. In rejecting this argument the court reasoned that the notice was adequate because it afforded the guarantors an opportunity to take steps to protect their interests. Similar logic should apply in the present case.
The general purpose of the U.C.C., including article 9, “is to simplify, clarify and modernize the law governing commercial transactions . . . .” Natarelli, supra at 87, 401 N.Y.S.2d at 410. Our decisions run contrary to that purpose by creating numerous traps and pitfalls for the unwary creditor. The majority opinion seems to indicate that the notice must include legal advice to the debtor as to why he may be liable for a deficiency. What ought to be a simple procedure has become a highly technical matter in which skilled legal advice is necessary to avoid disaster.
The present case is distinguishable on its facts from First Nat. Bank & Trust Co. v. Hughes, 214 Neb. 42, 332 N.W.2d 674 (1983). In the Hughes case the single letter of notice sent was addressed to one of the guarantors in his corporate capacity in the debtor corporation. An ambiguity arose from the fact that the addressee’s interest as a coguarantor was in direct conflict with that of the debtor corporation as primary obligor. In the present case the individual guarantors each received a letter of notification which made no reference to their corporate capacities. Thus, the ambiguity in the Hughes case was not a factor here.
The fact that the notices in this case failed to refer to the guaranty agreements should not affect the result. A person who voluntarily signs a guaranty for the debt of another should be expected to know that if any part of the debt is not paid he will be liable for all or part of the deficiency. I would not have affirmed the judgment.